What is Customer Relationship Management?


The customer relationship management (CRM) initiatives focus on building and maintaining profitable and long lasting relations with the customers and creating superior customer value and customer satisfaction.

CRM focuses on co-operative and collaborative relationship between the firm and its customer. The focus is creating, growing and retaining customers.

Learn about:-


1. Meaning of Customer Relationship Management 2. Definitions of Customer Relationship Management 3. Objectives and Context 4. Concepts 5. Role 6. Purposes.

7. Implementation of CRM Concept 8. Nature 9. Importance 10. Process 11. Types 12. Factors for the Growth of CRM 13. Aspects

14. CRM and Marketing 15. CRM and HR 16. CRM as a Business Strategy. 17. Customer Satisfaction through CRM 18. Advantages 19. Disadvantages.

What is Customer Relationship Management: Meaning, Definitions, Role, Nature, Importance, Types, Advantages and Other Details

What is Customer Relationship Management – Meaning

According to one industry view, CRM consists of:


(i) Allowing the formation of individualised relationships with customers, with the aim of improving customer satisfaction and maximizing profits; identifying the most profitable customers and providing them the highest level of service.

(ii) Providing employees with the information and processes necessary to know their customers, understand their needs, and effectively build relationships between the company, its customer base, and distribution partners.

(iii) Helping an enterprise to enable its marketing departments to identify and target their best customers, manage marketing campaigns with clear goals and objectives, and generate quality leads for the sales team.

(iv) Assisting the organisation to improve telesales, account, and sales management by optimising information shared by multiple employees, and streamlining existing processes (for example, taking orders using mobile devices).


CRM is a term that can refer to a range of things from the ‘management of the relationship with customers’ all the way to ‘the software and hardware that allow one to manage [his or her] relationship with a customer.’ It has become a catchall term. CRM generally is an enterprise-focused endeavour encompassing all departments in a business.

For example, in addition to customer service, CRM would also include operations — manufacturing, assembly, product testing — as well as other areas like purchasing, billing, HR, engineering, marketing and sales. When the full company spectrum of departments is focused on building, maintaining, and constantly improving not only the product but also the relationship with the customer, this is what is meant by CRM.

This requires a deep look at the goals and objects of the entire business and how those goals at the executive level are carried out in the sublevels of management and employees.

Practitioners and consultants use Customer Relationship Management (CRM) to refer to technology enabled processes for customer interactions and relationship building while marketing academicians prefer the term “relationship marketing”.


So there are three words that mean many things too many people when linked together, Customer Relationship Management has become something of an enigma. There is little doubt, it would seem, about what a customer is, though the term CRM is applied to “things done” to non-customers as well. The key that makes CRM different from other forms of strategy or marketing is that it is about relationship management.

That pair of words has two implications that may or may not be true that the firm can identify the type or types of relationships it wishes to have with customers and that the customer will allow the firm to manage those relationships. There are a number of dreams to which CRM software can contribute dreams such as seamless customer interaction across multiple channels, one-to-one marketing, 360-degree knowledge of the customer, and so forth.

The reality is that CRM often devolves into an endless Stream of campaigns that may take advantage of better customer data, but do not really build or contribute to a relationship. The most important step is to define what is meant, then, by relationship. Consumer package goods manufacturers, like Kraft or M&Ms, are not going to have the same types of relationships with their buyers as are business-to-business companies such as BASF or SAP.

Moreover, Karr- Hunter Pontiac/GMC has different and more direct relationships with its customers than does the Pontiac division of GM. How each of those organisations defines relationship categories is going to be different.


But what many pundits and experts fail to recognise is that simply dividing customers into “bins” (or whatever terminology they use) based on recency and frequency of purchase doesn’t define the relationship. Having sex every night with the same person does not guarantee marriage-knowing that information might make for a useful prediction as to what will happen tomorrow night, but it won’t predict what will happen next year, nor will it predict any other aspect of the relationship.

Why is it so important to define the type of relationship? Because what is left out of CRM, especially when defined operationally as campaign management, is the future. We are forecasting the future entirely based on yesterday’s information. We are not building into our forecast anything about the buyer’s commitment (or lack of) to us, nor anything about how much the buyer likes doing business with us or any other relational input. As such, we can’t forecast our buyer’s behaviour any further than tomorrow night. That’s why we lose important opportunities for product development, channel development, and more.

The dark side of how CRM is made operational in many organisations is how we train customers to play us. Years ago, the grocers complained about “deal-prone” consumers. The prevalence of couponing meant that grocers couldn’t sell anything at regular price — coupons had trained buyers to look for deals and eroded brand and store loyalty. Now we are training consumers to use our “loyalty” programs in much the same way.

What we are finding is that light users become stuck in loyalty programs, but they aren’t the ones we really want anyway. Few vendors get all of the business of the heaviest users because we don’t have a relationship with them; we sell loyalty as just another feature of the product/service mix. With too much emphasis on customer management, we lose sight of what the CRM revolution is really about.

What is Customer Relationship Management – Definitions

The customer relationship management (CRM) initiatives focus on building and maintaining profitable and long lasting relations with the customers and creating superior customer value and customer satisfaction. CRM focuses on co-operative and collaborative relationship between the firm and its customer. The focus is creating, growing and retaining customers.

Some of the aspects of customer relationship marketing are mutual benefits, trust, and transparency, inter-dependency and shared values. Normally, a customer buys a product that offers the highest perceived value, i.e., the difference between all the benefits and the cost of the product compared to that of competition. Customer satisfaction denotes the extend to which a product’s performance matches with the expectation of the buyer.

If the product matches his expectations, the customer is satisfied. If the performance exceeds expectations, then the customer is delighted. Sometimes, companies focus too much on mechanics such as IT and database rather than the ultimate user, i.e., increasing the value of customer relations. If the customer is taken care, sales volume, market share and profits will grow.

According to Kotler “CRM is about dealing with each customer individually by means of adding value to each customer’s daily life.”

“CRM is perhaps best described as an overarching business strategy built on a three-legged stool of technology, new business processes and cultural transformation. Neglect any one of the three legs, and projects teeters.”

Payne and Frow (2005) published a more sophisticated definition of CRM as a strategic approach that is concerned with creating improved shareholder value through the development of appropriate relationship with the key customers and customer segments. CRM unites the potential of relationship marketing strategies and is to create profitable, long-term relationships with customer and other key stakeholders.

It provides enhanced opportunities to use data and information to both to understand and co-create value with them. This requires a cross-functional integration of process, people, operations and marketing capabilities that is enabled through information technology.

Gartner Group, possibly the largest group of consultants involved into extensive research in the area of Customer Relationship Marketing (CRM), define CRM as “CRM …an enterprise wide business strategy designed to optimize profitability, revenue and customer satisfaction by organizing the enterprise around customer segments, fostering customer- satisfying behaviours and linking processes from customers through suppliers.”

According to Paul Greenberg, “CRM is a philosophy and a business strategy supported by a system and a technology designed to improve human interactions in a business environment”.

According to James J Lynch, “CRM as selling by using psychological rather than economic inducements to attract and retain customers. It seeks to personalize and appeals to the hearts, minds and purses of the mass consumers”.

According to Ian H Gordon, “CRM is an ongoing process of identifying and creating new values with individual customers and then sharing the benefits from this, over a lifetime of association. It involves the understanding focusing and management of ongoing collaboration between supplier and selected customers for mutual glue creation and sharing through inter­dependence and organizational alignment”.

Customer Relationship Management (CRM) is an information industry term for methodologies, software and usually Internet capabilities that help an enterprise manage customer relationships in an organized way.

According to one industry view, CRM consists of:

i) Helping an enterprise to enable its marketing departments to identify and target their best customers, manage marketing campaigns and generate quality leads for the sales team.

ii) Assisting the organization to improve telesales, account, and sales management by optimizing information shared by multiple employees, and streamlining existing processes (for example, taking orders using mobile devices).

iii) Allowing the formation of individualized relationships with customers, with the aim of improving customer satisfaction and maximizing profits; identifying the most profitable customers and providing them the highest level of service.

iv) Providing employees with the information and processes necessary to know their customers understand and identify customer needs and effectively build relationships between the company, its customer base, and distribution partners.

What is Customer Relationship Management – Objectives and Context


CRM, the technology, along with human resources of the company, enables the company to analyze the behaviour of customers and their value. The main areas of focus are as the name suggests – customer, relationship, and the management of relationship and the main objectives to implement CRM in the business strategy are –

i) To simplify marketing and sales process.

ii) To make call centre’s more efficient.

iii) To provide better customer service.

iv) To discover new customers and increase customer revenue.

v) To cross sell products more effectively.


The context of CRM can be summarized as follows:

1. Increased sales revenue – Increased sales result from spending more time with customers, which results from spending less time chasing needed information, (i.e., productivity improvement).

2. Increased win rates – Win rates improve since companies can withdraw from unlikely or bad deals earlier on in the sales process.

3. Increased margins – Increased margins resulting from knowing customer better, providing a value-sell, and discounting prices.

4. Improved customer satisfaction rating – This increase occurs since customers find the company to be more responsive and better in touch with their specific needs.

5. Decreased general sales and marketing administrative costs – This decrease occurs since the company has specified its target segment customers, it knows their need better, and thus it is not wasting money and time, for example, on mailing information to all customers in all existing and potential target segments.

What is Customer Relationship Management – 3 Important Concepts that Support the CRM Definition

There are several important concepts that support the CRM definition. These concepts must also be commonly defined and understood, because they are critical to any successful CRM effort.

1. Customer Life Cycle:

The customer life cycle is the total time that the customer is engaged with your company from the customer’s experience and viewpoint. The CRM concept includes the definition of the customer life cycle. The customer life cycle is your customer’s view of her relationship with your organisation over the long term.

The customer life cycle is not your company’s view. For example, “Product Support” is not part of the customer life cycle. It is certainly a function that your company provides to help customers use your products or service. But from the customer’s perspective, the perfect world is where everything always runs perfectly and she never needs any help from you while using your products.

There is a high-level life cycle that is consistent for all customers, no matter the product or service and no matter how much time the customer spends in each stage:

i. Consider – Customer becomes aware of a need and investigates alternative solutions.

ii. Purchase – Customer evaluates and chooses the best alternative and places an order.

iii. Set up – Customer installs the product and learns how to use it.

iv. Use – Customer operates and maintains the product and finally makes the decision to retire it or to upgrade, which starts the cycle all over again.

A typical customer life cycle covers these four major stages and includes a layer that you should make specific to your customers and your business. Of course, there is no single life cycle that is identical for all companies and all customers.

You’ll need to determine the life cycle of your own customers. The basic framework is relatively consistent, but service companies, for example, are not likely to find the concept of “install” relevant to their customers’ experience.

2. Business-to-Business CRM:

CRM in the business-to-business (B2B) marketplace is plagued by all the same misconceptions of CRM misconception. But B2B CRM suffers from one additional misconception.

B2B Customers are Companies:

Although it is true that company information is an absolutely critical element of any B2B CRM effort, B2B customers are still human beings. We build relationships with the people who work at customer companies. Company information is very important because it helps us describe and understand the people who make up that company, but the company is not a customer.

There are some differences between how consumer and B2B CRM programs are implemented (information requirements) and managed (multiple contacts at the same business), but the basic definition of what CRM is remains the same.

3. Customer Asset:

The concept of the customer being one of your company’s assets is just now beginning to be widely accepted. This concept is a very important one because investing in customer relationships often does not generate short-term gains, and we know that most companies today are focused on the short term.

CRM delivers value because it focuses on lengthening the duration of the relationship (loyalty). CRM makes good business sense because loyal customers buy more product, buy more often, cost less to sell to and support, and often pay a premium. Loyal customers continue to buy our products because they perceive value in the relationship itself.

Based on the experiences (with our people, products, processes, etc.) that they have had over time and on the relationship we have been able to establish because of our knowledge of their situation, preferences, and needs, these loyal customers continue to buy from us.

Of course, even the most loyal customers must be willing to pay enough that there is some profit on each sale. A company can’t stay in business just by having loyal customers if they lose money on every transaction. This was one of the lessons from the dotcom bust.

What is Customer Relationship Management – Roles in Banking, Telecom, Service and Retail Industry

The various roles of customer relationship management are:

1. Role of CRM in Banking Sector:

Customer relationship management (CRM) played a vital role to the banking industry at the start of the 21st century as it has been to any other industry. Many banks have used CRM tools to acquire more customers and to improve relationships with them.

i) Customer Service and Retention:

More competition and increased regulation made it more difficult for banks to stand out from the crowd. However, the development of CRM gave proactive banks access to technology that helped them improve customer retention by using customer feedback to offer conveniences like ATMs and online banking. Banks can also use CRM tools to improve customer loyalty by using data collected through customer sign-ups, transactions and feedback processes.

ii) Call Centers:

Bank call centers, use CRM solutions for various purposes. Cost-driven call centers use CRM to track call transactions and troubleshooting techniques to fine-tune the service resolution process. Metrics like average handle time and customer feedback ratings help bank call centers improve their customer support for retention. Profit-driven call centers also leverage CRM customer account records for add-on selling opportunities.

iii) Sales:

Sales have taken on more importance in banks with the evolution of CRM. Bundling of products and premier customer accounts are examples of techniques used by banks to build single-product customer accounts into full product suites including a range of financial services.

With CRM software, bankers can easily see what products you currently use, what products you are eligible for and what the benefits are should you add the additional product or service.

2. Role of CRM in Telecom Industry:

Information Technology and Telecommunication are constantly evolving industries in terms of technology, growth, global reach and understandably facing a high level of threat of obsolescence. In the earlier days of Telecom, both customer relationship and billing used to handle by one system only. As competition grew, there was a need to be competitive in responding to the customer queries, paving the way for exclusive Customer Relationship Management (CRM) systems.

CRM evolved from being used by just the Customer service team to solving customer inquiries, request and complaints across the organization. CRM is a huge transformation in service experience for any customer of any Communicating Sequential Processes (CSP). Today, we see significant changes in the expectations of the customer who is just not happy with the basic levels of service.

Customers now expect service that is proactive rather than reactive. Today, the customer expects a CSP to know if he/ she has a good network, accurate billing, a good voice and data experience, service experience and finally if he/ she is getting the appropriate return for investment. This becomes more challenging with the evolution of multiple technologies like 2G, 3G, LTE and LTE Advanced. A Customer Experience Management (CEM) solution is the one stop solution for CSPs today to be competitive in the market, to provide a great customer experience and to define the future roadmap for technology, process and people.

We see a CEM solution as one which not only helps in customer experience enhancement but has a huge potential in revenue enhancement as well. An integrated Customer experience solution will go a long way towards changing these customer perceptions and enhancing the Life Time Value of the customer. In today’s world of cutthroat competition, it is very essential to not only exist but also to excel in the market.

Today’s market is more & more complex so, to survive in the market the companies not only have to satisfy its customers but also delight them. This drastic change in ever changing market of telecom makes Information technology an essence part of today’s telecommunications industry domain. Now, the challenge for telecoms is to balance the ever-increasing need for sophisticated IT with the need to keep IT costs reasonable.

Telecom companies are facing some unique set of challenges that stem from customer demands and technology trends. The convergence of applications, networks and integrated user experience are the main points in the telecoms’ industry. Ranosys’ telecom solutions help you identify and address the challenges and opportunities created by convergence.

Ranosys’ solutions and service offers enterprise resource management and collaboration platform for specifically for this domain. It consists of features such as powerful project planning, collaboration, document management and resource management functionalities for enterprise project monitoring. Our solutions help you identify and address the challenges and opportunities created by convergence of applications, networks or content.

3. Customer Relationship Management (CRM) in Service industry:

CustomerRelationship Management (CRM) is a process implemented by a company to handle its contact with its customers by storing information on current and prospective customers. Used by business to improve services provided directly to customers and to use the information in the system for targeted marketing and sales purposes.

Detailed and Achieved through CRM:

i) All sales or service related interaction a company has with each individual customer.

ii) Track and detail personal customization for company and online experience to improve the relationship.

iii) Work flow automation and a well-documented service history for customer support.

Issues and Areas Addressed:

i) Front office department support to areas such as sales, service, and marketing.

ii) Readily accessible and available customer information.

iii) Save customer from having to repeat contact and previous history with company helping to improve the customer to company relationship.

iv) Creating a customer-centric approach for a company.

v) Because of the company-wide size and scope of many CRM implementations, significant pre­planning is essential for a smooth roll-out of the CRM software as well as an equally important role of employee adoption and training of the system.

SME Handles CRM:

i) Customizable field labels.

ii) Unlimited note taking ability.

iii) Auto text entry for redundant or common services.

iv) Automated email statements, invoices, notices, and marketing collateral.

v) Stored documents, service history, maintenance contracts, sales history, past and current billing, installation notes, system notes.

vi) Synchronize with customers and contacts within your Quick Books records.

vii) Enable recurring tasks for account maintenance or services for easy task management.

4. Role of CRM in Retail Industry:

Retail is India’s largest industry as for over 10 per cent of the country’s GDP and around 8 percent of the employment. Technological improvement is responsible for majority of innovation in retail sector over past few years.

Customer Relationship Management systems are adopted by the retail sector in order to get success by improving customer satisfaction and enhancing loyalty. CRM motivates a customer to return again and again as they receive good services.

With the help of CRM system and strategies, retail sector can retain their customers even for the life time. India is progressing towards a tough competitive environment where only those retailers would survive who can understand their customers and develop a strong bond with them by developing and implementing appropriate CRM strategies and programs effectively.

What is Customer Relationship Management – Purposes of Adopting CRM Processes

The purposes of adopting CRM processes are:

1. Develop better communication channels.

2. Collect customer related data.

3. Create detailed profiles of individual customers.

4. Increased customer satisfaction.

5. Access to customer account history, order information, and customer information at all touch points.

6. Identify new selling opportunities.

7. Increased market share and profit margin.

8. Increased revenues.

9. More effective reach and marketing.

10. Improved customer service and support.

11. Improved response time to customer requests for information.

12. Enhanced customer loyalty.

13. Improved ability to meet customer requirements.

14. Improved quality communication and networking.

15. Reduced costs of buying and using product and services.

16. Better stand against global competition.

What is Customer Relationship Management – Implementation of CRM Concept

Customer relationship management is accomplishable. Top management commitment, personnel motivation, user training and prototyping the system are the other key factors for successful implementation of CRM concept.

However, the following guidelines must be taken into consideration before implementing the CRM concept:

(i) Evaluate and plan – All aspects of customer relationship management, including technology solutions, must be fully explored to effectively deliver the competencies required to realize the business benefits.

(ii) Tackling any one competence alone will lead to a dysfunctional business. One competence does not make customer relationship management.

(iii) Take pragmatic steps with a clear view on delivery of all the components in the medium term, rather than adopting a piecemeal approach in the short term.

(iv) Successful mass customisation is crucial to reducing customer acquisition costs and improving the cross-selling capability.

(v) Channels are a delivery mechanism – The effectiveness of the mechanism can be achieved only when it is seamless.

Firms would adopt relationship marketing only if it in CRM has the potential to benefit them. The benefits come through lower costs of retention and increased profits due to lower defection rates. When customers enter into a relationship with a firm, they are willingly foregoing other options and limiting their choice.

Some of the personal motivations to do so result from greater efficiency in decision- making, reduction in information processing, achieving more cognitive consistency in decisions and reduction of perceived risks with future decisions. It is generally accepted that it costs, more to acquire a customer than to retain an existing one. However, identifying valuable customers is also important.

There is still a trend that a customer must be kept no matter what the cost to the organisation, even if it mean incurring a loss. It is a realisation that countless organisations have been oblivious to and in the process have experienced substantial customer churn. Successful implementation of CRM requires a strategic approach, which encompasses developing customer centric processes, selecting and implementing technology solutions, employee empowerment, customer information and knowledge generation capabilities to differentiate them, and the ability to learn from outstanding practices.

Implementation of CRM by Several Organizations:

Once it has been built a customer-focused strategy and backed it up with the appropriate organization, ask yourself how much CRM technology you need. More is not necessarily better. In fact, successful CRM operations are very often low-tech. Think about how you can motivate and mobilize your employees, for example. The key is to strike the right balance between people and software. Tailoring the technology to the company’s business processes and culture is just as important as tailoring the business processes to the strategy.

Consider Enterprise Rent-A-Car, which has 45,000 employees and more college recruits than any other company. Enterprise counts on its employees to implement the company’s customer relationship strategy, so it takes great care in hiring and retaining employees. The company targets people who want a “real-life MBA,” and tests both the IQ and the emotional intelligence of job applicants.

Recruits start out in the branches serving customers and giving them the personal touch-like a ride home-that has made Enterprise the largest car-rental company in North America. What’s more, profit sharing and a generous compensation scheme have contributed to an employee retention rate that has helped Enterprise to grow 20 per cent per year in a relatively flat market.

That careful selection of employees paid off after the 9-11 disaster, when stranded travellers flooded car-rental outlets across the nation. Although Enterprise does not have a system for one-way trips, branch managers waived the penalties and offered customers one-ways. Three days later, it became company-wide policy. Enterprise will surely win the loyalty of customers it helped in those dark days.

Some companies mix it up. Wal-Mart is a great example of a company that uses a blend of high-tech solutions and high-touch employees-like flesh-and-blood greeters-to increase customer loyalty. Wal-Mart lets technology work behind the scenes. Its CRM data warehouse is one of the largest in the world, tracking exactly what the customer’s purchase.

As a result, WalMart stocks more of the most popular merchandise, and clusters items that people tend to buy at the same time. But Wal-Mart does not use the technology to build profiles of individual customers by gathering addresses and phone numbers. Instead, Wal-Mart leaves that job to its local employees, who know their regular customers and understand their needs.

On the high-tech end is a company like Square D, a market leader in electrical distribution, industrial control and automation products, systems and services. After realigning its business processes, the company literally brought all Rs. 16,000 of its employees into the digital age.

It streamlined the processing of customer queries by consolidating all of its call centres in one information centre. Among other innovations, sales engineers now utilize “middleware” technology to create proposals, via a plug-and-play menu, on the basis of what the factory can actually deliver on time in a cost-effective way.

The level of CRM technology you choose, then, ought to depend on your company’s strategy and its processes. Above all, don’t fall into the trap of buying an expensive high-tech CRM solution just because it’s there. Consider the case of Mshow, a company that produces training and marketing programs via the Internet.

The company invested Rs. 73,00,000 to equip its sales force with a “killer app” designed to boost their performance. In reality, however, the sales force never intended to use the software. So Mshow pulled the application, spent more time figuring out what would help the sales force, and installed a more suitable system.

What is Customer Relationship Management – Nature of Good CRM

1. Save Time:

A CRM automates a lot of the usual time-devouring tasks, giving salespeople more time to do what they are actually paid to do: namely, sell to prospects. More time spent in front of potential customers (instead of shuffling paper) means more sales, which makes everyone happy.

2. Look Professional:

Which do you think looks better to a prospect – a salesperson who keeps all their information in a computer database and can pull up vital details immediately, or one who keeps their information on Post-It notes and has to scramble for ten minutes just to find the scheduled appointment time?

3. Save Money:

Sure, the more impressively arrayed CRMs can cost a lot of money. But if you don’t need quite that much technology working for you, it’s easy to find less expensive or even free alternatives. And just think how much you’ll save on Post-It notes if you’re putting all that information into the computer instead.

4. Convenient:

If the whole sales team is using the same CRM, then it’s easy to share that information as needed. Most CRMs allow you to develop templates for phone scripts or frequently used emails and the team can share these templates. Many CRMs even support mobile devices, so you can access all that information from your iPhone or enter a few quick notes right from the prospect’s office.

5. Secure:

What happens when the nightly cleaning crew accidentally throws out someone’s Post-It archive? With a CRM, information is usually stored either in a central database or in the CRM provider’s system. At the very least each salesperson can back up copies of their individual databases to another computer.

6. Faster Lead Generation:

A good CRM can help immensely with lead generation. For instance, many CRMs can integrate with website and social media campaigns, sending leads from these sources directly to the appropriate salesperson. That means the sales team is spending less time cold calling and more time working warm leads, which tend to be far more fruitful. And by tracking each salesperson’s activities, it can keep lead lists up to date – so that you don’t have five different salespeople calling the same lead.

7. Simplified Goal-Setting:

By pulling all the data together into one place, CRMs make it easy to track performance both within and across the team. CRMs can also bring all this information together into reports that help with forecasting. Having this level of analysis available makes setting the next period’s goals much easier and makes it more likely that these goals will align with reality.

What is Customer Relationship Management – Importance

The importance of CRM are as follows:

(i) Common Growth for Marketers and Customers:

CRM will help customers to identify the right product that will suit them; also the marketers will know about their target audience and will not waste their time.

(ii) Customized Marketing Efforts:

Much B2B marketing today is customized, in that a manufacturer will customize the offer, logistics, communications and financial terms for each major account. Computers, database, e-mail, fax, etc., permit companies to return to customized marketing. Today customers are taking more individual initiative in determining what had how to buy. CRM helps customize marketing to be more effective.

(iii) Lower Cost of Marketing:

As products manufactured with the help of CRM techniques the customers will accept it and they will also be satisfied with the product. Also a good relationship will be maintained with the customers and thus more and more money will not be wasted in advertising and promotions.

(iv) Strong Customer Loyalty:

Today the loyalty of customers is decreasing for any brand. So if with the help of CRM good relationship is developed with the customers than chances are less of customers not being loyal. Thus CRM develops a strong customer loyalty and also a good company image.

(v) Improve Customer Satisfaction:

Companies now are trying to offer total customer satisfaction. Xerox guarantees total customer satisfaction. As with the use of CRM firstly the customers will choose the right product offered and also if they face any problems they will be solved quickly. Thus the Level of customer satisfaction can be raised with CRM.

(vi) Improved Employee and Customer Retention:

With the help of CRM customer retention will improve. As the old customers will be fully satisfied they will buy the same companies products. If a person bought a colour TV of Sony and he is fully satisfied, as the company solved some problems quickly, if he has to buy a C.D. player he will buy of Sony. Thus CRM helps to retain new customers and maintain old customers.

(vii) Decreased Cost for Customers:

As the marketing expenses of a firm will decrease in long run firms can offer the same product at a bit low cost, which will be in the benefit of the customers.

What is Customer Relationship Management – Process: 5 Step Process

Relationship with customers can change from time to time because it is evolved under distinguished situations.

Following are the steps from where the relationship with customers can evolve:

i. Exploration – Exploration is the process when customer investigates or tests the supplier’s capabilities and performance or cross verifies the product’s or brand’s usefulness. If the test results fail to satisfy customer’s demands, the relationship can drastically come to an end.

ii. Awareness – Awareness is the process when the customer understands the moti­vational values of supplier or the products he sells.

iii. Expansion – Expansion is the process when the supplier wins customer’s faith and customer falls under huge interdependence of the supplier. This is time when there are more chances of business with that particular customer and expand business.

iv. Commitment – Commitment is a powerful stage when suppliers learn to adapt­ing business rules and goal to excel.

v. Dissolution – Dissolution is a stage when customer requirement suddenly changes and he looks for better perspectives. This sudden change is the end of relation­ship.

Relationship can come to an end due to many reasons like – customer is not satisfied with the services of supplier or customer diverges to other better brands and prod­ucts. Suppliers can also prefer to break relationships due to customer failing to be a part to increase sales volume or when the suppliers are entangled with fraud cases.

What is Customer Relationship Management – 4 Important Types

Type # 1. Strategic CRM:

The aim of strategic CRM is to concentrate and enhance the knowledge about cus­tomers and use this knowledge to improve and customize the interactions with customers to maintain a long-term relationship with them.

Determining and development of CRM strategies involves following steps:

i. Amplify Commitment:

Strategic CRM involves almost all the departments of an organization e.g. finance, sales, manufacturing, distribution, marketing etc. Hence it is essential to get support and use their important feedback while determining strategies. For this each and every department should be kept informed about all the developments and implementation of processes carried out or performed. Everyone should also be emphasized about the positive approaches and end re­sults of the strategies.

ii. Building Valuable Project Team:

After organizational commitment is secured the next important stage in developing CRM strategies is building a determined and valuable project team. Each and every member of this team should be expe­riences and dedicated professional as these members will be the key decision makers in the whole process. They will be responsible to communicate all the related details and benefits of the CRM strategies to all the members of the organization.

These members should be from following work groups to ensure all the aspects of strategies are addressed efficiently:

a. Management:

Management professionals are responsible to provide moti­vation, leadership and management at every strategic development step es­pecially when a change in business process or organizational structure is expected.

b. Technical:

Automation of CRM strategies are important and must involve experienced technical hands. Also technical professional provide their use­ful contribution in building and managing software application and deter­mining their compatibility with existing software features.

c. Sales and Marketing:

These are final users of CRM system once the strate­gies are determined and implemented. The applied strategies are supposed to be successful once these users fell comfortable and satisfied by using all the CRM features. Being the end users these people are also responsible to provide useful feedbacks on efficiency and effectiveness while the strategies are in development phase.

d. Financial:

The CRM strategies must also be gone through or evaluated un­der financial aspects. The financial professionals of the team can provide crucial analysis on assessment of enhanced productivity, evaluation of oper­ational and production cost and final estimated cost of the project. They also help in assessing the investment cost per module or segment so that the prod­uct is delivered inside the budget.

e. External Experts:

Many times some external consultants and other CRM vendors are substantially helpful in strategy development. These are people who are generally hired or outsourced for second fruitful opinion or if the organization is lacking with sufficient CRM experts.

These professionals have vast experience in the same field and helps analyzing organization’s actual business needs, work with other professional to review and approve com­plex business structure and even helps in formulating the team members according to the expertise they possess.

iii. Requirement Analysis:

CRM strategies should always focus and concentrate on the actual business requirements. This process involves a series surveys and ques­tionnaires with top level sales, marketing and financial managers to gather the actual expectations regarding the strategies to be implemented and what results these strategies will throw in the final stage.

This is a very crucial factor in the development of an effective CRM system because if the results are not matching the actual requirement or if they diverge from focus points, then that means it’s not achieving the desired goals.

Type # 2. Operational CRM:

Operational CRM is mainly focused on automation, improvement and enhancement of business processes which are based on customer-facing or customer supporting.

The main importance of a CRM system lies on how the selling, marketing and service oriented processes are automated, and for which operational CRM systems are embedded with following major automation applications:

i. Marketing Automation:

As the name implies, marketing automation is basically focused on automating marketing processes. In marketing, campaign manage­ment involves marketers to use customer specific information to determine, eval­uate and develop communications that are targeted to customers in individual as well as multilevel or multichannel environment.

Campaigns developed to com­municate customers individually are easy and involves unique and direct com­munications. For multichannel environment the implementation of marketing strategies and campaign management is quite difficult and challenging. For ex­ample, some retailers have multichannel transactions like shops or stores, whole­sale stores, websites, home shopping and even television shopping. Here inte­gration and implementation of communication strategy is difficult and evalua­tion of performance and quality of campaigns needs to be automated and should be technologically sound across each of the channels.

For handling this, a CRM marketing strategy called event-based marketing is inherited. Using event based marketing communication and offers are presented to customers as and when they are required. For example, credit card customer calls the call center for in­quiring the current interest rates, this indicates that customer is specific about the interest rates and is trying to compare the interest rates and may switch to different competitor to find specific deals which suits him. Without wasting time the automated CRM system pops up an event of offer which is best suited for that customer and helps to retain him back.

ii. Sales-Force Automation:

A CRM system is not only used to deal with the exist­ing customers but is also useful in acquiring new customers. The process first starts with identifying a customer and maintaining all the corresponding details into the CRM system. This process can be distributed into many stages which includes generation of lead and then qualifying those leads as prospects.

The Sales and Field representatives then try getting business out of these customers by sophistically following up with them and converting them into a winning deal. Automation of selling process is efficiently handled by Sales-force automa­tion which automates all the methodologies or sales cycle and above described process sophisticatedly.

iii. Service Automation:

Service automation deals with managing organization’s service. The actual interactions with customers such as contact, direct sales, di­rect mail, call centers, data aggregation systems, web sites and blogs etc. are ex­amples of operational CRM. Each interaction with a customer can be collected to the client database generally known as ‘customer’s history’ and the information can later be used wherever necessary.

Anyone in the organization can have ac­cess to this information about customer which gives a clear view of customers’ needs and important information on the customer such as products owned, pri­or support calls etc. It naturally eliminates the need to obtain this information individually from the customer. On the basis of the information, if required, the customer can easily be contacted at right time at the right place.

Operational CRM refers to services that provide support for various ‘front office’ business processes in helping organization to take care of their customers. Focus on customers’ value is important for a successful operational CRM strategy. Differ­ent customers have to be treated differently so information on variables like custom­ers’ ranking, actual value and potential value is of strategic value.

Type # 3. Analytical CRM:

Analytical CRM supports organizational back-office operations and analysis. It deals with all the operations and processes that do not directly deal with customers. Hence, there is a key difference between operational CRM and Analytical CRM.

Unlike from operational CRM, where automation of marketing, sales-force and ser­vices are done by direct interaction with customers and determining customer’s needs, analytical CRM is designed to analyze deeply the customer’s information and data and unwrap or disclose the essential convention and intension of behav­ior of customers on which capitalization can be done by the organization.

Primary goal of analytical CRM is to develop, support and enhance the work and decision making capability of an organization by determining strong patterns and predictions in customer data and information which are gathered from different operational CRM systems.

Type # 4. Collaborative CRM:

Collaborative CRM deals with synchronization and integration of customer inter­action and channels of communications like phone, email, fax, web etc. with the intent of referencing the customers a consistent and systematic way. The idea is not only enhancing the interactions but also to increase and improve customer re­tention and liberty.

Collaborative CRM entangles various departments of organiza­tion like sales, marketing, finance and service and shares the customer information among them to highlight better understanding of customers. For example, the infor­mation of preferred products could be shared with marketing department so that analysis can be performed in this aspect to provide preferred products to customers.

The information regarding varied cost or price of a particular product in market defined by customers can be delivered to finance department so that strategies could be created to match the product cost with similar products in market and after analysis bring an affordable and efficient product in market.

The information re­garding a specific service which is not installed in the company’s environment and intimated by the customers can be transferred to service department to improve or install that particular service in-house. All this is done efficaciously within the range of channels so that the process automates the needs and minimal time is required for fulfilling these needs.

What is Customer Relationship Management – Factors for the Growth of CRM

The marvelous growth of interest and investments in CRM across the globe can be attributed to the following macro-environmental factors:

Factor # 1. Emergence of Market Economy:

Market regulation was in place all over the world including the US, Europe, USSR, China and India. The 1990s witnessed acceleration in the deregulation of many large industries including banking, telecommunications, broadcasting and airlines across the world.

As a result, market-oriented firms operating in intensely competitive markets now take decisions that was once controlled by the government (Victor). The focus has shifted from capacity creation under control to the markets. Market- oriented economy necessitated a customer focus and boosted the importance of CRM.

Factor # 2. Global Orientation of Businesses:

International trade became the growth engine for the global economy. Liberalisation of markets and trade proved to be a far stronger growth engine. It has eased the entry into foreign markets. Firms need stronger customer- orientation to be able to tap opportunities in new markets while defending themselves in their home markets.

National boundaries are giving way to either a borderless world or at least a regional world resulting in the emergence of trading blocks like North American Free Trade Agreement (NAFTA), European Union and the Association of South-East Asian Nations (ASEAN). The abolishment of the General Agreement on Tariffs and Trade (GATT) and the emergence of World Trade Organisation (WTO) helped create a global orientation for business establishments.

Factor # 3. Emergence of Service Economy:

The emergence of service economy is a global phenomenon. The growing importance of services resulted in greater customer orientation as services are characterised by simultaneity/inseparability/heterogeneity /perishability (Berry and Parasuraman). It implies that the production and consumption of services are inseparable. In services, one needs to be close to customers to deliver the service offering.

The factory is where the customer is and service is offered in real time. The customer perceives the production process as part of the service consumption, not just the outcome of a production process as in traditional marketing of physical goods (Gronroos). Therefore, it is not surprising that service businesses like hotels, airlines, banking, financial services, telecom and retailing were the early adopters of CRM.

The service sector contributes to 60-70 per cent of the GDP of economically advanced nations of Western Europe, Canada and Japan. The increasing contribution of the service sector is not limited to developed countries. Developing economics like China, Indonesia and Thailand employ about 40 per cent of the workforce in the service sector (Wirtz). In the year 2001, the service sector contributed to 48 per cent of the GDP in India, 54 per cent in Philippines and 33 per cent in China.

The average annual growth rate of the services during the decade of 1990s was 8 per cent in India, 9 per cent in China and 4.1 per cent in the Philippines (Statistical outline India, 2002-03). In the US, the service sector accounts for over 75 per cent of GNP and employs 80 per cent of the workforce (Czinkota and Ronkainen).

Advanced countries progressed from agricultural to industrial and then to post-industrial economies. The shift from manufacturing to services was spread over a few decades of the last century. However, in developing countries, the growth is led by all three sectors of the economy in varying proportions.

Factor # 4. Aging Population in Economically Developed Countries:

Aging of population has been attributed to the combined effects of a slowdown in birthrate and an increase in life expectancy. The economically advanced nations are witnessing an aging of their population. In 2000, 12.6 per cent of the US population was 65 years of age or older. The comparative figures for Sweden and Japan were 17.2 per cent and 17 per cent of their respective population.

This trend is visible in most parts of Europe, except in Ireland. While an aging population creates new opportunities for wellness, financial well-being, safety and security and recreation, it has also slowed the markets for traditional goods .and services designed for a younger population.

Therefore, in these markets, growth is being achieved by increasing the ‘share of wallet’ and not through growth of markets driven by a growing population. Marketers are now forced to develop a deep understanding of their existing customers and meet their ever changing needs through suitable products and services. Indeed, most large companies, especially the services sector, wants to become one-stop-shop for the customers.

Factor 5. Technology — An Essential Factor for CRM:

Firms can now manage every single contact with the customer from account management personnel, call centres, interactive voice response systems, on-line dial-up applications, and websites to build lasting relationships. Developments in information technology, data warehousing and data mining have made it possible for firms to maintain a one above relationship with their customers.

These interactions can be used to glean information and insights about customer needs and their buying behaviour to design and develop services, which help create value for the customers as well as the firms. Although customised as well as off the shelf technological solutions are available in the marketplace, businesses need to do a lot more than just adopt these solutions to implement customer relationship management (CRM) practices.

CRM offers huge potential benefits but requires a more sophisticated approach adapted to specific opportunities and circumstances. At the core of any technology enabler for CRM is the customer database. This represents the data hub that integrates the various statistical modelling, campaign management, contact history and response tracking components of the marketing campaign life-cycle.

The technology layer and — its integration with emerging business processes is therefore the key to successful implementation of a data-driven customer relationship management. To take advantage of the benefits of CRM, a company must undertake a structured process that ensures the automation venture does not become the automation misadventure.

For effective implementation of CRM concept, it is important to identify which process to Automate and which not to automate. Reengineering could be improved for providing complete end-to-end set of activities that together create value for a customer. It should be coupled with the complete vision of the business process — keeping customer as its base. Cross functional teams have proven to be the most successful organisations for CRM.

What is Customer Relationship Management – 3 Main Aspects: Operational CRM, Collaborative CRM and Analytical CRM

There are three aspects of CRM which can each be implemented in isolation from each other:

(1) Operational CRM—automation or support of customer processes that include a company’s sales or service representative.

(2) Collaborative CRM—direct communication with customers that does not include a company’s sales or service representative (“self-service”).

(3) Analytical CRM—analysis of customer data for a broad range of purposes. META Group (acquired by Gartner in April 2005) developed this conceptual architecture in the late 1990s, and dubbed it the “CRM Ecosystem”.

(1) Operational CRM:

Operational CRM provides support to “front office” business processes, including sales, marketing and service. Each interaction with a customer is generally added to a customer’s contact history, and staff can retrieve information on customers from the database as necessary.

One of the main benefits of this contact history is that customers can interact with different people or different contact “channels” in a company over time without having to repeat the history of their interaction each time. Consequently, many call centres use some kind of CRM software to support their call centre agents.

(2) Collaborative CRM:

Collaborative CRM covers the direct interaction with customers, for a variety of different purposes, including feedback and issue-reporting. Interaction can be through a variety of channels, such as web pages, email, automated phone (Automated Voice Response AVR) or SMS. The objectives of Collaborative CRM can be broad, including cost reduction and service improvements.

(3) Analytical CRM:

Analytical CRM analyses customer data for a variety of purposes including:

(i) Design and execution of targeted marketing campaigns to optimise marketing effectiveness.

(ii) Design and execution of specific customer campaigns, including customer acquisition, cross-selling, up-selling, retention analysis of customer behaviour to aid product and service decision making (e.g. pricing, new product development etc.) management decisions, e.g. financial forecasting and customer profitability analysis prediction of the probability of customer defection (churn).

(iii) Analytical CRM generally makes heavy use of predictive analytics.

Customer Relationship Management and Marketing

CRM leverages and amplifies customer base of an organization through efficacious and efficient marketing. In fact CRM has brought up new dimensions in the field of marketing by significantly improving marketing functioning and execution. Intui­tive CRM associated marketing strategies like direct marketing; web marketing, e-mail marketing etc. have been matured during the recent past.

These marketing strategies are more promising as compared to the traditional ways on marketing as they help delivering higher-up performance and walloping business. They also help meliorating response rates in marketing campaigns, cut cost on promotions due to low asset values and provide higher scrutiny on organizational investments.

The various aspects of CRM oriented marketing are discussed below:

1. Web Marketing:

With the growing popularity of web, customers are tending towards web marketing or web shopping. This helps both customers and suppli­ers to transact in a real time environment irrespective of their locations.

Some of the major advantages of Web Marketing are listed below:

i. It is relatively very inexpensive as it reduces the cost for physically reaching to the target customers for interaction.

ii. Suppliers can reach to more number of customers in lesser amount of time.

iii. The online marketing campaigns can be easily tracked, traced, calculated and tested.

iv. The selection process of any product or brand is simplified due to proven online research and analysis techniques.

v. Online marketing campaigns are more promotional as compared to manual campaigns.

2. Email Marketing:

Email marketing has turned out to be more efficacious and inexpensive as compared to mail or phone based marketing strategies. Email marketing is direct marketing which is data driven and leads to more accurate customer response and effective fulfillment of customer needs. More attractive features include newsletters, sending of eCoupons, eCards, provision of saving events into calendars etc.

3. Analyzing Customers Buying Behavior Online:

A CRM system provides a plat­form to analyze the customers buying behavior online. This interactive strategy provides great accuracy with high speed which includes profiling services fur­nishing elaborated bits of information regarding customers purchasing habits or behavior. Individualized analysis of this behavior also helps to identify to which product or brand the customers are more tended.

For example an online selling website www(dot)xyz(dot)com can analyze the customers buying behavior by installing an in-house service with the help of a full-fledged CRM that checks what all products are being purchased by a particular customer and under which specific group they fall. This is achieved by personalized analyzing the buying history of customers in the past which predicts the future business with those customers also.

This accomplishes to build a long-term relationship with customers by prop­erly canvassing customer needs and resulting in customer satisfaction. Analyz­ing this particular buying behavior of customers online also helps to fix or change of marketing techniques or strategies to mould the system according to the fu­ture perspectives.

4. Forecasting Future Marketing Strategies:

Down the line marketing strategies keeps on changing according to the emotional behavioral change of customers. CRM market forecasting techniques help to understand this change through re­gression and statistical analysis of customer behavior online. These are some com­plex but more accurate analysis techniques provided by CRM system which are proved to be one of best marketing strategies. This innovative approach is car­ried out with greater risks but is believed to outturn astonishing rewards.

5. Building Business Impact Models:

It is important for an organization to have check on marketing performance regularly so that the techniques never deterio­rate and always match to yield greater results. These CRM oriented models help in delivering accurate measurement of marketing performance throughout the organization and to do better every time.

These synergistic marketing strategies make a part of CRM system to develop high- end marketing business. Hence it is very important for an organization to incorporate them by carefully anticipating change, testing their performance and assembling the best possible combination of these strategies to meet the needs of the customers and maximize its marketing growth.

Customer Relationship Management and HR

Human Resources are those constituents of an organization that take care of the human facets and needs of all employees within that organization.

Key functions of HR in an organization are:

i. Employee recruitment and selection.

ii. Compensation calculation and reward program management.

iii. In-house training for all employees according to skill sets.

iv. Performance calculation and managing employee behavior.

v. Portfolio management and area location management.

vi. Transformation and change management.

vii. Structuring hierarchy of employees.

viii. Employee relationship management.

ix. Hiring Campaign management.

Employees are the significant assets and the primary promoters of profitable busi­ness for an organization. Hence, apart from managing clients and customers for business purpose, it’s a decisive responsibility of an organization to manage and fulfill all needs of its own employees.

It would be improper to say that a CRM system is only used to manage clients and customer; most of the HR heads or managers are using CRM technologies for managing company’s human capital. This approach is called as Employee Resource Management (ERM). An ERM is a business process that fills gaps between an organizations and its employee to create a strong emotional and professional bonding among them.

A well-integrated ERM provides a committed information base system for all Hu­man resources. This is termed as Human Resource Information System (HRIS) in most of the renowned organizations which provides a better interface for HRs to deal with internal employees and screens all problems associated with relationship among organization and employee.

Some of its features are listed below:

i. Profile Management – A profile management technique is used to manage pro­files of all the employees which contain the entire employee related information which is also exposed to the employees in HRIS tool. Employees are allowed to change or edit some of this general information whenever there is a need.

ii. Payment/Compensation – Details regarding employee payroll and employee branding can be easily managed under this. An employee can see all the payroll related features and the salary statements can be automatically mailed to every employee.

iii. Training – Notification to attend online and manual training can be easily distrib­uted within the organization. These can be online tracked for internship which can be optional or mandatory.

iv. Leave Management – Employee have a dedicated portal for applying or notify­ing for leaves. They just have to apply for leave through this portal and the infor­mation is escalated to his/her manager. The manager has the option for approv­ing or rejecting this application online. The applied leaves get deducted from the bundle of employee’s annual leaves automatically for which he gets email notifi­cation regularly.

v. Meetings and Certifications – Managers and employees have the facility to online schedules of meetings or to book available meeting rooms. A notification is sent automatically to all the attendees informing them to be present in the meeting on the specified timings and venue. All the employees also have the facility to com­plete or attain online certifications as and when needed.

vi. Generate online Letters and data – The human resource managers or executives have the zeal to furnish offer letters or response letters online to the newly joined employees. There is no need for the new employees to re-enter their respective information again and again whenever needed.

vii. Online Alerts – Online alters are generated whenever any employee have some­thing due. For example, employees are used to get these alerts automatically when they need to complete any survey or review or when there is a need to renew any software license.

viii. Export/Import facility – Every employee does have the deftness to export or im­port any sort of data available on the portal to and from an excel sheets or comma separated files (CSV files).

An organization is always benefitted by Employee Relationship Management if it is implementing it with CRM strategies with clear rules and guidelines. For an orga­nization an upright and healthy relationship with employees always acts as recip­rocal commutation and leads to betterment of both.

Customer Relationship Management as a Business Strategy

CRM, or Customer Relationship Management, is a company-wide business strategy designed to reduce costs and increase profitability by solidifying customer loyalty. True CRM brings together information from all data sources within an organization (and where appropriate, from outside the organization) to give one, holistic view of each customer in real time. This allows customer facing employees in such areas as sales, customer support, and marketing to make quick yet informed decisions on everything from cross-selling and upselling opportunities to target marketing strat­egies to competitive positioning tactics.

Once thought of as a type of software, CRM has evolved into a customer-centric philosophy that must permeate an entire organization. There are three key elements to a successful CRM initiative – people, process, and technology. The people through­out a company-from the CEO to each and every customer service rep-need to buy in to and support CRM.

A company’s business processes must be reengineered to bolster its CRM initiative, often from the view of, how can this process better serve the customer? Firms must select the right technology to drive these improved pro­cesses, provide the best data to the employees, and be easy enough to operate that users won’t balk. If one of these three foundations is not sound, the entire CRM structure will crumble.

It’s a strategy used to learn more about customers’ needs and behaviours in order to develop stronger relationships with them. After all, good customer relationships are at the heart of business success. There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake. The more useful way to think about CRM is as a process that will help bring together lots of pieces of information about customers, sales, marketing effectiveness, responsive­ness and market trends.

If customer relationships are the heart of business success, then CRM is the valve the pumps a company’s life blood. As such, CRM is best suited to help businesses use people, processes, and technology to gain insight into the behaviour and value of customers. This insight allows for improved customer service, increased call center efficiency, added cross-sell and up sell opportunities, improved close rates, stream­lined sales and marketing processes, improved customer profiling and targeting, reduced costs, and increased share of customer and overall profitability.

This sounds like a panacea, but CRM is not without its challenges. For CRM to be truly effective, an organization must convince its staff that change is good and that CRM will benefit them. Then it must analyse its business processes to decide which need to be reengineered and how best to go about it. Next is to decide what kind of customer information is relevant and how it will be used. Finally, a team of carefully selected executives must choose the right technology to automate what it is that needs to be automated.

This process, depending upon the size of the com­pany and the breadth of data, can take anywhere from a few weeks to a year or more. And although some firms are using Web-based CRM technologies for only hundreds of dollars per month per user, large companies may spends millions to purchase, install, and customize the technology required to support its CRM initia­tive.

What is Customer Relationship Management – Customer Satisfaction through CRM

Customer satisfaction is the overall impression of customer about the supplier and the products and services delivered by the supplier.

Following are the important factors that could affect customer satisfaction:

i. Department wise capability of the supplier.

ii. Technological and engineering or re-engineering aspects of products and services.

iii. Type and quality of response provided by the supplier.

iv. Supplier’s capability to commit on deadlines and how efficiently they are met.

v. Customer service provided by the supplier.

vi. Complaint management.

vii. Cost, quality, performance and efficiency of the product.

viii. Supplier’s personal facts like etiquettes and friendliness.

ix. Supplier’s ability to manage whole customer life cycle.

x. Compatible and hassle free functions and operations.

The above factors could be widely classified under two categories i.e., suppliers behavior and performance of product and services. The supplier’s behavior mostly depends on the behavior of its senior subordinates, managers and internal employees. All the functional activities like customer response, direct product and maintenance services, complaint management etc. are the factors that rely on how skillful and trained the internal and human resources of the supplier are.

The second category is regarding all the products and services. This depends on the capability of supplier to how to nurture the products and service efficiently and how skilled the employees are. It’s all about how the skills are implemented to demonstrate engineering, re-engineering and technological aspects of the products and services. The quality and efficaciousness of the products is also an important factor that enables compatible and hassle free functions and operations. This bears to lower maintenance and higher life of the product which is highly admired by the customers.

If the product is having some problem or compatibility issues and requires frequent maintenance and support than the customers could get irritated and possibilities of sudden divert is there which lead to supplier’s financial loss. In the same way if the product is expecting huge amount of financial and manual resources then customers could get a feeling of dissatisfaction and worry. However, if these aspects are handled efficiently by giving class services and dealing with complaints effectively then dissatisfied customers could be converted into long time satisfied customers and retaining them becomes easy.

It is practically impossible for the supplier to provide all the above explained features. There are always some positive as well as negative features in products and services which could lead to delight or irritate customers. The final opinion is the sum of overall experiences which a customer percept. But it is also true that more the positive aspects, the more the customer is satisfied.

Hence the aim of the supplier should be always to enhance these positive feelings among all the customers to increase customer satisfaction. The supplier must identify how to enhance these positive aspects to maximum level by analyzing the customer’s data and information using CRM system. The individual liking and disliking of customers differ from customer to customer. It is hence required to target a customer and identify individual requirement to make them satisfied.

Having discussed the above factors that affect customer satisfaction we can say that higher the satisfaction level, higher is the sentimental attachment of customers with the specific brand of product and also with the supplier. This helps in making a strong and healthy customer- supplier bonding.

This bonding forces the customer to be tied up with that particular supplier and chances of defection are very less. Hence customer satisfaction is very important panorama that every supplier should focus on to establish a renounced position in the global market and enhance business and profit.

What is Customer Relationship Management – Advantages

The advantages of customer relationship management are considered are abound. It allows organisations not only to retain customers, but enables more effective marketing, creates intelligent opportunities for cross selling and opens up the possibility of rapid introduction of new brands and products.

To be able to deliver these benefits, organisations must be able to customise their product offering, optimize price, integrate products and services and deliver the service as promised and demanded by the customer base. Keeping the customer happy is obviously one way of ensuring that they stay with the organisation.

However, by maintaining an overall relationship with the customer, companies are able to unlock the potential of their customer base and maximise the contribution to their business. Whilst the value of customer relationship management has been identified by the full implications organisations, and benefits are yet to be.

Those responsible for delivery are perhaps the most informed about these strategic benefits yet the transformation is a long-drawn-out process. The strategic benefits of customer relationship management allow companies to reduce the cost of customer acquisition and give established players the ability to react like a new market entrant, the very people they are battling against.

Ironically these are increased and the potential of customers can be then capitalised through cross selling of other products and services. It is important to understand the key benefits of CRM for most companies.

These advantages generally fall into three categories- cost savings, revenue enhancement, and strategic impact.

Based on successful CRM implementations, the following advantages seem reasonable:

(i) Increased margins – Increased margins resulting from knowing customers better, providing a value-sell, and discounting prices.

(ii) Improved customer satisfaction ratings – This increase occurs since customers find the company to be more responsive and better in touch with their specific needs.

(iii) Increased sales revenues – Increased sales result from spending more time with customers which results from spending less time chasing needed information (i.e., productivity improvement).

(iv) Increased win rates – Win rates improve since companies can withdraw from unlikely or bad deals earlier on in the sales process.

The several benefits of CRM are:

1. Maximizing customer retention and value and hence achieving all round profitability is CRM’s goal and it manages to accomplish this. CRM entails acquiring knowledge about customer thereby enhancing the value to both customer and organization. CRM serves as a measuring tool for almost all departments including marketing, sales and service and brings about departmental co-operation.

2. CRM implementation helps a company to achieve increased customer revenues. Organizations are able to indulge in more cross selling. CRM aids the call centres in their activities as it tends to make call centers more efficient. CRM implementation has the propensity to aid marketing and sales processes thereby aiding the sale and marketing department in an organization. Customer Relationship Management is gaining importance as a management tool globally and is ranked second to strategic planning.

3. CRM is a process that manages to achieve the optimal balance between organization’s investment and customer satisfaction which leads ultimately to maximum profit. CRM involves applying customer knowledge to improve performance and results in the integration of marketing, sales and services activities. CRM also enables a company to help sales staff to close deals faster. All these contribute to overall profitability.

4. The benefits of customer relationship management are considered abound. It allows organizations not only to retain customers, but enables more effective marketing, creates intelligent opportunities for cross selling and opens up the possibility of rapid introduction of new brands and products. To be able to deliver these benefits, organizations must be able to customize their product offering, optimize price, integrate products and services and deliver the service as promised and demanded by the customer base.

5. Keeping the customer happy is obviously one way of ensuring that they stay with the organization. However, by maintaining an overall relationship with the customer, companies are able to unlock the potential of their customer base and maximize the contribution to their businesses. Whilst the value of customer relationship management has been identified by the organizations, the full implications and benefits are yet to be.

6. The strategic benefits of customer relationship management allow companies to reduce the cost of customer acquisition and give established players the ability to reach like a new market entrant, the very people they are battling against. Ironically, these are increased and the potential of customers can be then capitalized through cross selling of other products and services. It is important to understand the key benefits of CRM for most companies. These benefits generally fall into three categories – cost saving, revenue enhancement, and strategic impact.

Some of the Other Advantages of CRM:

1. Reduction in customer recruitment cost.

2. Generation of more and more loyal customers.

3. Expansion of customer base.

4. Reduction in advertisement and other sales promotion expenses.

5. Benefiting customer selectivity approach.

6. Increase in the number of profitable customers.

7. Easy introduction of new products.

8. Easy business expansion possibilities.

9. Increase in customer partnering, etc.

What is Customer Relationship Management – Disadvantages

1. System Integration – CRM software may not integrate well with other email and accounting systems. If this is the case, a CRM could prove costly for a company because it is utilizing more resources than originally thought. Companies must evaluate all departments that will be involved in its use before the purchase.

2. Resentment – CRM software’s biggest disadvantage is the resentment employees may feel toward the software. Many employees disagree with change. Often, implementing new systems indicate growth or the need for cutbacks to save the company money. Older employees who have used older systems or their own methods may feel offended as though they are not competent in doing their jobs. Once a new system is brought around, it’s important for an organization to keep employees in the loop.

3. A Learning Curve – Another disadvantage to newly implemented CRM software is the learning curve. Either implementing a CRM for the first time or upgrading an older version will require employees to take the time out to learn the system. People fear what they do not know. This may reduce productivity as they become familiar with the new system.

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