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Customer Relationship Marketing in Action within the Retail sector - Coursework Example

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Customer Relationship Marketing in Action within the Retail sector

Quality of customer service is central to service marketing, which is possible through CRM. Quality of customer service can be enhanced when trust, commitment, communication, empathy and conflict handling are given importance in relationship building. These become important because relationship quality has significant influence on customer loyalty (Prasad & Aryasri, 2008). CRM is also about acquiring the right customer and not all customers. This is justified because 80 percent of sales are derived from 30 percent of the customers (Hawkes, 2003). Apart from identifying high value customers, CRM is also about managing the entire lifestyle of customers (Lambe, 2001). Retailers have to look beyond the transactions of the customer. It is equally important to derive information on how the customer became the customer as well as the interactions surrounding customer’s departure. These would help the retailers to better retain customers. Knowing of their life style implies that CRM should be able to anticipate and predict the future needs of the customers Suitability and effectiveness of CRM strategy of Tesco and Sainsbury Tesco’s Club card scheme generated information on pricing, customer services, merchandizing, promotions, media effectiveness, customer acquisitions and communications (Hassan & Parves, 2013). ...
Their tesco.com is also aimed at keeping in touch with their customers. The Nectar card scheme of Sainsbury is aimed at attracting more customers by having increased number of partners (Hassan & Parves, 2013). Sainsbury customers redeem their loyalty points and the retailer experienced the highest number of Nectar card users during Christmas 2011. Such redemption enabled the retailer to understand the potential customer base. Sainsbury also has a strong presence on social networking sites such as Facebook and Twitter. Sainsbury gathers information on customer experience which is lacking at Tesco. Both Tesco and Sainsbury have loyalty cards aimed at retaining customers. Boedeker (1997) however, contends that loyalty cards are based on the assumption that special offers and bonus points would be the only reason that customers would not deflect. Economic aspects are only one of the benefits that consumers seek. A study by Turner and Wilson (2006) found that customers at Tesco may be shopping more because of Tesco Club cards but they do not feel more valued because of these cards. This undermines the very purpose of CRM as no relationship has been built. The success of loyalty cards is not limited to enhanced sales or profits. Their card only promotes incentivized loyalty and no emotional loyalty has taken place as customers are not influenced by brands. Hassan and Parves also found that loyalty card holders at both Tesco and Sainsbury do not limit their shopping only within these two retailers. Possibly this could be because of weak value proposition and flawed design of the loyalty cards (Bayraktar, Yilmaz & Yamak, 2010). Also, the companies may not be able to analyze all of the data generated through ...Show more

Summary

Rationale for pursuing CRM in retail Customer relationship management (CRM) has been recognized as one of the most powerful marketing tools as retailers have experienced phenomenal increase in sales and profit maximization (Hassan & Parves, 2013). CRM has become a strategic imperative as it integrates internal functions of an organization…
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