Customer Relationship Management

Customer Relationship Management

Before going in the detail of customer relationship marketing first we should know that what is

relationship marketing? It is basically Establishing a long-term continuous relationship with the

customer, initiated and managed by the firm. This relationship must provide value to both parties.

If a customer is lost, not only is that particular transaction lost, but perhaps all future transactions

throughout the life of that customer.

As discussed earlier that marketing is the organizational function charged with defining  customer targets and the best way to satisfy needs and wants competitively and profitably. Since consumers and business buyers face an abundance of suppliers seeking to satisfy their every need, companies and nonprofit organizations cannot survive today by simply doing a good job. They  must do an excellent job if they are to remain in

the increasingly competitive global marketplace. Many studies have demonstrated that the key to profitable performance is to know and satisfy target customers with competitively superior offers. This process takes place today in an increasingly global, technical, and competitive environment. When marketing helps everyone in a  firm really meet the needs of a customer both before and after a purchase, the firm doesn’t just get a single sale. Rather, it has a sale and an ongoing relationship with the customer. That’s why we

emphasize that marketing concerns a flow of need-satisfying goods and services to the customer. Often, that flow is not just for a single transaction but rather is part of building a long-lasting  relationship that is beneficial to both the firm and the customer.

•  CRM Customer relationship management:

“CRM is the overall process of building and maintaining profitable customer relationships by

delivering superior customer value and satisfaction.” CRM Customer relationship management can

be defined: as strategies focused on increasing customer satisfaction, loyalty, and profitability by

leveraging superior customer knowledge acquired, stored, and acted upon with the aid of

information technology.

•  The basic goals of the CRM are:

Customer relationship marketing provides the key to retaining customers and involves providing

financial and social benefits as well as structural ties to the customers. Companies must decide how

much relationship marketing to invest in different market segments and individual customers, from

such levels as basic, reactive, accountable, proactive, and full partnership. Much depends on

estimating customer lifetime value against the cost stream required to attract and retain these

customers.

Total quality marketing is seen today as a major approach to providing customer satisfaction and

company profitability. Companies must understand how their customers perceive quality and how

much quality they expect. Companies must then strive to offer relatively higher quality than their

competitors. This involves total management and employee commitment as well as measurement

and reward systems. Marketers play an especially critical role in their company’s drive toward

higher quality. The basic goals of CRM are:

• The idea of CRM is that it helps businesses use technology to gain insight into the behavior

of customers and the value of those customers. If it works as hoped, a business can:

• Provide better customer service

• Make call centers more efficient

• Help sales staff close deals faster

• Simplify marketing and sales processes

• Discover new customers Enable companies to provide excellent real-time customer service

by developing a relationship with each valued customer through the effective use of

individual account information

• Based on customer attributes, companies can customize market offerings, services,

programs, messages, and media

• Reduces the rate of customer defection

• Increases the longevity of the customer relationship

• Enhances the growth potential of each customer through “share of wallet,” cross-selling,

and up-selling

• Makes low-profit customers more profitable or terminates them

• Focuses disproportionate effort on high value customers

CRM is mainly based upon the customer loyalty that is of great importance for the marketer

because firms have realized the value of customer retention. Winning a new customer is usually 5-

10 times more costly than retaining an existing customer Customers are usually more profitable the

longer you keep them. The value of loyalty goes beyond single customer for the reason that loyal

customers provide more and more credible referrals but the angry gossip of disloyal customers can

devastate a firm.

•  Building Profitable Customer Relationships

Managing demand means managing customers because:

1. A demand comes from new customers and repeat customers.

2. Today, besides making efforts to attract new customers, marketers are going all out to

retain and build relationships with existing customers. It costs five times as much to attract

a new customer as it does to keep a current customer satisfied.

3. Because of changing demographics, a slow-growth economy, more sophisticated

competitors, and overcapacity in many industries, many markets and market shares are

shrinking. The key to successful customer retention is superior customer value and

satisfaction.