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Customer Relationship Management

4888 words (20 pages) Essay in Marketing

21/04/17 Marketing Reference this

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This study aims to examine the causal relationships among customer relationship management and customer retention. This paper will follow the main aspects, characteristics, dimensions and processes of Customer Relationship Management, and will analyze the challenges that the local companies will have to face. There is one independent variable (customer relationship management) and one dependent variable (customer retention) with sample size 100 as convenience data collection. In this study will test the targeted customer satisfaction to gain customer loyalty as well as. This study will be examining the effect of customer relationship perceptions and relationship marketing on customer’s relations. Customer relationship perceptions are considered evaluations of relationship strength and suppliers offerings. Research marketing instruments are aimed at to evaluate the relationship and help to differentiate between loyalty or reward programs promotions. The subjects for the proposed study were bank customers. A self administered questionnaire had been used for the proposed study.

Introduction:

This part will be helping reader to introducing the bigger picture of related topic which will be discussed in this study. The topic is related to customer relationship management and customer retention to study what would be the impact of good relationship between marketers and the final consumer and along with this drive to follow the topic. The capability of customer relationship management on customer retention in other words how it will has an impact to retain customer and to make him or her loyal this is the main purpose to study this topic and this will be the main focus of this research. We are conducting this research to study that either the customers would be influenced by good relationship management and how much the relationship management would be help them out to retain customers loyalty as well. Basically the main concept of customer relationship is relationship between the customer and the organization in other words how a company can achieve large number of potential customer who is willing to buy a particular brand of same company and then how they are going to retain in the long run. Nowadays companies are willing to deliver right brand or service to the right customer with right features and benefits or attributes when the wanted. To become a good organization it should to manage good relationships with its customer in order to make more customers or to attract them and also keep in view with company’s changing environment. Consumers willing to buy benefits and also interested to get good services as well as if we are talking about here the tele communication industry so we have lots of examples of different companies’ services which they are providing innovatively to satisfied their customers’ needs, wants and requirements also. All the companied are coming up with different and innovative ideas and using as a method to compete with their competitors successfully and because of that consumers are getting more aware with different and lots of services which are also increasing customers’ needs.

This research is actually focusing on two areas, first is to test is there significant impact of customer relationship perception on customer retention or not? And second is, there is significant impact of relationship marketing instruments on customer retention or not? Because every company has aim to retain their current customer as long as much and also try to steal away from their rivals, so this study is testing the impact of customer relationship perception and relationship marketing instruments on customer retention. I took tele-communication industry to test customer retention that how much good relationships and marketing instruments have an impact to retain customers on the long term basis. The current expansion in customer relationship marketing has more and more paying attention towards the valuable impacts of consumer retention. The idea of structuring customer relationships and providing good quality service to maintain or persuade reliability is possibly of specific significance in the service segment where it is frequently discussed that consumer appeal costs are considerably more than retention costs. The main purpose of investment in the expansion of service quality and consumer relationships is the faith that these investments will improve loyalty, retention and productivity. This study will discover the relationship between service quality consumer relationships and consumer loyalty and retention. Customer relationship is playing an important part within the organization as they are the keys in order to increase the sales, market shares and net profit, marketers are more focused nowadays to attracting and making more customers and plus to retain them forever, customer relationship process is very significant strategy to retaining, pertaining and acquiring quality customers or potential customers to make superior quality for the organization and for the customers. Marketing productivity can be achieved by create marketing efficiency and create marketing effectiveness. Customer relationship management is playing a key role to improve organization’s well known name also. The main idea of this study is to test the impact of marketing instruments and customer relationship perception and to test how these two techniques are effective to influence customers, either it works truly or maybe it is not.

Through data collection and market research we will be able to finalize this argue. Customer relationship management must be understand the difference between the high value customer and low value customer on the basis of lifestyle, perception, preferences, age, culture background and education also. Being a marketer we should focused on loyal customers because they are more profitable key customers company should has to invest more on loyal customers to give them high quality service, benefits and incentives also to retain them and this would be good way to be a positive impact on customer’s perception. Companies nowadays are diligently working on this sector to improve company’s services in order to attract more customers. Customer relationship management is simply a philosophy that keeps the customers in the heart of the business organization, as we all know that consumer is a king of marketing companies should have serve them as best as they can. A successful customer relationship management process can be done by understanding customers needs and requirements and to integrate them according to the organization’s internal strategy changing’s time to time and also according to the external changing’s analysis. Therefore the main aim is should be to start customer relationship management initiatives is to look what company is doing right now and what it should be doing in future to improve its interface with its customers.

Purpose of This Study

This study is focused on the impact of customer relationship management on customer retention.

In this research there will be multi nominal logestictechnique using to identify the impact of customer relationship management on customer retention, there is one independent variable (customer relationship management) and one dependent variable (customer retention) with sample size 100 as convenience data collection. In this study will test the targeted customer satisfaction to gain customer loyalty as well as. The organizations look for paths to deal with consumer relationships in the long term basis and to find the service providing ways customer to manage targeted customers relationship which becomes a key main concern. This study will be examining the effect of customer relationship perceptions and relationship marketing on customer’s relations. Customer relationship perceptions are considered evaluations of relationship strength and suppliers offerings. Research marketing instruments are aimed at to evaluate the relationship and help to differentiate between loyalty or reward programs promotions.

Literature Review

According to author nowadays in marketing the fashion to constructing or maintaining of relationships between the customers and the marketers is now become a continues process to build and grow to be strong and marketers have become gradually more involved to retaining consumers for the long time in future to make them loyal. Not amazingly, a lot of realistic and theoretical models of consumer retention have discover fulfillment of their needs as a way to addressed in consumers judgment to keep or leave or discontinue to the specific manufactured goods or service relationship or association. Certainly, fulfillment of needs can be measure have accounted for up to 40% of the difference in models of Consumer retention. (Lemon, 2002)

Managers of many multinational companies are strongly believed that there is a wide and rising subject of study explores on consumer fulfillment that center of principally on person level of fulfillments of desires with specific merchandise or services. Moderately slightly concentration

Is paying to the determinants of marketplace level of satisfaction, which is distinct here as the collective fulfillment of those who buy and use a specific good presenting. The researcher objective is to build and experiment an approach to reproduction satisfaction that connects to the market place prospect, supposed performance or worth and consumer satisfaction over time

(Johnson, Anderson, Fornell)

According to a researcher of this study that the main purpose of this study is that the consumer

Gaining procedure has an effect on the consumer retention procedure. This study shows a method for discovering consumer retention which determinant for the effect the consumer gaining procedure has on the retention procedure infect although information on non obtain prediction are not accessible. In other words if we are talking about statically so this means that the planned technique at the same time addresses information will be editing. This is very significant to code that the center of this technique is not to address how companies should

Obtain consumers. In its place, the purpose of this technique is to accurate for the partiality in the consumer retention study that answer from imagining that consumer attainment and retention

Are independent procedure. evaluating the technique with a normal technique used in retention study, this study illustrates that the normal approach disregard the connection among attainment and retention, guides to wrong conclusion concerning the period of the consumer company connection and the productivity of a consumer and mystification concerning the effect of marketing strategy on the period of the consumer company association (Thomas, 2001)

Now a days the fashion in marketing in the direction to making associations with consumers keep on to raise and managers have been now more and more paying attention in retaining consumers during the time. Not amazingly, a lot of realistic and academic representation of consumer retention has discovered fulfillment since an input determinant in consumer’s choices to remain or fall that is discontinued. In other words a known manufactured goods or service relationship. Certainly, fulfillment of desires procedures have determinant at least 40% of the variation in representation of consumer retention. In this study, we search for to know which further aspects might manipulate the consumers choices to remain or go down a manufactured goods or service, over and above satisfaction level (Lemon, White, Winer)

Customer relationship management

Customer relationship management (CRM) is a grouping of individuals, processes, and technology intended to recognize and deal with a company’s affairs with consumers by emphasizing on relationship development and customer retention. Its intention is to increase profit by achieving a most favorable equilibrium among corporate investments and customer satisfaction. “CRM applications help organizations analyze customer loyalty and profitability on measures such as repeat purchases, dollars spent, and longevity” (Chen & Popovich, 2003).

CRM also analyzes its roots to relationship marketing, which is objected at improving profitability in the long run by deemphasizing captivating fresh consumers and emphasizing customer retention through efficient management of customer relationships (Christopher, Payne, & Ballantyne, 1991). Relationship marketing refers “to all marketing activities aimed at forming, increasing, and maintaining winning relational contacts”. The management of customer relationships is precious for the company (Morgan &Hunt, 1994; Webster, 1992).

Customer Relationship Management has been around for the last 30 years, but it became very significant when companies altered their approach towards marketing function. These days, the cross-functional approach to marketing needs an organizational climate and culture that appreciates teamwork and support among departments. Individuals within the business must value their part in helping clients, internal or external one. CRM builds on the values of relationship marketing and recognizes that clients are a business asset and not just a commercial audience, implies the structuring of the company from functions to Processes, information are used proactively rather than reactively and form the one-to-one marketing approaches (Payne, 2006)

chiefly CRM allows the company to realize who their purchaser is, isolate the best client (those with whom you wish to have old associations), form relationships stretching over time and linking multiple interactions, handle the bond to shared benefit, search for to obtaining more of those “best” clients. Inputs like marketing tactics, products and customer base, and regulation, competitors and staff skills are synthesized in a CRM programmer which forms outputs as customer service, customer retention, more share of wallet, customer referral, more expected revenues streams, better profitability, lesser costs and better fulfillment (Russell-Jones, 2003).

CRM has its roots in Relationship Marketing, that is “an over effort of exchange associates to make a long-term relationship, characterized by purposeful support and shared reliance on the growth of social as well as structural association” (Pulde, 1999). Light (2003) acknowledged that CRM originated from business processes such as relationship marketing and the increased highlighting on better customer retention through the efficient management of customer relationships.

A CRM system can be observed as an enterprise information system that includes all business processes in marketing, sales, , and after-sale service that entails the client. Levine (2000) points out that CRM systems use customer-related information or knowledge to convey related products or services to the company’s clients. One of the most important definitions of a CRM system has been put forward by Davenport et al. (2001), stating that CRM systems are “all the tools, technologies and actions to direct, progress or assist sales, support and linked relations with clients, prospects, and business associates all through the enterprise”. In the same way, Parvatiyar & Sheth (2002) speak of CRM systems as “a co partnering with choosy clients to create better worth for the company and the clients. It involves the integration of marketing, sales, customer service, and the supply-chain functions of the organization to attain better efficiencies and competence in delivering customer value.”

CRM is about captivating and keeping clients and increasing your business. To do so, you must recognize and achieve insight into your most valuable clients so you can aim and personalize relations with them. You have to alter products and services based on their requirements and

Preferences and construct long-term, beneficial relations with them. To encourage beneficial growth, your corporation must become a customer focused enterprise. You do so by designing

and constantly improving business processes and communication channels to build and convey greater customer value and outstanding customer experiences across all touch points. You know that loyal customers are your most vital assets and that your business practices must hold and

maintain such relationships. Your business must understand individual customer requirements, react rapidly to customer desires and altering wants, and offer high-quality service. You must also lessen the cost of interacting with clients and allow your workers to focus on doing what they do most excellent.

Customer relationship management (CRM) is a mixture of individuals, processes, and technology designed to recognize and control a company’s relations with clients by focusing on

relationship development and customer retention (Chen & Popovich, 2003). Its intention is to

increase profit by obtaining an optimum equilibrium among corporate investments and client

contentment. “CRM applications assist organizations assess customer loyalty and productivity on

Measures such as repeat purchases, dollars spent, and longevity” (Chen & Popovich, 2003).

CRM traces its roots to relationship marketing, which is targeted at improving long run profitability by deemphasizing captivating fresh clients and emphasizing customer retention through efficient management of customer relationships (Christopher, Payne, & Ballantyne, 1991). Relationship marketing refers “to all marketing activities aimed at establishing, budding, and maintaining booming relational exchanges” (Morgan & Hunt, 1994). The management of customer relationships is precious for the corporation (Morgan &Hunt, 1994; Webster, 1992). Dwyer, Schurr, and Oh (1987) points out those customer relationships grow over different phases that are associated to the customer lifecycle. Greve and Albers (2006) identify three customer lifecycle phases: “Initiation”, “Maintenance” and “Retention”. These phases are characterized by differences in attitudes and orientations and thus need different management relationship approaches at each phase (Srivastava, Shervani, & Fahey, 1998).

Many organizations chartered with implementing CRM are confused as to what CRM in reality means (Payne, 2006). Persons, teams and managers might be struggling with where to start on in the CRM process. In a lot of cases they might have acknowledged a directive to “implement a CRM solution” with slight direction on what this in reality means. Payne (2006) points out that some of this uncertainty may be due to the fact that there are many vendors who recommend CRM-based solutions for information management therefore skewing the definition of customer relationship management away from fostering customer relationships and on the way to technology.

Customer retention is very vital for businesses to continue to be competitive. It has lately become more significant compared to customer acquisition. In this Study the customer retention was calculated by four proportions i.e. overall firm contentment, repeat purchase intentions, positive words of mouth and loyalty to the firm. Earlier researches showed that when clients were pleased with a firm quality of services, (Maxham III, 2000) clients delivered positive words of mouth and suggested the firm services to other potential and prospective clients ( Soderland, 1998; Susskind, 2000 ). They also come back more regular to the firm to purchase in bigger amounts or in another words the tendency to repeat purchase was very high ( Palmer et al, 2000 ). In addition pleased clients were loyal to the firm even though they were given better perks, discount and other promotional incentives by competitors. Pleased clients are loyal and tough to defect to competitors ( Foster & Cardogan, 2002 ; Zins, 2001)

Relationship management is superfluous if customers defect since there is further no relationship to deal with. To retain clients, merchants must carry on satisfying them. When consumers are pleased, they continue to stay loyal longer, purchase more, chat thoughtfully about the company and its goods, and price fewer to service since the transactions become more regular. In order to Keep customers content is price effective, as it outlays extra money to tempt a customer away from the rivalry than to maintain the present one (Kotler, 2000)

Acquiring new customers can cost five times more than the costs engaged in pleasing and retaining existing customers (Reichheld, 1996). Further, there seems to be a direct association among retention and company profitability and customer worth, which is explained as an exclusive blend of benefits received by targeted buyers. These benefits include quality, cost, handiness, in time delivery, and both before-sale and after-sale service (Kerin, Hartley, & Rudelius, 2007).

Also, a content purchaser tends to tell at least three other individuals regarding their shopping experience while a discontented purchaser tends to complain to at least nine other individuals. Content buyers also tend to become loyal customers (Sheth, Mitral, & Newman, 1999).

Relationship marketing is suggested as an approach to beat service intangibility (Berry 1983) and may be suitable for “credibility” services that are the, services which are hard for consumers to counseling services are in this group. The customer may have an association with a firm itself and/or a particular contact individual, but personal relationships are assumed to result in larger commitment (Liechty and Churchill 1979).

Customer Relationship Management (Payne, 2006) is based on the idea that in order for a company to make the most of long term profit, client requirements have to be understood and Leveraged (String fellow, Nie & Bowen, 2004). Payne and Frow (2005) report that the definition of CRM differs broadly. One end of the range deals with very planned and targeted technology solutions while the other end considers customer relationship management a holistic and strategic approach in order to increase shareholder value (Payne & Frow, 2005).

Firms use relationship marketing instruments (RMIs), such as loyalty programs and direct mailings (Hart et al. 1999; Roberts and Berger 1999). Firms also aim to build close relationships with customers to enhance customers’ relationship perceptions (CRPs). Although the impact of these tactics on customer retention has been reported (e.g., Bolton 1998; Bolton, Kannan, and Bramlett 2000), there is skepticism about whether such tactics can succeed in developing customer share in customer markets (Dowling 2002; Dowling and Uncles 1997).

Relationship marketing is in reality Database marketing with a pleasant, more intellectual face. Many database marketing types just utilize the database as a list and mail things to it; relationship marketing implies a deeper knowledge of the client and some sort of give and take. In relationship marketing, there is acknowledgement of a client’s life cycle, and marketing is viewed as a practice rather than a sequence of apparently unrelated proceedings.

The process is typically explained as a series of customer stages, and there are many different names specified to these stages, depending on the marketer’s viewpoint and the kind of business. For instance, working from the start of the association to the end of the association:

Interaction > Communication > Valuation > Termination

Awareness > Comparison > Transaction > Reinforcement > Advocacy

Suspect > Prospect > Customer > Partner > Advocate > Former Customer

in this process, you attempt to modify programs for individual customer groups and the stage of the process they are going all the way through; as opposite to some forms of database marketing where everyone would get nearly the same promotions, with possibly a vary in offer. The phase in consumer lifecycle determines the approach used in marketing. An uncomplicated example of this would be delivering fresh clients a “greeting Kit.” And in relationship marketing, you pay attention to the data and attempt to listen to what it’s telling you. OK, if you pursue the techniques in the book, you are doing relationship marketing, no hesitation about it.

Relationship marketing with a currency, a store of value that attempts to maintain the client “locked up” with a business. In loyalty programs, customer profiling is used broadly to encourage to clients, apart from points are used in its place of discounts as the incentive for activity. Loyalty programs are costly and hard to do right, but can be successful, as long as these things are true:

The rewards are desirable to the particular customer base. Generic loyalty programs with blah awards nearly all the time do not succeed. If you are doing a sports loyalty program and you suggest tickets to big games in place of over-priced cameras for rewards, you will do okay with the clients.

The program is kept new and thrilling, with a continuous diversity of stuff to entail the client with, as well as refreshing of the rewards directory, point auctions, etc.The marketing does not focus on thoughts forming subsidy costs between finest clients. In the ideal world, you need to utilize points to create activity from little value clients, and you do not need your high value clients spending down their points to zero every time. Some marketers persuade the opposite and bankrupt their programs.

Loyalty programs have extensively been a significant component of customer relationship management for firms in travel related industries such as airlines, hotels, and rental cars. Information technology that enables firms to put into practice individual level marketing has facilitated the extend of loyalty programs into such diverse industries as gaming, financial services, and retailing (Deighton 2000). Some academic researchers have started to analyze loyalty programs. Behavior leaning researchers, such as Soman (1998) and Kivetz and Simonson (2002), have study the consequences of postponed incentives on consumer decisions.

A unique feature of loyalty programs is that their attractiveness might alter with dynamism with respect to a customer’s decisions. As purchases are being made, all together the customer’s investment in the program and the customer’s probability of earning an incentive also enhances. on the other hand, when a customer decides not to buy in a specified time, the probability of earning an incentive minimizes, as the customer moves no closer to the incentive threshold, and the time left to earn rewards shrinks. The evaluation of a program’s attractiveness becomes more complex because customers usually have inadequate awareness of their future necessities and of the marketing policies of the firm. These dynamic factors are a challenge in the modeling of customer reaction to loyalty programs.

Customer satisfaction has for several years been a key determinant in analyzing why clients

Disappear or go on with with an organization. Each organization wants to know how to retain their clients, even if they show to be satisfied. Richards refers that a few unsatisfied clients may wish not to defect, because they do not look forward to be given improved service somewhere else and that some satisfied clients may look for other options if they think they can get improved services in another place. Customer satisfaction is viewed a significant indicator of customer retention but customer satisfaction is not all the time a guarantee of customer retention. Retaining customers is also dependent on various other variables such as choices, conveniences, prices, and incomes (Richards, 1996; Jones and Sasser, 1995).

Understanding the association among organizational strategy and customer loyalty is the Next region of examination. Oliver (1999) describes that customer loyalty will keep up a customer coming back for upcoming buying “in spite of situational influences and marketing Efforts having the probability to cause switching attitude”. Several researchers consider that customer satisfaction is a principal driver of customer loyalty (Kotler & Keller, 2006), on the other hand Oliver (1999) and McAlexander, Kim and Roberts (2003) caution that contentment is only one driver of customer loyalty and that other factors must be well thought-out, together with potential obstacles to creating and maintaining loyalty (Gurau, Ranchhod & Hackney, 2003).

Customer satisfaction

For customer satisfaction to be far above the ground, promises and hopes must be met. This involves the firm’s capability to recognize customer prospect. The ability to deal with problems as they arise is a key ingredient to success. Also, the organization needs to consider complaints as a gift! Why?

Customers who have an issue dealt with to their satisfaction have a 95% likelihood of repurchasing and telling 5 people about their experience; if they don’t complain (as 96% of people do) they will tell at least 10 other people about their problem.

The occurrence of problems can cause a 15-to-30-point drop in high-satisfaction responses and in loyalty indicators. This puts revenue at risk to the average tune of 11%.

So, some techniques to maintain and improve satisfaction must be considered. An effective complaint handling system is an excellent defensive tool. Ongoing surveys to measure customer satisfaction and loyalty, and capture the voice of the customer are also essential.

The biggest problem, however, is that companies do not manage the customer contact experience with sufficient detail. Therefore I often recommend my Customer Experience Workshop as an effective analytical and improvement tool. It is practical and leads to speedy outcome.

Customer retention

Haven’t we all heard the now-clich├ęd quote – “Customer is the king?” Not only is this true for all service oriented businesses, but also increasingly relevant for all types of businesses like manufacturing, product based businesses etc. Never has been the customer more relevant to an organization’s success than today’s essentially buyer focused markets.

It, therefore, makes immense business sense to keep your customers from choosing other providers (your competitors) over you. Not only does this ensure you the advantages of repeat business, but also creates a comfort zone for the customer, where they can predict the quality of products and / or services they’ll receive from you. It thus pays to manage and effectively retain satisfied customers. Customer retention is a series of activities and/or strategies aimed at keeping customers from defecting to your competitors.

Customer Retention marketing is the kind of approach that is tactically-driven and is based on customer conduct or attitude. It is the central activity going on at the back the scenes in relationship marketing, loyalty marketing, database marketing, permission marketing, and so forth. Here is the fundamental viewpoint of a retention-oriented marketer:

1. Earlier and Current customer conduct is the best analyst of Future customer conduct. imagine about it. Generally, it is more frequently right than not right, and when it comes to action oriented behavior like going for purchases and visiting web sites, the thinking truly shines all the way through.

We are discussing about real conduct here, not implied conduct. For instance a 35 year old lady is not a conduct; it is a demographic trait. Acquire these two groups of prospective buyers who visit the Net:

Individuals who are a perfect demographic match for your site, but have not at all purchased online anyplace.

Folks who are outside the center demographics for your site, but have bought online often from various different web sites.

Suppose if one sends a 20% o

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