CUSTOMER RELATIONSHIP MANAGEMENT

Customer Relationship Management,

If relationship marketing is the science or physics of relationships, then customer relationship management represents its application or engineering.

Most of the big businesses are actively implementing some aspects of relationship marketing. Customers who get satisfied plays prime role of business growth. As great management thinker Peter Drucker has pointed out “it is the customer who determines what a business is & the purpose of firm is to create and keep customers”. Operationally the traditional focus of business is to upgrade efficiencies. This thought was embedded in economic ideation. Adam Smith did not write about customer satisfaction, retention & relationship; he developed theories of specialization ,division of labour and production efficiency. Economic theory that originates from his model of perfect markets assumes that competition for undifferentiated products drives prices down to a level necessary merely to sustain investment in continued production. In this model , there are no brands, product differentiation, loyal customers or excess profits. In his viewpoint an efficient producer of commodities, accepting the price and volume dictated by market.

Customer relationship management (CRM) is a technology that permits businesses both large and SME to collate, automate, and synchronize every facet of customer interaction. CRM system examples include marketing, sales, customer service, and support. Most CRM platforms involve businesses analyzing customer interactions and improving the customer relationship.

This technology has been widely embraced throughout the business world. In fact, As Gartner Research predicted that by the year 2017, CRM has grown to encompass a world-wide market of approximately $36 billion.

If you wishful about investing in a CRM solution, you’re possibly limited interest in the big numbers, and more connected with how companies such as yours can use CRM to improve their productivity of business. How CRM has helped businesses of all sizes perfect the art of customer satisfaction.

Wells Fargo.

While your organization is responsible for keeping trace of the money and property of approximately 70 million individuals, you can be sure that customer service is going to be one of your most pressing concerns. “Such is the case with Well’s Fargo, one of the “Big Four” banks in the United States. Wells Fargo realizes that many of their customers use multiple banks, so they know that they need to go above and beyond when it comes to connecting with clients. They do this by taking advantage of CRM social media connectivity, so that they can always remain in touch and accessible to those who need them. They also use CRM to ensure that those who come to them with concerns are quickly connected with someone who can provide a solution. In the words of Steve Ellis, head of the Wells Fargo Wholesale Service Group, “We see the cloud as a way to help people connect around customers, to connect around building products, and to connect around risk management practices.”

Firms innovate in product design, product function, manufacturing processes, distribution, service and communication to differentiate their offers from those of competitors. Much of this innovation focuses upon creating new and improved products & service and reducing costs. Efficiency, coupled with product innovation, drives competitive strategy for most firms. Efficiency-driven firms focus on the product or service they sell, whereas effective firms focus on their ability to fulfill individual customer’s most important needs. Effective firms seek competitive advantage in customer involvement, service and superior knowledge of customer motivation and behavior. Their customers, rather than their technology and production, drive effective businesses. Moving from efficiency to effectiveness represent a big shift in business emphasis, and is one of the drivers behind the surge of attention and investment in CRM.

A recent definition of customer relationship management from the Journal of Marketing, based on a synthesis of the literature, suggests that customer relationship management is a subcomponent of RM with the following additional caveats (Payne and Frow 2005, p. 168):

1. Restricts the relationship target to “key customers and customer segments.”
2. “Unites the potential of relationship marketing and IT [information technology].”
3. Focuses more on the tactical through an “integration of process,people, operations, and marketing capabilities that is enabled though information, technology, and applications.”

Thus, customer relationship management (CRM) is the managerially relevant application of relationship marketing across an organization focused on customers, which leverages IT to achieve performance objectives. If RM is the science or physics of relationships, then CRM represents its application or engineering. Because extant research often fails to differentiate between RM and CRM, this monograph uses the term relationship marketing in its broad form, with the recognition that it often encompasses aspects of customer relationship management as well.

Changing customer behavior and motivation

Customers are most exacting than ever in purchase decisions and wish to get best possible service transparency. As Business core is customer, the expectations would be multiplying. The customers are coming forward to persuade a change in internal management processes. They are more competent purchasers. Cost of misjudging the customer is immense which may lead to reneging by them. This switching is detrimental to overall profitability of the company. They may prove as helpful to the companies in new product development. Thus companies will need to get better at listening, learning and responding to each individual customer.

CRM is the cross functional activity. According to the eminent contributor Adrian Payne,CRM’s  present practice are across five processes:

 Strategy Development, value creation, channel and media integration, information management & performance assessment

Process1.Strategy Development:

• Where are we and what we want to achieve?
• Who are the customers that we want and how should we segment them?

Process 2. value creation:

• How should we deliver value to our customers?
• How should we maximize the lifetime value of the customers we want?

Process 3.channel and media integration:

• What are the best ways for us to get customers and for customers to get to us?
• What does an outstanding customer experience, deliverable at an affordable cost, look like?

Process 4.information management:

• How should we organize information on customers?
• How can we replicate the mind of customer?

Process 5.Performance Assessment

• How can we create increased profits and shareholder value?
• How should we set standards, develop metrics, measure our results and improve our performance?

According to C. K. Prahalad & V Ramaswamy (2000) Business practitioners and scholars talk about alliances, networks, and collaboration among companies . But managers and researchers have largely ignored agent that is most dramatically transforming the industrial system as we know it: the customer. Now just study of competencies and resources of company’s business partners and suppliers to compete effectively would not suffice the purpose, they must now include consumers as a part of the extended enterprise.  The shifting role of consumer affect the notion a company’s core competencies.

There are four fundamental realities in co-opting customer competence:

1.They have to engage their customers in an active, explicit, and ongoing dialogue

Now customer requires richer and subtler form of exchange than existing in past. Hence companies must understand the purpose, meaning, and quality of Dialogue from  customer perspective.

2.Mobilize communities of customers

In self selecting virtual community like Internet chat rooms are easy to start up,join and participate in. Instead of pushing  image concept in advertising ,in new market –consumers’ collective personalized experiences are positioned & initiated .Smart companies are finding ways to mobilize customer communities. 

3.Manage customer diversity

Customers  differ in judgment of product or services-will vary in their skills also. Some prefer to buy product on-line others may not. Hence companies have to face issue of customer diversity.

4.Engage customers in co-creating personalized experiences

Today customization is being replaced by personalization. Through personalization, Customer get an opportunity as Co-creator of the content of their experiences through choice and flexibility. Channel of distribution and communication and design of product can be chosen by customer. (Simon Knox, Stan Maklan, Adrian Payne, Joe Peppard, Lynette Ryals, Elsevier,Butterworth-Heinemann,2003)

Summary

Customer relationship management (CRM) is the managerial relevant application of relationship marketing across an organization focused on customers, which leverages IT to achieve performance objectives. Because extant research often fails to differentiate between RM and CRM, this monograph uses the term relationship marketing in its broad form, with the recognition that it often encompasses aspects of customer relationship management as well. C.K.Prahalad says that the Company, family/network of companies and enhanced networks -have the shifting locus of core competencies. company , its suppliers, its partner, and its customer creates a whole system having enhanced network. Resources of whole system obtain access to other companies’ competencies and investments, as well as customers’ competencies and investments of time and efforts. Thus CRM tries to understand customer in better way.

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©2019,Dr. Amit Medhekar. All rights reserved.