Customer Relationship Management is a discipline of identifying, attracting, and retaining a company's most valuable customers. It explains the circular relationship between suppliers, technology and customers which together provide the infrastructure for customers support in an e-business environment. It is a combination of people, processes and technology that seeks to understand a company's customers. It is an integrated approach to managing relationship by focusing on customer retention and relationship development.
Importance of CRM
Common growth for marketers and customers: CRM helps customers to identify the right product and the marketers to know about their target audience and will not waste their time.
Customized marketing efforts: Much of Business to Business marketing today is customized, in that a manufacturer will customize the offer, logistics, communications and financial terms for each major account. CRM helps customize marketing to be more effective.
Lower cost of marketing: As CRM technique facilitates maintaining a good relationship with the customers, more money will not be wasted in advertising and promotions.
Strong customer loyalty: The chances of the customers not being loyal is reduced when good relationship is developed with them.
Improved customer satisfaction: Companies now are trying to offer total customer satisfaction. The customers are able to choose the right product offered and if they face any problems they will be solved quickly. Thus the Level of customer satisfaction can be raised with CRM.
Improved employee and customer retention: With the help of CRM customer retention will improve. As the old customers will be fully satisfied they will buy the same companies products. CRM helps to retain new customers and maintain old customers.
Decreased cost for customers: As the marketing expenses of a firm will decrease in long run, firms can offer the same product at a bit low cost, enable the customer to buy more.
Components of CRM
Information It is the raw material of CRM. It includes
Identification Data: Name, address and phone number which are collected from customers to complete a business transaction.
Marketing Data: Descriptors, traits and preferences which are collected from customers during a transaction.
List Data: Names and addresses collected by third party, which can be bought or leased.
Overlay Data: Customer profile data collected by a third party, which can be leased and appended to existing customer records.
Process Customer-centered processes are the "product" of CRM which includes
All current and future processes that directly touch the customer.
Touch points or means of interaction with customers, such as phone, e-mail etc.,
Integrating and rationalizing processor from the customer's point of view.
Networking and integration applications and databases.
Databases, either purchased solutions or home-grown, central or distributed.
Security features, such as encryption tools and firewalls.
People They are the power supply of CRM. The energy source must be set to the right voltage for the entire system to work. People are "reset" through various change management tools and support mechanisms, such as
Training and education.
New tools.
Measurements and rewards.
Benefits Of CRM
Perpetual stream of revenue: A better served and delighted customer gradually becomes loyal. Once customer loyalty is built, the customer remains with the company and proves to be a perpetual source of revenue and profit often increasing over a period of time.
Positive referral creation: A satisfied customer often spreads positive things about the company. Such positive opinion proves to be more reliable and authentic than companies propaganda, including advertisements and consequently brings in more customers.
Premium: A customer satisfied with the service of a particular company is found to be ready to pay a little premium on the products/services.
Customer retention: Through personal and effective customer care and service, it helps the company keep customers for life. Retaining customers with the company helps in many ways and contributes straight away to the company's bottom line.
Reduced costs of sale: A satisfied customer does not require to be lured every time and hence, his subsequent acquisition cost to the company decreases.
Understand consumer behavior: By providing personal service to its customers, the company understands the consumers and can adapt itself to their changing requirement.
Opportunity to cross-sell and up-sell: A satisfied customer is expected to come back to the same company to repeat purchase. In case of any cross-sell and up-sell, he comes back to the same company and with no extra expense, the company is able to get him for more products.
Reduced marketing time: Through positive referrals and opportunities to cross-sell and up-sell, the customer acquisition becomes easier and consequently leads to reduced marketing time.
Channel cost rationalization: An effective CRM provides an opportunity to the companies to value the cost of various channels with respect to its profitability and the customers may be served via a channel that is cost-effective for the company and suitable for the customer.
Business process re-engineering: CRM programmes enable a company to have an insight of individual customer and helps to redesign its offer to various customers as per their profitability and thus, re-engineer their business process.
Factors affecting the growth of CRM
Emergence of Market Economy Market-oriented firms operating in intensely competitive markets now take decisions that were once controlled by the government.
Global Orientation of Businesses Firms need stronger customer orientation to be able to tap opportunities in new markets while defending themselves in their home markets. The General Agreement on Tariffs and Trade and the emergence of World Trade Organization helped create a global orientation for business establishments.
Emergence of Service Economy
The emergence of service economy is a global phenomenon. The growing importance of services resulted in greater customer orientation as services are characterized by simultaneity, inseparability, heterogeneity, and perishability. It implies that the production and consumption of services are inseparable and hence, one needs to be close to customers to deliver the service offering.
Challenges of CRM implementation
To develop an integrated CRM platform that collects relevant data input at each customer's interface and simultaneously provides knowledge output about the strategy and tactics as suitable to win customer business and loyalty.
CRM software solutions based on relational database helps to share customers information but they still do not provide knowledge output to the front-line personnel.
CRM solutions platform needs to be based on interactive technology and processes.
It should assist the company in developing and enhancing customer interactions and one-to-one marketing through the applications of suitable intelligent agents that helps to develop front-line relationship with customers.
Conclusion The CRM encompasses almost the entire marketing and also the strategic areas of business decisions. The recent growth and emphasis of CRM is a result of convergence of various dimensions of marketing that have incorporated the contemporary developments. Thus, whole marketing has been built on the premise of increased cooperation and collaboration of the company with the customers. Therefore, effective customer relationship is a fundamental business requirement and requires holistic strategy and process to make it successful.
