01-03-2011, 11:22 AM
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CUSTOMER RELATIONSHIP MANAGEMENT
INTRODUCTION
The biggest management challenge in the new millennium of liberalization and globalization for a business is to serve and maintain good relationship with the king – the customer. In the past producers took their customers for granted, because at that time the customers were not demanding nor had alternative source of supply or suppliers. But today there is a radical transformation. The changing business environment is characterized by economic liberalization, increasing competition, high consumer choice, demanding customer, more emphasis on quality and value of purchase etc.
All these changes have made today’s producer shift from traditional marketing to modern marketing. Modern marketing calls for more than developing a product, pricing it, promoting it and making it accessible to target customer. It demands building trust, a binding force and value added relationship with the customers.
The process of developing a cooperative and collaborative relationship between the buyer and seller is called customer relationship management shortly called CRM. According to Ashoka dutt head of Citi Bank “the idea of CRM is to know the individual customer intimately, so that the company has a customized product ready for him even before he asks for it.”
AIMS OF CRM
The CRM is a new technique in marketing where the marketer tries to develop long term relationship with the customers to develop them as life time customers. CRM aims to make the customer climb up the ladder of loyalty.
The company first tries to determine who are likely prospects i.e. the people who have a strong potential interest in the product and ability to pay for it The company hopes to convert many of its qualified prospect into first time customers and then to convert those first time customers into repeat customers. Then the company tries to convert these repeat customers into clients – they are those people who buy only from the company in the relevant product categories. The next challenge for the company is to convert these clients into advocates. Advocates are those clients who praise the company and encourage others to buy from it.
The ultimate challenge is to convert these advocates into partners where the customers and the clients work actively together to discover ways of getting mutual benefit.
Thus in CRM the key performance figure is not just current market share but share of life time value by converting customers into partners.
In CRM the company tries to identify that small percentage (20%) of key account holders who’s contribution to the company revenues is high (80%). So from this point of view, CRM is also known as KEY ACCOUNT MANAGEMENT.
WHY – CUSTOMER RELATIONSHIP MANAGEMENT
Ø A satisfied customer in 10 years will bring 100 more customers to the company.
Ø It costs 7 times more to attract a new customer than to serve an old one.
Ø 20% of the company’s loyal customer’s account for 80% of its revenues. (Pareto’s principle)
Ø The chances of selling to an existing customer are 1 in 2, the chances of selling to a new customer are 1 in 16
HOW TO INTRODUCE CRM IN THE COMPANY
There are four key steps for putting one to one marketing program to work –
Step 1: Identify your customers
To launch a one to one initiative the company must be able to locate and contact a fair number of customers or at least a substantial portion of its valuable customers. It is crucial to know the customer details as much as possible, not just their names or address, but their habits, preferences and so forth.
Step 2: Differentiating your customers
Customers are different in two principal ways, they represent different levels of value and have different needs. Once the company identifies its customers differentiating them will help the company to focus its efforts to gain the most advantage with the most valuable customers.
Step 3: Interacting with the customer
Interaction is also a crucial component of a successful CRM initiative. It is important to remember that interaction just not occur through marketing and sales channels, customer interact in many different ways with many different areas of the organization so to foster relationship all the areas of the organization must be accessible to the customer.
Step 4: Customize your enterprise’s behavior
Ultimately to lock a customer into a relationship a company must adapt some aspect of its behavior to meet customer’s individually expressed needs this might mean mass customizing a manufactured product or it might involve tailoring some aspect of the service surrounding the product.
CUSTOMER RELATIONSHIP MANAGEMENT
INTRODUCTION
The biggest management challenge in the new millennium of liberalization and globalization for a business is to serve and maintain good relationship with the king – the customer. In the past producers took their customers for granted, because at that time the customers were not demanding nor had alternative source of supply or suppliers. But today there is a radical transformation. The changing business environment is characterized by economic liberalization, increasing competition, high consumer choice, demanding customer, more emphasis on quality and value of purchase etc.
All these changes have made today’s producer shift from traditional marketing to modern marketing. Modern marketing calls for more than developing a product, pricing it, promoting it and making it accessible to target customer. It demands building trust, a binding force and value added relationship with the customers.
The process of developing a cooperative and collaborative relationship between the buyer and seller is called customer relationship management shortly called CRM. According to Ashoka dutt head of Citi Bank “the idea of CRM is to know the individual customer intimately, so that the company has a customized product ready for him even before he asks for it.”
AIMS OF CRM
The CRM is a new technique in marketing where the marketer tries to develop long term relationship with the customers to develop them as life time customers. CRM aims to make the customer climb up the ladder of loyalty.
The company first tries to determine who are likely prospects i.e. the people who have a strong potential interest in the product and ability to pay for it The company hopes to convert many of its qualified prospect into first time customers and then to convert those first time customers into repeat customers. Then the company tries to convert these repeat customers into clients – they are those people who buy only from the company in the relevant product categories. The next challenge for the company is to convert these clients into advocates. Advocates are those clients who praise the company and encourage others to buy from it.
The ultimate challenge is to convert these advocates into partners where the customers and the clients work actively together to discover ways of getting mutual benefit.
Thus in CRM the key performance figure is not just current market share but share of life time value by converting customers into partners.
In CRM the company tries to identify that small percentage (20%) of key account holders who’s contribution to the company revenues is high (80%). So from this point of view, CRM is also known as KEY ACCOUNT MANAGEMENT.
WHY – CUSTOMER RELATIONSHIP MANAGEMENT
Ø A satisfied customer in 10 years will bring 100 more customers to the company.
Ø It costs 7 times more to attract a new customer than to serve an old one.
Ø 20% of the company’s loyal customer’s account for 80% of its revenues. (Pareto’s principle)
Ø The chances of selling to an existing customer are 1 in 2, the chances of selling to a new customer are 1 in 16
HOW TO INTRODUCE CRM IN THE COMPANY
There are four key steps for putting one to one marketing program to work –
Step 1: Identify your customers
To launch a one to one initiative the company must be able to locate and contact a fair number of customers or at least a substantial portion of its valuable customers. It is crucial to know the customer details as much as possible, not just their names or address, but their habits, preferences and so forth.
Step 2: Differentiating your customers
Customers are different in two principal ways, they represent different levels of value and have different needs. Once the company identifies its customers differentiating them will help the company to focus its efforts to gain the most advantage with the most valuable customers.
Step 3: Interacting with the customer
Interaction is also a crucial component of a successful CRM initiative. It is important to remember that interaction just not occur through marketing and sales channels, customer interact in many different ways with many different areas of the organization so to foster relationship all the areas of the organization must be accessible to the customer.
Step 4: Customize your enterprise’s behavior
Ultimately to lock a customer into a relationship a company must adapt some aspect of its behavior to meet customer’s individually expressed needs this might mean mass customizing a manufactured product or it might involve tailoring some aspect of the service surrounding the product.
