Customer Relationship Management - Term Paper Example

? Relationship Management of the of the Table of Contents Introduction 3 2.Method 4 3.Result 4 3 Customer Loyalty 5 3.2.Firm differentiation 5 3.3.Firm values 5 3.4.Firm Image 6 4.Discussion 6 5.Conclusion and Recommendation 6 References 8 1. Introduction Customer relationship management (CRM) is a management process that involves the development of an exhaustive picture of customer expectations, needs and behaviors. These factors are thereafter managed in order to enhance business performance (Hoots, 2004). It is considered a revolutionary advancement that has been made in the field of customer services. The root of CRM process can be traced back in sales where CR managers study customer buying patterns and trends in order to match service levels to revenue expectations alongside satisfying the needs of the customers. The underlying rationale behind this management process is to bring down the rate of customer complaints thereby addressing their issues at the earliest and henceforth rewarding customer loyalty and maintain a high customer retention rate. In order to carry the process effectively special computer programs have also been designed. Driven by customer economics, companies have been implanting the CRM process for a long time. The CRM initiatives are directed towards formulating effective CRM strategies in order to support the overall business strategy as well as the sales and marketing department. A better coordination and synergy between these elements process proves that the CRM process has delivered its promise of increasing the customer loyalty and maximizing the shareholder value (Raihan, Hamid & Akhir, 2013). The primary objective of CRM as explained by the author is to obtain a better understanding of customer requirements and preferences which are directed towards offering the customers with high quality buying experience as well as services thereby leading to customer loyalty. CRM system involves processes such as data warehousing and mining, online order tracking, multi-channel ordering system, call centre and so son and so forth are used as the means to deliver the expected result. During the age of mass production, business world involved competitions that catered to widen customer bases for companies by carrying out efficient production (Oztaysi, Sezgin & Ozok, 2011). New competitions and structural modifications in the process of exchange have led to the establishment of the relationship archetype for the creation of long term relationships between suppliers and customers. The reasons that can be attributed to this fact are globalization of business, deregulation and internalization, shorter product life cycle, information technology advancements and the evolving association between customer retention and company profitability (Osarenkhoe & Bennani, 2007). CRM involves the planned usage of process, information, technology and people in order to manage customer’s relationship with the company thereby supervising the marketing, sales, services and support division of a company. This process is carried out across the whole customer life cycle (Tu & Yang, 2013). Customer knowledge is a crucial aspect that plays a major role in ensuring a successful CRM process. It is a critical asset and thus, proper collection, sharing and managing and sharing of customer knowledge can help a company to gain competitive advantage over its peers. However, over the past few years it has been witnessed that customer knowledge received very little attention while CRM strategies were formulated. Customer knowledge/data i.e. the knowledge from customers can be obtained by interacting with them in order to understand their needs and requirements in order to provide them with superior quality services (Khodakarami & Chan, 2013). CRM system comprises of a group of information sources that enables a company to gather, store and analyze customer data in order to provide an exhaustive view of their customers. As can be seen from the theories provided above, CRM process is absolutely customer centric. They cater to assess customer behavior and buying style in order to help a company to design products and services according to the needs of the customers. Thus, it can be said that customer data is one of the major factors that facilitate a successful CRM process within an organization. Moreover, empirical researches explaining the relationship between marketing strategy tools such as the CRM system and performance has been studied through numerous theoretical perspectives such as market orientation, transaction cost economics and profit impact of marketing strategy. However, this study will focus on the importance of customer data in the CRM process thereby explaining the relationship between marketing strategy tools and company performance. 2. Method In order to do a comprehensive study of the research topic, information has to be collected from various sources. Information collection and extensive research plays an essential in maintain the appropriateness of a research study towards the issue it is addressing. The research paper will involve the collection of information from secondary sources. Secondary data will be collected from multiple data sources such as online library databases, books, journal articles and authentic websites. The journals have been collected from renowned library databases such as Ebscohost business source complete, science direct and emerald database. 3. Result Since its inception in the nineties, CRM has undergone numerous developments. The lack of a universal theoretical ground and fragmented research field resulted in a sphere that operated at diverse level of analysis which included empirical, conceptual and practical (Zablah, Bellenger & Johnston, 2005). In such a context, customer data bears a special significance. It has been used as input resources to company processes by many organization in order to accrue benefits (Garc??a-Murillo & Annabi, 2002). One such process is the customer relationship management. CRM processes involve customized marketing communication or segmentation and cross selling which caters to acquire the value potential of customer data (Winer, 2001). In such a way, firms enhance their ability to sell more products and manage their customer relationship effectively. Over the last few years, it has been noticed that firms have been diverting their attention from selling products to serving customers and in that process traditional uses of customer data more often than not proved to be unsatisfactory. The methods of marking management that are used recently are more products centric hence failing to identify the strategies that facilitates processes supporting customer value creation. Supporting customer value creation is the basic determinant of service as far as business logic is concerned (Saarijarvi, Karjaluoto & Kuusela, 2013). As far as the role of customer data in the CRM process is concerned, it can be explained from four dimensions that explains the role. The dimensions are customer loyalty, firm differentiation, firm values and firm image. 3.1. Customer Loyalty It is widely known that loyal customers desire for service that would be actually beneficial to them. Thus, it suggests that the importance of including customer data in the CRM process should be the first and foremost priority by means of which loyalty of existing customers can be increased. The customer’s perspective says that, being provided with useful information regarding products and services helped them to make an informed choice about the services that could or could not be availed. In such a way they were able to enjoy a better buying experience. Moreover, providing customers with beneficial and interesting information was considered going beyond conventional customer loyalty achievement strategy. The information sharing service seemed very appropriate and beneficial for an increasing group of customers who were interested in monitoring their buying pattern for a particular section of product (e.g. nutrition). In such a context, data sharing helped the customers to assess their current customer loyalty thereby enabling them to decide whether to switch from one retailer to another or not. 3.2. Firm differentiation The strategy of introducing a service that provides customers with useful information regarding the products or services that they are using helps the firm to distinguish itself from its competitors and improve the role that it plays in customer value creation. Alongside receiving useful information, customers also receive additional resources that establish the company as a trustworthy resource provider who supports the customer’s value creation. The emphasis now shifts from goods to a more comprehensive perspective on customer’s value creation that includes goods, services and the related information that helps customers to plan and assess their daily activities. This aspect of the role of customer data was accepted by both companies and their respective customers. Being a loyal customer, customer can get access to preferential services like this which they would not get from anywhere else. This is the firm’s perspective and the same is believed by the customers. The role of customer data enables a firm to distinguish themselves from other market participants thereby gaining competitive advantage. The steep competition that exists between companies requires firm to take new approaches in order to attract potential customers by providing them with unmatched products and services and thus establishing themselves as a more favorable choice. In doing so, firms can harness the potential customer data in order to make a transition from providing goods to services. 3.3. Firm values The customer data is also an important factor that helps a company to undertake effective corporate responsibility strategy and it also helps them to exceed customer expectations. Providing useful information regarding products and services helps a company to build a trust relationship with their customers. Customer data play a crucial role in maintaining a transparent exchange process. It offered practical means to design appropriate products according to demographical features. Customer feedbacks were also analyzed in order to determine their satisfaction level which provided companies with a further insight about the areas of improvement in their products and services. This is how company uses customer data in the CRM process in order to maintain uphold corporate responsibility. Alongside maintain corporate responsibility, customer data is also associated with another core value of the firm and that is to exceed customer expectation in order to achieve a higher customer satisfaction level. 3.4. Firm Image Sharing and analyzing customer data was an innovative and relatively new service that enhanced a firm’s image to the customers. This is primarily because such information exchange and analysis offered benefits to customers which led to view the firm as being a pioneer organization in that particular line of business. Traditionally customer data was only used for the benefit of the firm. However, the system has changed drastically over the past few years. In recent times the data is sent back to the customers thereby helping them to analyze their own buying and consumption pattern. Having received such services in return for their loyalty influenced the customer’s perception about the firm’s image. 4. Discussion Having done a thorough research about the customer relationship management process and the importance of the customer data in this process, it has been witnessed that customer data is a crucial aspect ensuring that the CRM process is being carried out successfully. In the traditionally CRM approaches customer data was only used by firms in order to accrue benefits for themselves. However, over the past few years a drastic change has been witnessed, where customer data were shared along with the customer themselves in order to help them assess their buying behavior and consumption pattern. This strategy was followed by companies in order to achieve customer loyalty as well as a high customer satisfaction index. Customer data exchange process helped firms to determine the needs and specifications of customers thereby enabling them to design products and services that catered to satisfy those needs. Incorporation of customer data into the firm’s CRM process helped the company to enhance its image in front of the customers as well helped them to distinguish themselves from their competitors and henceforth achieving competitive advantage in the market. It also helped the firm to fulfill their core value of exceeding customer expectations. 5. Conclusion and Recommendation The CRM process that is conducted in recent times is innately firm-centric. The author claimed that the extent to which customer data is used in the CRM process is narrow and limited. However, this study provided moderately conclusive evidence that customer data used for the purpose of CRM process is customer centric as well. They are directed towards achieving high customer satisfaction level thereby achieving a greater customer loyalty and retention rate. Firms utilize customer data in their CRM process in order to establish themselves as a pioneer organization in that particular business sector thereby enhancing their image in front of the customers. However, this study leaves a scope of further research whereby studies can be conducted explaining the extent to which the implementation of customer data in the CRM process has been successful. References Garc??a-Murillo, M. & Annabi, H. (2002). Customer knowledge management. Journal of the Operational Research Society, 53, 875-884. Hoots, M. (2004). Customer relationship management for facility managers. 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An enhanced customer relationship management classification framework with partial focus feature reduction. Expert Systems with Applications, 40, 2137-2146. Winer, R. S. (2001). A framework for customer relationship management. California Management Review, 43, 89-105. Zablah, A. R., Bellenger, D. N. & Johnston, W. J. (2005). An evaluation of divergent perspectives on customer relationship management: towards a common understanding of an emerging phenomenon. Industrial Marketing Management, 33, 475-489. Read More