The Importance of Customer Relationship Management - Essay Example

Relationship Management Introduction relationship management is a model through which acompany’s interactions are managed with current as well as future customers. The various aspects of the company that is sales, marketing, customer service and technical support are synchronized, organized and automated through the use of different technologies. CRM or customer relationship management is an information technology term in which software and Internet capabilities helps an organization to maintain relationships with customers in an organized way. Many enterprises has efficient database systems to contain details of customers that would help the management, the salespeople to provide good services to the customers, even the customers could access the information, it helps to match the needs of the customer with the products and services being offered by the company, it also helps to know the purchase history of customers and even acts as a reminder for the customers for service requirements. Earlier times marketing campaigns mainly focused on how to increase the customer loyalty for a product or service. The idea was that more number of loyal customers would initiate more business for the firm and in turn will help the firm to increase its product prices and generate more profit for the firm, but this idea would not be beneficial always as these loyal customers can contact call centre services to get the best of offers and take advantage of every sales offer. This will not generate profits but increase cost for the company. Thus an important part of CRM is to identify the various types of customers, then developing different kind of strategies for profitable customers, new customers who can be profitable and some specific strategy for the unprofitable customers. A very important aspect of customer relationship management is the customer value. This customer value is actually the economic value of the firm through customer relationship which contributes to the net profit. Customer value helps a firm to optimize and evaluate the marketing efforts if it is involved in the decision making. CRM can thus also be defined from the customer value perspective as a practice for analyzing and using the database of marketing, implementing various communication technologies to obtain the methods and practices of corporate that will help to maximize the lifetime value for each and every customer of the firm. The individual customer supplier relationships began to grow in the early 1990s. The relationship marketing gained so much importance that it was considered as a substitute for transaction marketing. Even analysis proved that such co-operative relationships between the suppliers and customers were of long term nature. The growth of CRM activities was mainly because the expectations of the customers are not only to avail the best products or services but also face-to-face transaction by getting what they demand for and at a lesser amount of time. Customer relationship management is a strategy through which an enterprise solidifies relationship with customers for long-term and enhances profitability as well as productivity for the firm. A CRM system is termed as ideal when there is a centralized collection of all data sources of the organization and a real time vision is obtained of customer information. It is a vast and significant concept which is used not only by larger enterprises but also by small enterprises in order to serve the customers efficiently. In an organization there are various departments who have a direct or indirect access to the customer information. It is the function of CRM to pile up all these information centrally and makes the information available across all the departments. An example of such CRM system can be an international call center which uses a xyz CRM tool, and this tool is integrated with a laptop or computer and a phone. This system will automatically generate information on receiving a call from a customer.(Peelen 139) The information appears on the screen of the laptop even before the executive attends the call of the customer, this will help the executive to have enough knowledge about the customer, their purchase history, any order if placed by the customer and the opportunity of any deal with that customer in future. It even helps in matching the needs of the customer with the various products. CRM system helps the finance department to show the current balance information, and the accounting department is benefited by having information regarding the current purchases of the customer. All these data are available on the database of CRM and is made available as and when it is required. Customer relationship management provides a well structured platform for all of the business units to communicate with their clients, resolve their issues, satisfy the needs and wants of the client, and build a long-term relationship with the client. This management of relationship with customer is not an easy task and it depends upon the structure and flexibility of the CRM system that is implemented in the enterprise. But on successful implementation it helps to build self-satisfaction for the customer and a better bonding with the supplier and generating more business for the firm.(Goldenberg 98) Various aspects of a CRM system CRM system is a tool not only used for dealing with existing customers but also acquiring new customers. CRM is a process which starts from identification of customer, then maintaining all of the required details in the CRM system which is termed as opportunity of business. This helps the sales team to interact with these customers and generate business out of them. The CRM strategy has giving a new edge to the relationship between the suppliers and buyers by establishing an estimable relationship through the fulfillment of mutual needs of selling and buying. CRM originated in the year 1970s when the enterprises started believing on the fact that it is more beneficial to be ‘customer emphatic’ rather than being ‘product emphatic’. Earlier the transaction was on paper, people used to strive hard to get new customers then crack a deal, and the job was tedious. Though there was customer loyalty and satisfaction to some extent but there was no such signs of any such strong relationship between the buyer and supplier for long term which would help the business in future. Previously it was a one to one communication it involved a lot of time and patience but with increase in competition and emergence of new technologies in the global market place there was a great need for a firm to become proactive than reactive. CRM was thus a beneficial system surpassing the whole business and dealing with relationships with customers. Customer relationship management mainly was based on three principles that are to enhance the asset value of all the customers, to shield the current or existing customers, and to foster new customers. The evolution of CRM with the support of high end technology and software the business perspectives started to change. A CRM system acted as a well defined platform for enhancing customer satisfaction, consisting of all the details which was previously scattered across all the departments and at the same time reducing the cost and investment of the firm. The outgrowth in the CRM strategy was for the following reasons that is the believe that customers are the real assets of the firm, the development required in one to one transaction, the need of using software technologies instead of involving manual labor for maintaining important details, the realization of using the information proactively then using it reactively, the change in business perspective from transactional approach to relationship approach, the focus more on the customer values rather than the focus on how the product is being delivered to the customer, the change in focus of the enterprises from its self-satisfaction and profits to the customer loyalty and customer satisfaction, the approval on the idea that in order to reduce the cost of a firm it is not required to compromise on the quality of the products or services but the cost can be reduced only by implementation of software and technology, the increasing trend in maintaining the existing customers in order to generate more and more business out of these customers, and the realization of the fact that in the current economic scenario the traditional trend of sales and marketing are failing. The CRM system can be classified intro three approaches. The first approach is the functional level, by this approach the customer relationship management is practiced at the functional level on a very limited order like any campaign management by the marketing department. This approach is a combination of the CRM activities with the strong orientation in technology, usually used by the vendors when they need to position a particular product in the market. The second approach is the customer facing front end level, the whole of CRM system is focused on the total customer experience at this level and used when there is a need for new business or new arrangement of capabilities. The main goal of this approach is to develop a single view of all the customers located across all contact channels and to distribute all customer facing functions with customer intelligence. This approach focuses on the c-ordination of information across all the channels to manage the customer relationship efficiently. This approach also helps in marketing the products to the customers. The third approach is the strategic level; at this level CRM system is not only considered as an information technology tool or to build strong relationship with customers but also to use the customer information efficiently in R&D and even in supply chain management. CRM is based on the following features customer needs, customer responses, customer satisfaction, customer loyalty, customer retention, customer complaints and customer service. It is important for an organization to know the needs of customers by interviewing them to know the actual needs and wants of them and then modulate the needs and wants to serve the customer efficiently and maintaining a long term relationship with them. Customer response is the queries of the customers, the success of any firm depends on how effectively these responses are handled and the best possible solutions are provided to the customers by the firm to build an emotional relationship along with a professional relationship, at the same time even a small misunderstanding can create a wrong perception. Customer satisfaction serves as a performance exponent as well as a differentiator of business strategies in the competitive market place. If the needs and wants along with the queries of the customers are handled efficiently by the firm it increases the bonding as well as the business for the firm. Customer loyalty is when a customer is very much satisfied with the supplier and tends to buy the product or brand over times from that particular supplier. Customer loyalty is very important for any business and is totally dependent on customer satisfaction. It is an influencing factor for the CRM system and is important for the success of business. Customer retention is a strategic process of retaining the existing customers of the firm and keeping the customers satisfied and not letting these customers deviate to any other supplier. As long as the basic needs of the customers are satisfied they would not take the risk of going for a new product. Customer retention contributes greatly to the net growth of the business. Customer complaints are a result of dissatisfaction amongst the customers. This happens when the customer’s needs and wants are not met by the suppliers. Customer complaints are always a challenge for the suppliers. These complaints can also be a result of any kind of misunderstanding in perceiving and interpreting the conditions of a deal. If these complaints are not handled efficiently it may lead to loss of customer and even bad word of mouth for the company. Hence a predefined set of process is essential in the CRM system to efficiently deal with these complaints and resolve it in as less amount of time possible. Customer service is a method of delivering information and services to the customer’s regarding the products of the firm. The firm need not only elaborate on the information but also abide by the conditions in the deal. Customer satisfaction solely depends on the quality of customer service provided by the firm. If the quality of the customer service exceeds the expectation of the customer then the organization is likely to have great business ahead. Thus customer relationship management is entangled with these features to manage the vendors and customers in an efficient way to generate more business. (Schafer 35) The Customer relationship management acts as an integration of the back end systems with the front end systems. The back end system or the ERP (enterprise resource planning) comprises of the distribution, marketing, finance and R&D departments of the organization. The front end system comprises of the customers. The CRM systems integrates these two through service and support, order processing, sales and marketing as described in the diagram below. The various types of CRM system used are in marketing and customer service through emails, social networking sites, call centers, inbound/outbound calling and direct mails. Then there are personalized CRM software’s developed for organization like SaaS CRM which is created on demand, vendors do not buy this but pay it’s rent monthly it does not require installation as it is available over the internet. Sales force software sets the lead source as marketing by tracking all the web activity. BPMonline CRM software used to improve the campaigns, close deals and satisfy customers. AmoCRM software assists the management to meet future growth needs. Oracle CRM software helps enterprise to drive sales, marketing, customer loyalty, service effectiveness for various industries. CRM system is used for both B2B (business to business) which has a smaller contact base and B2C (business to customer) which has a larger contact base. Some of the CRM oriented marketing tools are web marketing, this helps in reaching to more number of customers over less time, these online marketing campaigns are more beneficial and can be easily calculated, tracked and tested. Web marketing reduces the cost of directly reaching to customers similarly one more CRM marketing tool is email marketing method it is a direct marketing method and generates accurate customers responses and fulfillment of the needs of the customers. (Reinartz 115) Analyzing customers buying behavior online is another CRM marketing tool where an interactive strategy is implemented to generate information regarding the purchasing habits or behavior of the firm. CRM system is also used to forecast future marketing strategies through statistical analysis and regression of customer behavior online. Lastly, CRM oriented business impact models helps in giving accurate rate of marketing performance in all levels of the organization and to make it better every time. Conclusion Customer relationship management is the most efficient and strongest approach in maintaining and developing relationships with the customers. In the highly competitive and commercial world today getting more number of customers at the same time retaining the existing customers is a mere dilemma. A CRM system implementation improves this situation and helps the organization to remain in the competition by giving a challenge to the new ways of marketing and business. Hence it is beneficiary that every organization should have a full fledged Customer relationship management (CRM) system to cope up with all the needs and wants of a business. Works cited Goldenberg, Barton. CRM in Real Time: Empowering Customer Relationships. New Jersey: Information Today Inc 2008. Print. Peelen, Ed. Customer Relationship Management. New Delhi: Pearson Education India. 2008. Print. Reinartz, Werner. Customer Relationship Management: Concept, Strategy, and Tools. Georgia: Springer. 2012. Print. Schafer, Michael. The Importance of Customer Relationship Management. Toronto: Grin Verlag. 2007. Print Read More