Customer Relationship Marketing - Essay Example

Relationship Marketing Analysis of the Development of Marketing Thought Practice within a Relationship Based Context Table of Contents Table of Contents 2 Overview 3 Part A: Marketing Perspective 4 Part B: Theoretical Perspective 9 References 14 Bibliography 17 Overview Marketing has changed its meaning and outlook drastically from the past to the present after a prolonged periodisation. Today marketing not only means to sell products but also embraces various operations related to customer services and customer satisfaction. These enlarged operations of marketers in the present context are termed as Customer Relationship Management with an overall perspective. Evidently, the concept of CRM is among the most prioritised factors of the corporate. The aim of CRM is a lot more than mere acquisition of customers. Apart from customer acquisition it also includes the identification of valuable customers and intends to retain the valuable customers in order to increase the profitability of the company at large. The paper, therefore, shall focus on identifying the actual need of the CRM approach and on the contrary it shall also focus on certain problems faced by the companies. The first part of the paper, henceforth, shall be based on a business point of view rather than an academic perspective analysing the various factors of the approach in depth. The second part of the paper will try to justify the aspects discussed in the first part through analysing the theories and previously conducted research paper. Part A: Marketing Perspective To state the history or origination of marketing is indeed a difficult task. But evidences from decades have been emphasising on the issue to unleash the actual period when the thought and need of marketing were recognised by organisations. According to few researchers, authors, and analysts, revising the initiation of the marketing concept occurred in late 90s while the others argue it to crop up in ancient Greek. However, the marketers in their realistic practises were able to reveal the fact of a revolution in marketing thought with effect to its implementation. To state the fact in other words, marketing concept has changed drastically from the past to its present implication (Hollander & Et. Al., 2005). Consequently, the past phenomenon of marketing was centred on the development of the products or services rendered to the targeted customers. On the whole it was solely implemented from the perspective of the company rather than the targeted customers. To be specific, the companies were highly concentric on what they want rather than considering what their potential customers want from them. Apparently, with due course of time the thought of marketing implications transformed from the sole intention of meeting the companies’ requirements to the aim of justifying the actual need of the customers. Evidently, as a result of the constant periodisation of the marketing concept, today marketing has gained a fresh look considering both what the company can serve and what the customers expect from the company. This relatively fresh thought was conceptually referred to as “Customer Relationship Management”. In this milieu, that concept of Customer Relationship Management beholds a strong and significant position in the corporate today (Raab & Et. Al., 2008). Unlike the past thought of marketing, the present concept of Customer Relationship Management focuses on the issues related to customer values, whether it is a B2B or a B2C relationship. It is worth mentioning that recent evidences have revealed the fact that only 15% of the total customers in a retail industry contribute to the revenue structure. With an overall perspective, this situation is not particular in the case of retail industry but also tends to influence other various industries such as the service and the manufacturing industries. Consequently, CRM aims to assist a company in identifying and escalating its valuable customers. This in turn enhances the potential of the company as a marketer and therefore energises its competency level on the whole (Atos Origin, 2002). Hereby, it is quite evident that companies today are increasingly getting concerned about the effective implication of the CRM strategies with a hope to accelerate its growth as market leaders. Dow Jones Newswires, a global player in communications and media industry was facing a problem due to separate segments for customer support and CRM systems. It was due to the fact that with a growing perspective the customer support channel needed to face more than 50 calls a day in order to satisfy the customers with queries related to technical troubles and invoicing questions as well. But the organisational structure possessed a separate information channel to deal with the technical problems and the billing or invoicing issues. This started affecting the customers’ satisfaction level and the company’s sales in turn due to the delay in satisfying the customers’ queries. As a solution to the matter, the organisational structure was integrated in a manner with the intention that the customer support associates were able to view any information about the customer from billing to technical issues and satisfy the queries (Sales Force, 2007). Another example is related to the technology industry highlighting a problem faced by Go Software Inc., which is a B2B company dealing with Internet marketers, retailers and mail-order and telephone-order companies. The company in this regard was using two separate software systems to account the orders received by the company. During the initial stage the company did not face any big trouble in its practices, but accordingly with the growing numbers of orders and contracts the company started facing certain challenges. It was due to the fact that using two separate software systems meant to have two separate database systems for which the associates of the company required to record the orders and contracts placed for twice. This not only affected the total Return on Investment (ROI) figure but also lowered the customers’ satisfaction level in favour of the company. Later the company enforced the Microsoft CRM software to maintain its records which integrated the facilities of both the disconnected software used by the company before. As a result, the company’s customers’ satisfaction level was increased, which simultaneously increased ROI of the company (Nucleus Research, 2005). Reflective from the above cases, it is quite evident that, today, marketing in an overall prospect is related to growth. Business, in the current scenario, requires a constant increasing market share resulting from a proportionate increase in the customer base. For instance, there are numerous retail outlets in the local and the global market today, but only few of them are treated as market leaders acquiring a large proportion of the total market share. It is due to the fact that the successful retailers have a stronger customer base than its competitors. The key success factor, hereby, emerges to be the attribute of customer service. Through the proper implementation of efficient customer service, the company can positively avail higher customer loyalty and productive customer relationship. Consequently, in this 21st century vision, customers are termed as the king in the business world which manifestly reveals the fact that the control of market is largely shifting into the hands of consumers. As strategists include, the marketing model is inclining to the pull model rather than the push model which it used to follow in the past. In these circumstances, the biggest challenge for a marketing company is to increase the number of valuable customers in order to gain a constant growth. The scenario becomes much more challenging with the fact that with a minimum increase of 5% in customer retention, a company can earn a profit increased by at least 25%. Furthermore, the analyses of evidences have also revealed that a company can even lose approximately 50% of its total customer within a span of five years. Hence, the reason for marketers to focus on customer relationship is justified (Webtrends, n.d.). Part B: Theoretical Perspective Evidently, there are many other companies which in due course of time realised certain major flaws in their customer service strategies along with the actual need for a well designed customer relationship management strategy. It is in this context, that CRM involves numerous phases to relate customer demands with company needs. Contextually, the three main components focused on the CRM implementation are people, technology and process. The factors influencing the implication of CRM are the strategies adapted by the company, i.e. the top management commitment, change management systems of the company, data management, IT systems and skilled task forces. Therefore, it is likely that a company will face many obstacles in dealing with every influencing factor during the ultimate execution of CRM strategies (Almotairi, 2009). In order to eradicate these limitations, researchers and various authors have continuously introduced new approaches and models to the thought. However, in the early stage of customer relationship management, organisations used to perform somewhat dissimilar approaches in the realistic practices. But the approaches were based on certain common goals, i.e. to acquire new customers, increase the value of the customers and retain productive customers (Raab & Et. Al., 2008). According to the study of Christopher, Payne and Ballantyne (2002), approaches to an efficient customer relationship management differ from one region to another. As the authors’ findings state that there were three most effective relationship marketing approaches, i.e. the Anglo-Australian approach, the Nordic approach and the North American approach to relationship marketing. The various factors included by the marketers during the ultimate execution of the customer relationship marketing were further studied by the authors revealing few significant facts related to the concept. First, the market was likely to be highly cross-functional rather than acting merely as functional. To be precise, there are numerous factors which a marketer needs to consider apart from mere selling of products or services. Next, the market activities are not just centred on the aim to avail an increasing number of customers, but are also focussing on the issues related to customer retention (Christopher & Et. Al., 2002). The study of Merlin Stone, Woodcock and Machtynger (2000) also revealed the fact that there is no single model or theory which can be applied by marketers to develop an efficient customer management model. To be summed up, certain used and pre-tested models were related to the consumer goods branding, retail marketing and sales force management. But one single model which was introduced further by the marketers was the Customer Relationship Marketing model. The model, i.e. Customer Relationship Marketing as stated by the authors is quite useful to identify the relationship factor active between various elements in marketing mix. However, the study also revealed that although the model is appropriate for the B2B relationship, it somewhat falls short to gain its importance in the field of B2C scenario. As further quoted by the authors, it is due to the fact that customer loyalty in the case of B2C vastly differs from the B2B customer relationship (Stone & Et. Al., 2000). Furthermore, the reason for failure of the Customer Relationship Marketing model and its consequences were analysed by Newell and Godin (2003). As they conclude, Customer Relationship Marketing is becoming one of the prime factors considered by corporate at present while designing their strategic portfolio. Therefore, the failure of the Customer Relationship Marketing approach is quite affective in terms of company operations and growth. For instance, as the data reveals, almost 74% of the total US based businesses increased their investment in the CRM infrastructure from 2000 to 2001. To be stated further, approximately 67% of the total number of respondent companies based in Europe had included them in implementing the CRM strategies. To state precisely, all these data revealed one fact about CRM, i.e. the significance of the approach is gaining a rapid increase among the companies in the modern perspective (Newell & Godin, 2003). Undoubtedly, CRM in the present scenario is one of the most significant approaches implemented by the companies. However, as revealed by various studies, it is somewhat misunderstood by marketers related to various industries. Few marketers slip in treating the approach as an application, while few refer it to be a technology oriented model. On the contrary, others refer it as an integration project. But according to O’Halloran and Crockett, CRM is rather a strategic approach. It is neither a technological approach nor an integration project. It is a fact that companies are growing more concerned regarding the strategies related to customer acquisition and retention as well. But in the realistic practices, the data reveal in a contradictory manner to the statement. Although the figure of investments is increasing rapidly, the customer retention is growing at an inflexibly low rate. The authors further conclude most of the CRM projects are executed by the companies, but is unable to reward the amount expected from return on investment (ROI) (O’Halloran & Crockett, n.d.). To provide solution to the issue, Iyer, Mani, and Soudagar contributed certain significant facts to be considered by companies while implementing the CRM approach. According to the study, it was revealed that in the past phenomenon, the approach was implemented as a functional model. As the authors include, previously, an organisation was separately focussed on the customer support sector and the sales department. This evidently affected the overall customer relationship of the company. To be precise, when the sales team enforced a sales force automation application, the department dealing with customer support may use the call centre application. This will not only provide rise to confusion but will also emerge as a time consuming application while satisfying the queries of the customers, as happened in the case of Go Software Inc. Hence, the authors suggest the companies to emphasise on a multi-functional approach rather than adapting a functional model. Evident from the study of the authors, companies generally use two strategic approaches, i.e. a Siloed CRM Solutions and Process-Based CRM Solutions. Contextually, the implication of a Siloed CRM Solution approach assists the business to meet the customers’ queries involving a small span of time in the early stage of the company’s incorporation. On the other hand, the implication of Process-Based CRM Strategies can assist a company during a more complex stage, i.e. when the company is constantly increasing the number of customers. But both these approaches have certain amount of limitations which minimise the applicability of the approaches. First, the Siloed CRM Solutions somewhat is unable to assist the company during its maturity period and therefore is termed to have a restricted scope of implication in the introductory and the initial growth stage of the company. On the contrary, the Process-Based CRM approach is termed to be just the contradictory form of the former approach (Iyer & Et. Al., 2009). References Almotairi, M., 2009. A Framework for Successful CRM Implementation. Brunel University. [Online] Available at: http://www.iseing.org/emcis/CDROM%20Proceedings%20Refereed%20Papers/Proceedings/Presenting%20Papers/C31/C31.pdf [Accessed January 10, 2011]. Atos Origin, 2002. Customer Relationship Management. White Paper. [Online] Available at: http://www.es.atosorigin.com/NR/rdonlyres/9C826F13-D59C-456B-AC57-416E686A4C30/0/crm_wp.pdf [Accessed January 10, 2011]. Christopher, M. & Et. Al., 2008. Relationship Marketing: Creating Stakeholder Value. Butterworth-Heinemann. Hollander, S. C. & Et. Al., 2005. Periodization in Marketing History. Journal of Macromarketing. [Online] Available at: http://business.nmsu.edu/~mhyman/M670_Articles/Hollander_JMacro_2005.pdf [Accessed January 10, 2011]. Iyer, V. & Et. Al., No Date. Which CRM Strategy Is Right for Your Business — and Your Customers? Siloed CRM Applications vs. a Process-Based Approach. [Online] Available at: http://www.google.co.uk/url?sa=t&source=web&cd=3&ved=0CDkQFjAC&url=http://download.sap.com/download.epd%3Fcontext%3Dc8627f76f70fe20f570617cea82b970402f3b9140e0c8bda2e923878779c866d4233e0a889036c6e9932d13ec54c58620ae4bc95120110a9&rct=j&q=CRM%20approaches&ei=_v8qTbPNLMLMrQenwu3DDA&usg=AFQjCNFdO0KLmZAFY20S9JTPhMxmnNGsXw&cad=rja [Accessed January 10, 2011]. Newell, F. & Godin, S., 2003. Why CRM Doesnt Work: How to Win by Letting Customers Manage the Relationship. Bloomberg Press. NucleusResearch, 2005. ROI Case Study: Microsoft CRM Go Software. Case Study. [Online] Available at: http://www.google.co.uk/url?sa=t&source=web&cd=1&ved=0CB0QFjAA&url=http%3A%2F%2Fdownload.microsoft.com%2Fdownload%2Fe%2F4%2Fe%2Fe4ed3c66-01c0-423b-bc08-6001c779c510%2FMicrosoftCRMROIcasestudy.pdf&rct=j&q=ROI%20Case%20Study%3A%20Microsoft%20CRM%20Go%20Software&ei=QrIqTfj0IcrsrQfPhp3-DA&usg=AFQjCNFT063IDbgYofACLwSySc06mhUqjw&cad=rja [Accessed January 10, 2011]. O’Halloran, J. P. & Crockett, B. K., No Date. An ROI-Based Approach to CRM Implementation and Management. Accenture. Raab, G., 2008. Customer Relationship Management: A Global Perspective. Gower Publishing. Stone, M. & Et. Al., 2000. Customer Relationship Marketing: Get To Know Your Customers And Win Their Loyalty. Kogan Page Publishers. Sales Force, 2007. At Dow Jones, Salesforce Integration Delivers More Than Real-Time Information. Customer Case Study. [Online] Available at: http://www.salesforce.com/assets/pdf/casestudies/pdf_cs_dowjones.pdf [Accessed January 10, 2011]. Webtrends, No Date. Best Practices for Relationship Marketing. Whitepaper. [Online] Available at: http://www.webtrends.com/upload/wp_relationshipmarketing.pdf [Accessed January 10, 2011]. Bibliography Brown, S., 2000. Customer Relationship Management: A Strategic Imperative in the World of e-Business. John Wiley & Sons. Bruhn, M., 2003. Relationship Marketing. Prentice Hall. Carbone, L., 2004. Clued In: How To Keep Customers Coming Back Again And Again. Prentice Hall. Donaldson, B. & OToole, T., 2002. Strategic Marketing Relationships. John Wiley & Sons. Egan, J., 2004. Relationship Marketing: Exploring Relational Strategies in Marketing. Prentice Hall. Gronroos, C., 2000. Service Marketing & Management: A CRM Approach. John Wiley & Sons. Gummesson, E., 2002. Total Relationship Marketing. Butterworth-Heinemann. Hakansson, H. & Et. Al., 2004. Rethinking Marketing. Developing a New Understanding of Markets. John Wiley & Sons. Read More