Role of Social Media in Customer Relationship Management - Essay Example

Role of Social Media in Relationship Management Introduction relationship management is defined as the practice, tactics and technical support that an organisation utilizes for managing, recording and evaluating customers’ response to satisfy their requirements. At present, competition has led the firms to make more efforts in order to retain customers and sustain their position within target market (Chan and Guillet, 2011). In this context, social media is playing a crucial role for companies as it provides management with appropriate platform regarding evaluation, understanding and solving the issues of target customers. The purpose of this essay is to critically analyse the role of social media in customer relationship management. Along with that, this work explores the importance of using social media for its diverse objectives in business, event, and social context. In the context of an event, this study also explores London Mela festival (2014), and the way organizers used social media to manage customer relationship. London Mela is Europes largest outdoor South Asian festival which consist of several live entertainment and traditional Asian culture activities. This research study explores the role of social media in customer relationship management with a reference to London Mela as an example of the event. 1. Meaning and definition of Customer Relationship Management Firstly, there is a need to understand the definition of relationship marketing. Grönroos (1994, cited in the Egan, 2001, p. 23) describes relationship management as “identify and establish, maintain and enhance and, when necessary, terminate relationships with customers and other stakeholders, at a profit so that the objectives of all parties involved are met; and this is done by mutual exchange and fulfilment of promises.” Thomas and Housden (2011) assert that the concept of relationship marketing is that customer must be influenced in a way that leads to his contentment. According to Chan and Guillet (2011), customer relationship management is a systematic approach for managing firms communication or interaction with current and future customers. However, it involves technological expertise in organising and synchronising sales, marketing, customer services and technical support. On the other hand, Masterman and Wood (2006) argue that Customer Relationship Management (CRM) is a management philosophy on the basis of which firms common goal can be achieved through identifying and satisfying customers defined and undefined needs and wants. Masterman and Wood (2006, p. 194) determined that “relationship marketing is a move away from a focus on one-off transactions to an emphasis on customer retention.” In this context, management of London Mela has to evaluate desired requirements of their existing and potential customers, and on the basis of their evaluation, they have to provide customers with entertainment and services that could lead to maintenance and enhancement of customer relationship. Furthermore, as per the view of Miguel and Bondarouk (2013), it is a process of establishing, identifying, monitoring, maintaining, enhancing relationship with target customers to attain maximum return in monetary terms as well as sustainability within existing market. There are several theories of customer relationship management presented by different authors which can be used for London Mela event in order to address the needs of target customers. Primarily, CRM has a marketing theory that focuses on marketing products and services in an effort to create awareness amongst target market. On the other hand, CRM also has a behaviour theory which concentrates on understanding the behaviour of people and providing them with what they want on the basis of behavioural evaluation (Labus and Stone, 2010). London Mela is one of the biggest South Asian events in the UK. Several activities and entertainment opportunities are provided to the people visiting there. It started in 2003 and approximately 60000 people visited the Mela. From then on, its customer’s count kept increasing. In past, several approaches were used by the organizers of London Mela to attract large audience and they have been succeeded in their efforts (London Mela, 2013). Woodcock et al. (2011) explains that there are different perspectives of attaining desired goals through customer relationship management. Tosovic (2001) defined CRM life cycle model that assists in performing management tasks and operations appropriately. There are three major phase of this model: attraction, promotion and maintenance. Each of the phase focuses on understanding and supporting knowledge of relationship between company and its customers. In addition, this theory states that each of its phase have various effects on communication with customers. According to Aurier and N’Goala (2010, p. 306) relationship marketing theory broadly examined respective aspect of “trust and relationship commitment”. It implies that if management of London Mela are undertaking this theory or approach than it is their responsibility to focus on linking each of the activities to these phases so that they can attain desired goals and objectives. 2. Significance of Customer Relationship Management As discussed above, customer relationship management is crucial for management as it helps in retaining existing customers, attracting potential customers, and for future contingency. As per the selected event, it is important for managers of London Mela to practice customer relationship management in order to attract large audience for the event and generate high revenue. Moreover, maintaining relationship with people is significant as vendors of London Mela would be showcasing variety of products and services to huge audience that is excepted to generate higher revenues ((Jha, 2008). Davidson and Rogers (2006) observe that main trend in CRM is the business strategy as it provides businesses with the opportunity to control communication with their most beneficial customers. Hutter et al. (2013) assert that CRM is more than just an application of technology because it assists in developing better relationship with customers by providing appropriate platform to assess their individual needs and wants. There are several important aspects of customer relationship management for organizers of London Mela to consider: Firstly, client management is crucial aspect of an event (Hoyle, 2002). However, for organizing such a big event as London Mela, it is essential for management to get clear visibility within their client base. According to Sethna et al. (2013), undertaking CRM helps manager to understand the needs and wants of customers and encourages employees to work their best for satisfying customers. Furthermore, having better client management tactics leads an event to generate higher profits (Aurier and N’Goala, 2010). For instance, if organizers of London Mela identify that its 75% of audience is from South Asian culture than they can include more entertainment facilities or elements from Asian culture because it will not only help them to attract large Asian population, but also satisfy their needs effectively and efficiently. Secondly, according to Wang (2012), communication is one of the major tools by the means of which companies can manage its relations with customers or clients. Consistent interaction with customers helps managers of a business to ensure satisfaction of the target market. Therefore, communication in CRM is considered to be a significant tool. By doing so, they easily identify and evaluate people’s need that leads to providing them with best products and services for maximum benefits. Similarly, social media has played vital role in creating better communication channel between customers and management of London Mela (Baird and Parasnis, 2011). According to London Mela, it is the responsibility of marketing manager to ensure that there is proper communication between target audience and employees in order to satisfy customer’s questions, and provide them with variety of information regarding event date, venue, activities, programs, artists etc. Therefore, we can say that communication plays a vital role in maintaining relationship with customers and attracting new ones. Thirdly, retaining customers is crucial aspect for any company or event. Organizers try to attract large audience to their events in order to generate high revenues. They use traditional approaches towars customer retention in an effective manner (Masterman and Wood, 2006). Furthermore, by using different means of managing customer’s relations management of London Mela is attracting larger audience each and every year. Social media plays a significant role in communicating with customers; it keeps them updated, engages them with the events and activities, and invokes a sense of community. Fine (2010) asserts that incorporating social networking site such as Facebook and Twitter helps the managers to connect with people at a much better level. These networking sites provides better platform to the people for expressing their needs and things that they find amusing. This feedback is firsthand and genuine; management of mela utilizes this information to make changes and improvements accordingly. 3. Managing Relationship with Customers through Social Media According to Malthouse et al. (2013) the blend of social media and customer relationship management termed as social CRM. It assists companies to light up their brand and truly listen to the people more than ever before. The major objectives of this are to help in improving traditional customer relationship management by engaging social media networks; to identify and evaluate the needs and wants of customers; to engage them through social media conversation, and to track new ideas for events through Facebook and twitter. Harrigan et al. (2014, p. 3) introduced “dynamic capabilities theory” which describes that it is crucial to use social media in tactical and strategic way. It is significant to analyze market orientation for relationships with consumers and social media is the best tool available in today’s world. At present, all business enterprises are communicating with their clients and even competitors by incorporating social media into their routine functioning. As per the view of Miguel and Bondarouk (2013), social networking sites are an integral part of the organisation as they are majorly used in marketing and promoting products and services of firms in effective and efficient manner. Mangold and Faulds (2009) explain that social media include a diverse list of blogs, social networking websites, forums, websites and special forums with ratings about the product, consumer e-mails etc. In addition, social media provides the platform for management to recognize the needs of people regarding particular products, services, or events. In this way, Chen et al. (2011), observe that companies not only satisfy the needs of their existing customers, but new customers are also attracted by company’s message and hundreds and thousands of people interacting with them publically. For my chosen event, London Mela, existing customers communicate their appreciation, needs, and complaints through social media. This valuable feedback leads management to take appropriate action to keep the customers happy and attract interested people to the event. At present, there are several social networking sites that are being used by Ealing council in order to promote and market the event, such as, Facebook, Twitter, and YouTube (Hutter et al., 2013). Ballings and Van den Poel (2015) observe that Facebook is one of the most used networking sites by people around the globe. Therefore, management uses Facebook to promote its event effectively. Moreover, customers are provided with various facilities to record feedbacks and innovative ideas that management plans to incorporate in the future events. Also, mangers uses this social networking site to connect with its existing customers by constantly communicating with them through messages, replying their messages, responding to their complaints, and providing them updates about the activities and facilities (Sethna et al., 2013). In general terms, Facebooks provide appropriate platform to connect with large audience in short span of time. In addition to that, there is an official page of London Mela on Facebook (Facebook, 2015). It provides detailed information of past events in the form of pictures, videos, and messages while updating customers with upcoming events and activities. Social media strategy of CRM helps to attract and influence large audience for increased attendance more impact, and thus higher revenues. Besides Facebook, Twitter is another major social networking site which trends around the globe and connect large population .Twitter holds second place in terms of followers after Facebook. However, social media experts believe that twitter supersedes Facebook in the regions of UK, US. In other words, there are more Facebook users than Twitter around the world, but in UK and USA twitter is used more than Facebook . Promoting London Mela on Twitter (Twitter, 2015) has provided great assistance in connecting with people. At present, London Mela is renowned on Twitter with handle @TheLondonMela (Shih, 2011, pp. 110). Through this handle, customers are given detailed information and notification regarding each and every activity taking place in the event. YouTube is another important social networking site that London Mela management use in order to promote its event as well as remains connected with its customer base. YouTube assists mangers in uploading event videos that consist of past activities and current happenings that engages people and arouse their interest that leads to their retention or attraction for Mela. YouTube is also widely used social media site throughout the world (Shrivastava, 2013). Due to its South Asian niche, Mela management invites several popular Indian and Pakistani celebrities which enhance the brand’s image and attract large audience to visit the Mela for witnessing their cultures (YouTubeGB, 2015). There is no doubt that particular social networking sites or social media in general plays vital role to interact with customers, attract them, influence them as well as satisfy their needs and wants by understanding and identifying their issues and obstacles. Similarly, there are several other events in London that use social media extensively in order to promote their events and create awareness among people. For instance, London Olympics in 2012 is considered to be one of the biggest in London’s history.UK Sports department also utilized social media to create awareness and update its customers throughout the world (Kenyon and Palmer, 2008). In addition, management used social media as a base where people can buy tickets for different sport events and enjoy the facilities provided by the Olympic authority. Du ring 2012 London Olympics, social media played a leading role in order to promote and market the overall event successfully (Evans, 2010).Winter Wonderland is another popular event in UK, people from all over UK attend and enjoy this event(Winterwonderlanduk, 2015). There are several aspects of this Wonderland festival which majorly promotes sustainable environment within London. In an effort to create awareness and influence people, management uses social media quite extensively and engages people at a massive level. 4. Benefits of using social media for Customer Relationship Management Nowadays, for most of the entrepreneurs, social media marketing is the next big thing. Similarly, social media can attract a wide range of audience and engage them in the event management (Chi, 2011). In general terms, an event is a public entertainment function in which every individual of any gender, ethnic background and age is invited. Getting back to my chosen event, London Mela, organizers are constantly focusing on making optimum utilisation of social networking sites to attract as well as maintain relationship with large audience (Fine, 2010). Customer relationship managers achieve several objectives through social media communication through these platforms that include: enhanced communication, brand recognition, widespread geographical reach, and cost effectiveness. Chi (2011) confirms that social media sites provide real time platform to communicate with the people who are interested in the brand. In other words, social networking sites provide appropriate platform to the marketing managers in order to directly interact with target audience. In addition, management provides customers with the opportunity to give feedbacks and get real time solution to their problems (Zarrella, 2009). In this way, company attracts new customers, retain existing customer, increase their loyalty and involvement level, and respond to potential issues that may arise in future. This approach goes beyond traditional marketing when it comes to its content and tools. In case of London Mela, management uploads event’s videos, photos, performances, activities, other shareable content, and people’s opinion in real time that encourage similar and adventurous people to be a part of it. Baird and Parasnis (2011) confirm that social media platforms enhance communication between management and customers. Moreover, they provide an opportunity to mend or enhance brand image. These platforms work as an ongoing opportunity to enhance brand recognition. Grönroos (2004) also asserts its significance because it keeps the management-customer relationship easy, strong, convincing, and attracts new customer who witness the interaction. According to Trainor et al. (2014) companies with efficient CRM application facilitate more efficient customer-company interactions and use effective data from social media. For instance, a frequent user of Twitter might hear about London Mela for the first time only after stumbling upon it in a newsfeed. Moreover, social media is of great use because it assists managers to have widespread geographical reach (Mangold and Faulds, 2009). In other words, marketing and promoting event through social networking sites helps management of London Mela to attract large population in short span of time. However, through traditional marketing approach may incur high cost and time in terms of reaching people. Lastly, it is evident that adopting this approach is very cost effective as there is almost no money required to start a marketing campaign on social media. Though, there are several other ways to connect with the customers, but social media platforms are most efficient, friendly, cost effective, and long lasting to keep and attract customers and resolve their issues (Shrivastava, 2013). 5. Drawbacks of using social media for Customer Relationship Management My research so far has proved that social media works like magic when it comes to connecting with customers at a deeper level. It is evident that social media has numerous advantages for businesses and customers as well, however, some believe that there are certain disadvantages of using social media management that we tend to overlook. Let’s have a look on them. Masterman and Wood (2006) argue that the most common drawback of social media with regard to CRM is that at times, it may lead to negative or bad branding of the business or event. Twitter, blogs, and Facebook provide the customer with an opportunity to talk about the service, products, and events in order to know whether they like it (Thomas and Housden, 2011). The main objective of London Mela’s organizers is to ensure that relationship with customers is maintained by appropriate branding. Further, no negative or unethical message should be promoted by the means of it which can affect the overall brand image of the event. Therefore, this can be one of the major issue or drawback that organizers might face while using this approach to know customers’ problems (Neises, 2013). On the other hand, Wang et al. (2012) argue that adopting modern approach of dealing with target audience must be utilized in an effective manner. It is observed that in many situations, irrelevant or misleading content about the product or services causes miserable situations for customers and force them to break their loyalty towards company (Rogers, 2013). Furthermore, social media does not provide short term return on investment. Maintaining relation with customers through social media can be quite difficult as organisers of London Mela has to keep an individual for 24/7 for an update or resolving the issues of customers. Along with that, there is high risk of negative comments which may lead whole campaign to negative publicity (Grönroos, 2004). The main implication of this drawback can be observed on the customer base of London Mela. Therefore, it is important for organisers to use social media efficiently and take appropriate measures to avoid negative publicity. Top level management must ensure that people’s issues are resolved in real time, in this way, people with negative perception will witness and appreciate that issues are being resolved in a friendly and timely manner. In this way, business will come across as real, caring, and trustworthy. However, it’s a continuous process, but it wins the customers and assists companies in keeping them. 6. Conclusion Conclusively, for operating in a modern market and dealing with a 24/7 connected consumer, it is critical for businesses to connect and maintain relationship with their customers. Customer relationship management is a systematic approach for managing firms communication with current and future customers. By incorporating social networking sites, such as Facebook and Twitter, organizers of London Mela connect with people effectively and efficiently. Furthermore, study highlights the role of social media in maintaining customer’s relationship for the event management company. Communication is one of the major tools by the means of which companies can manage its relations with customers or clients. However, constantly interacting customers help managers of a business entity to ensure satisfaction to the target market. Thereafter, the essay illustrates the significance of social networking sites that companies are using in order to attract and influence people to buy their products and services. In this study, I analyzed customer relationship management of London Mela in particular and role of social media in CRM in general. I found that social media is most critical, cost effective, friendly, and efficient way to communicate, retain, and educate existing and potential customers. Some problem may arise due to its easy accessibility and widespread nature; however, business can work it to their benefit through effective monitoring and efficient problem solving. References Aurier, P. and N’Goala, G. (2010) The differing and mediating roles of trust and relationship commitment in service relationship maintenance and development. Academy of Marketing Science. 38, pp. 303-325. Baird, C. H. and Parasnis, G. (2011) From social media to social customer relationship management. 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YouTubeGB (2015) Funny girlSuoerwoman doing her thing at London Mela 2013 for BBC Asian Network https://www.youtube.com/watch?v=XtxZaJ7UIaY. Zarrella, D. (2009) The Social Media Marketing Book. Canada: O’Reilly Media Inc. London Mela (2013) Home [online] Available at: Read More