Customer Relationship Management in the Car Industry - Research Paper Example

Executive Summary Customer relationship is considered as a pillar which helps the business to succeed. The developments seen in the field of customer relationship through the development of different loyalty programs has fuelled a new insight into this area and has made business look toward developing a business model which looks to ensure better satisfaction. The report looks into the manner loyalty program has helped to develop customer relationship in the car industry. The report focuses on the literature findings based on past performance which shows that loyalty programs helps businesses to grow. A study in this direction shows that loyalty programs help to improve value for the customers and creates a positive impact by improving value for the product (O’Brien & Jones, 1995). The importance of value for the customer increases when proper selection is made regarding the loyalty program (Mueller, 2007) This has been matched by a survey carried out in this direction which shows that proper development of loyalty programs helps the customer to be attached to the product. The survey carried over 10 respondents showed that loyalty programs helps to ensure customer loyalty and different people give importance to different features of the loyalty program. The findings showed that satisfaction was an important aspect that people looked into. The survey also highlighted the improvements required in the loyalty program. It showed that companies need to develop their loyalty programs time and again and should look to improve transparency. The report also presents the manner in which loyalty programs benefit and draws important findings which will help the car industry to develop a loyalty program which helps to build customer relationship and helps the company to have a pool of loyal customers. Table of Contents 1.0. Introduction 4 1.1. Background Information 4 1.2. Aims 4 1.3. Scope 4 2.0. Customer Loyalty & Relationship Marketing 5 2.1. Literature Based Evidence 5 2.1.1. Managing Value through Loyalty Programs 5 2.1.2. Customer benefits & sacrifice in the Value equation 7 2.1.3. Benefits of retaining customers 8 2.2. Survey Findings 9 2.2.1. Highlights of the survey 9 2.3. Existing Loyalty & Relationship Marketing Programs 12 2.3.1. Different loyalty programs used 12 3.0. Conclusion 14 4.0. Recommendations 14 References 16 Appendix 17 List of Figures 1. CRM Cycle 6 2. People aware about loyalty program 9 3. People using loyalty program 10 4. Respondents awareness about the loyalty program 10 5. Positivity about loyalty program 11 6. Negativity about loyalty programs 11 1.0. Introduction 1.1. Background Information Companies with intensifying competition are laying special stress on Customer Relationship Management and are looking forward to include it in the management thinking process and look towards improving their image in the society. Car Industry can expand its reach by developing their loyalty programs and ensuring that they look after the society and environment by including these things in their planning process. This will help to ensure that customers are managed well and retaining them becomes easier. Customer Relation Management will help the car industry to develop their strategies for the future. It will ensure that business is able to build a pool of customer which will warrant regular sales and ensure that customer is able to get what they want. The car industry on the basis of it will help the customers to get cars at the same time and also a sense of belonging with the company. Also regular gifts and updates will help the customer to be associated with the car industry and will help in developing future relation. 1.2. Aims The report looks to find out the importance of loyalty program for a car industry. The main aim here is to identify the manner in which loyalty programs help to develop customer loyalty and the importance being laid on it. To identify the manner in which loyalty program has an influence on the working of the car industry is an important aspect of this report. This thereby helps to understand the customer loyalty relationship management in a car industry. 1.3. Scope The report looks into different aspect of customer loyalty programs by drawing inferences from past studies and literatures. This helps to set up the direction and helps to determine the influence of loyalty programs. To ensure efficiency and the manner in which loyalty programs have an influence on car industry a survey has been carried out over different respondents which helps to identify the important of loyalty program and the manner it influences the buying decision of individuals. The scope of the report also looks into the benefits that accrue due to the different loyalty programs and the manner it has shaped the performance of the car industry. This thereby provides important recommendations for the car industry to look into for the future and develop their planning process accordingly. 2.0. Customer Loyalty & Relationship Marketing 2.1. Literature Based Evidence This section of the report draws important findings from past loyalty programs used in the industry and the manner it has benefitted the industry. This helps to build the underlying importance for loyalty programs and helps to identify the customer perception towards the product. Using different studies and reviews helps to draw important insights into different directions thereby enabling to develop loyalty programs based on it. 2.1.1. Managing Value through Loyalty Programs Customer Relationship Management is “a business strategy of engaging customer and developing a relationship with him which is based on trust and loyalty”. (Harish, 2010) This definition highlights and covers various aspect of customer relationship management. Loyalty here is “the inclination of the customer to purchase the same product over and over again as the attitude matches with his requirements”. (Harish, 2010) This will ensure that customer have trust and will ensure steady sale. The chart looks as follows Figure 1: CRM Cycle It shows that after acquiring the customers business units need to look at ways to retain them and grow which makes customer relationship more important. This shows that it is a cycle and business needs to continuously evolve and look for new strategies to ensure that customers remain loyal. Maintaining healthy relation with the customer is vital every time. Previously it was easy to “remember every customer by their face and name as the spread was small and with little technology customers preferred their local destinations”. (CRM, 2010) It was easy to remember all the customers’ needs and requirements. The business units on the basis of it were able to deliver it. With the changes in technology and advancement it has gone rapid changes and maintaining a healthy relation today is vital. This has made companies look towards loyalty programs to ensure that the customers remain with the company and is able to sustain growth in the long run. A study shows that “business units have slowed down their response to customer feedback and queries by email as the percentage of companies responding within 24 hours has come down to 33% in 2008 as compared to 63% in 2002”. (David, 2008) This is making many businesses realize the potential of this technology and the importance customer relationship has. This has also made sales go down and business loosing vital customers. This is making companies revert back to maintaining healthy relation with the customer so that they are able to tap the customers. This has been matched with a development of loyalty programs which ensures that customers are looked after and provided with the best of service along with some amenities which are either free or cost litle. Companies to maintain this relation has done many changes. It was seen that “an IT company to improve customer relation ensured that customer who enters their building are guided by the guide to the place concerned and while doing so the guard ensures to walk with the customer there by creating a friendly environment”. (Kale, 2009) This is a step in building customer relation and ensuring that development of relation with the customer is on an upswing. A study has also shown that “enterprise needs to spend time to improve the quality of service provided by reducing stress and freeing up time to come with product development so that it helps to improve the productivity and the financial figure”. (Lucas & David, 2008) This helps to develop customer relationship and having a loyalty program goes a long way in ensuring a steady growth in the company. 2.1.2. Customer benefits & sacrifice in the Value equation The car industry has undergone tremendous change and this has being due to the change in customer relation. The car industry has “transformed itself from a car to a luxury item with special attention being laid to quality, ambience, furniture, floors and comfort level of the customers”. (Sims, 2010) This has transformed the way the car industry presents them. It has also ensured that “the long lines in front of car industry are done away with and the different varieties being offered present a lot of opportunity”. (Sims, 2010) The transformation has brought about changes in the way customers are looked upon. This change has improved the work culture and also ensured that the car industry that relies on customer satisfaction is able to sustain. A study in this direction shows that loyalty programs help to improve value for the customers and creates a positive impact by improving value for the product (O’Brien & Jones, 1995). The importance of value for the customer increases when proper selection is made regarding the loyalty program (Mueller, 2007). Loyalty programs also affect the value of customer to a certain extent. It has been studied that loyalty programs sometimes lead towards wrong attitude (Rosenspan, 1998). The value reduces in case of repeat purchase if the loyalty program is not changed thereby affecting the positivity of value created from the program (Sharp & Sharp, 1997) 2.1.3. Benefits of retaining customers The use of customer relationship management tool will help to provide various benefits to the car industry. It will make the functioning of the car industry more efficient and help them get an advantage compared to their competitors. The benefits derived are Firstly, car industry can gain from “increase customer value as providing proper services will ensure that they remain loyal and will help the car industry provider to ensure that they don’t have to fight to get new customers”. (Advantages, 2010) This will make the car industry provide proper customer service. Secondly, car industry by using the CRM ensures that “control is better which will help to forecast better and estimation of the sales will be better”. (Advantages, 2010) This will help the car industry to perform the duties better and also see that customer satisfaction is high. Thirdly, car industry by ensuring customer relationship management “will help to discover new customers by finding out the prospective customer based on the data base and then directing their efforts in that direction”. (Advantages, 2010) This will help the car industry to execute their vision purpose and develop them. Fourthly, car industry on the basis of this “will be able to improve the call centres and be able to respond to the customers problems better”. (Advantages, 2010) this will thereby promote the customer interest and the car industry will be able to deliver quality services. Thus, the car industry using CRM techniques will benefit in the long run and will be able to plan accordingly. This will thereby improve the planning process and will make the car industry gain a lot of leverage. This will thus bring the car industry as one of the most favourable destinations and will help them improve their market. 2.2. Survey Findings 2.2.1. Highlights of the survey The customer response towards the loyalty program for the car industry helps to bring forward important findings. A survey was conducted and the questionnaire for the same is attached in the appendix. A total of 10 respondents were surveyed for the program. The findings for the program showed that 90% of the respondents knew about the loyalty program compared to 10% who didn’t know about it. The graph looked as follows Figure 2: People aware about loyalty program The above graph shows the number of respondents being aware of the loyalty program. A more detailed analysis of people using loyalty program showed the following Figure 3: People using loyalty program The above graph highlights the percentage of people using loyalty programs to be 70% of the total respondents making it a total of 7. When asked about the manner they heard about the loyalty program the following was highlighted Figure 4: Respondents awareness about the loyalty program The above finding showed that 40% of the respondents i.e. 4 people knew about the loyalty program through friends and relatives and the remaining 30% each heard it from magazines and advertisement. Thus the findings for the manner in which awareness is spread about a loyalty program is phenomenon. Another important findings that highlights the positivity of the loyalty program was contrasting and showed the following Figure 5: Positivity about loyalty program The above findings showed contrasting views as people used loyalty programs for different reasons and it showed that loyalty programs helped to improve value and service for the customer. This made the customer loyal towards the product and developed better product. Another finding which showed the loopholes and areas that the company needs to ensure in the loyalty program is as follows Figure 6: Negativity about loyalty programs The loyalty program also highlighted some negative points and areas to improve. It showed that customers need to be updated about the loyalty programs regularly followed by transparency and correct information. Thus, the overall analysis showed important relationship and brought forward important areas that need to be worked upon to improve the efficiency of the loyalty program. This will help to ensure that the loyalty program provides the maximum benefit for which it is used and helps to develop customer relationship. 2.3. Existing Loyalty & Relationship Marketing Programs 2.3.1. Different loyalty programs used Customer relationship focuses on customers. This makes it a vital part of the car industry. The car industry needs to ensure that “they organize and analyze customer data to understand the customer preference so that cars which are demanded highly can be marketed accordingly”. (Krishna, 2010) The value of this can be magnified by storing the data centrally. This will allow easy accessible to all and makes it easy for the car industry to gather vital information. Customer Relationship Management will also help to improve “the sales and marketing function, the billing and expense function, the project management efficiency and better management of the human resources”. (Krishna, 2010) This will thus help the car industry to improve their services thereby making it more productive both for the management and the customers. The car industry can develop customers “who are loyal by developing a program which has a link with the mobile and the customers get a plastic card which is accessible through mobile so that the customer can pay the bill for servicing of their cars via that mode and at the same time receive updates and free gifts”. (Butcher, 2009) This will help the car industry to ensure that frequent visitors are given something in exchange. It will make the car industry realize the potential of the market. The growth of the telecommunication network will ensure for the car industry that payment is received directly in the banks and will also make it easy for the customers. Receiving regular feedbacks and gifts will make the customer look for it. It will also make the customer come back to the car industry ensuring proper customer relationship. This will further add as a greater advantage as the decision support system designed by the car industry will act as a medium to find the prospective customer. The car industry by using the data base from the decision support system can identify the prospective customers and thereby ensure that there efforts are in the right direction. The car industry can also improve their customer relation by “ensuring regular feedbacks from them”. (David, 2008) This can be done by developing their shops. The car industry needs to see that “customer provide regular feedback as this will help to work on the areas which will help to improve the relation with the customers”. (David, 2008) The car industry can implement this by ensuring that their cars outlets are “accessible and offer free internet wireless access so that more customer pour in and they are able to provide feedback by using the technology” (David, 2008) thereby ensuring that customer relationship with the car industry strengthens. The car industry to promote their relationship with the customer can make use of the latest technology and ensure that there is rapid growth. The car industry can make “use of you tube and customers by using it can visualize the satisfaction and rating of other customers who have visited their car industry thereby enhancing the performance”. (CRM, 2010) This will act as a boost as the penetration level of internet will help the car industry to reach far flung areas. The car industry will be able to deliver on the promises and will be able to expand it to other markets as customers by reading the blogs and watching the videos ascertain themselves regarding the potential and quality the car industry provides to the customer and the satisfaction derived. This experience can further be enhanced by “loading short movies made by the car industry on you tube which will show the ambience, variety, service, and pleasure the customer gets and also the different loyalty programs and services they can avail”. (CRM, 2010) This will act as a boost to the car industry and provide them with wider opportunity to deal with and also give a larger customer base. 3.0. Conclusion The car industry on the basis of the different techniques and mechanism develop proper customer relationship technique. This will help the car industry to work on important aspects. It will also create customers for the future as ensure that they remain loyal. Proper usage of customer relationship technique will help to the car industry to deliver quality service. This will help to manage the customer better and will act as a medium to gain advantage for the future. Thus, using VRM techniques will benefit the car industry and will be able to develop a big market for the future. Customer relationship management is going to gain prominence in coming years. With competition intensifying and companies looking for ways to capture and retain the customer this will hold prime importance. Companies will be lying stress on the fact that maintaining healthy relation with the customer is stressed upon. The car industry and other providers will also ensure that technology and strategies are crafted to ensure loyalty and delivering on the promises to ensure satisfaction for the customers. 4.0. Recommendations The car industry needs to ensure that “customer relationship management is given a priority as in a service industry it is important that a relation is developed such that it lasts forever”. (Brown, 2009) The car industry needs to integrate their data base by developing the decision support system and using different solution and software. This will help the car industry in pursuing active strategy and integrating all together will provide the framework to work upon. This will thereby build a good rapport and customer relation will be on an upswing. References Butcher, D. Ink! Cars launches mobile gift program. 2009 retrieved on April 27, 2011 from http://www.mobilemarketer.com//news/database-crm/2807.html Brown C, 2009, “Small Business CRM is here to stay”, Article Emporium, Coffee net CRM. The Broadway cafe: Customer Relationship Management. The New York Times Company. 2010 David, S. The real life of CRM: politics, healthcare, email and coffee shops. Customer Interaction Solutions, 2008 Kale, S. CRM evolves from Synergy. Innovating Ideas, urbino.net, 2009 Krishna, R. Role of CRM in customer interaction and services. ezine articles, 2010, retrieved on April 27, 2011 from http://EzineArticles.com/?expert=Rama_Krishna Lucas, B. & David, A. Effective time management in organization. European Journal of scientific research, Volume 24, Number 1, 2008 Muller, E. Letter: Customer Loyalty Program. Sloan Management Review, Volume 39, Issue Winter, 1998 O’Brien, L. & Jones, C. Do rewards really create loyalty? Harvard Business Review, Volume 73, pp. 75-82. 1995 Rosenspan, A. Delusions of Loyalty: Where Loyalty Programs go wrong. Direct Marketing, February, Volume 61, pp. 24-27, 1998 Sharp, B. & Sharp, A. Loyalty programs and their impact on repeat purchase loyalty patterns. International Journal of Research in Marketing, Volume 14, Issue 5, pp. 473-486, 1997 Appendix Questionnaire 1. Do you use loyalty programs? Yes/No 2. How often have you used loyalty programs?.......................………………….. 3. Why do you use loyalty programs?................................................................ 4. How did you come to know about the loyalty program?................................. 5. What was the most attractive part of the loyalty program?.............................. 6. Which part of the loyalty program you didn’t like?............................................ 7. Any negative points about the loyalty program?............................................... 8. Any Comments:……………………………………………………………………. Read More