Customer Relationship Management

Customer Relationship Management
Customer Relationship Management: Customer Relationship management is the strongest and the
most efficient approach in maintaining and creating relationships with customers. If the customer
is satisfied, they will always be loyal to organisation and will remain in business forever. This
results in increasing customer base and ultimately enhances net growth of business. Customer
Relationship Management is a comprehensive strategy and process of acquiring, retaining, and
partnering with selective customers to create superior value for the company and the customer.
Scott Hornstein: CRM is the delivery of customer care as a strategic product, with measurement
and reward, focused on generating happier customers that stay longer and buy more” –
Paul Greenberg: “CRM is philosophy and a business strategy, supported by a system and a
technology, designed to improve human interactions in a business environment. It is also a
continuing business initiative that demands a dynamic, strategy of customer engagement”.
Need and Importance of CRM:
1. Better service to customers: CRM provides more avenues for customers to communicate and
explain their needs to the organization through numerous contact points. Customers get
increased satisfaction and a feeling of being special and important because of the increased
personalization of services and customization of goods offered to them.
2. Reduction in the customer defection rate: CRM emphasizes on training and development of
the employees to become more customer oriented. Due to CRM training and development,
employees show care and concern towards the valuable customers; therefore, the customer
defection rate may be reduced to a great extent.
3. Increase long-term relationships: Some firms treat their customers as partners. Firms solicit
the help of the customers to design new products or to improve their services. If the customer
gets involved with the firm, they are more likely to remain with the firm.
4. Increase in customer equity: CRM increases customer equity. Firms focus the marketing
efforts more on the most valuable customers. The main aim of CRM is to produce high
customer equity. Customer equity is the sum of lifetime values of all customers.
5. Competitive advantage: The firms that adopt CRM get competitive advantage in the market.
They can face the competition with much ease. Competitive advantage helps in generating
higher returns on investment.
6. Building and maintaining corporate image: The image of the firm also gets enhanced. Loyal
customers become evangelists. The evangelists spread a good word about the company and its
products. This enables a firm to get additional customers to its fold.
7. Higher return on investment: Due to CRM, a company gains a position to generate higher
returns on investment. This is because of the repeat purchases on the part of the loyal
customers. The higher return on investment increases the shareholders’ value.
3 Major Aspects of CRM
1. Operational CRM: The support of customer processes involving sales or service
representatives. It provides support to “front office” business processes, including sales,
marketing and service. Each interaction with a customer is generally added to a customer’s
contact history, and staff can retrieve information on customers from the database as necessary.
Focus on customers’ value is key to a successful CRM strategy. Different customers have to be
treated differently.
2. Collaborative CRM: Direct communication with customers not involving sales or service
representatives (“self-service”). It covers the direct interaction with customers. This can include
a variety of channels, such as internet, email, or automated phone answering system. It can
generally be equated with “self-service”. The objectives of Collaborative CRM can be broad,
including cost reduction and service improvements.
3. Analytical CRM: The analysis of customer data for a broad range of purposes. It analyzes
customer data for a variety of purposes, including- design and execution of targeted marketing
campaigns to optimize marketing effectiveness design and execution of specific customer
campaigns, including customer acquisition, cross-selling, up-selling, retention analysis of
customer behavior to aid product and service decision making management decisions, e.g.,
financial forecasting and customer profitability analysis risk assessment and fraud detular for
credit card transactions Analytical CRM generally makes heavy use of predictive analytics.

Customer Relationship Management

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