CRM

sunandaC

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What is Customer Relationship management?

Before we begin to examine the conceptual foundations of CRM, it will be useful to define what is CRM. A narrow perspective of customer relationship management is creating a team relationship among sales, marketing, and customer support activities within an organization.

Another narrow, yet relevant, viewpoint is to consider CRM only as customer retention in which a variety of after marketing tactics is used for customer bonding or staying in touch after the sale is made.

Shani and Chalasani define relationship marketing as “an integrated effort to identify, maintain, and build up a network with individual consumers and to continuously strengthen the network for mutual benefit of both sides, through interactive, individualized and value-added contacts over a period of time”.

The core theme of all CRM and relationship marketing perspectives is its focus on co-operative and collaborative relationships between the firm and its customers, and/or other marketing actors.

CRM is based on the premise that, by having a better understanding of the customers’ needs and desires we can keep them longer and sell more to them.

Growth Strategies International (GSI) performed a statistical analysis of Customer satisfaction data encompassing the findings of over 20,000 customer surveys conducted in 40 countries by Infoquest.

The conclusions of the study were:

• A Totally Satisfied Customer contributes 2.6 times more revenue to a company as a Somewhat Satisfied Customer.

• A Totally Satisfied Customer contributes 17 times as much revenue as a Somewhat Dissatisfied Customer.

• A Totally Dissatisfied customer decreases revenue at a rate equal to 1.8 times what a Totally Satisfied Customer contributes to a business.

• By reducing customer defection (by as little as 5%) will result in increase in profits by 25% to 85% depending from industry to industry.

An important facet of CRM is “customer selectivity”. As several research studies have shown not all customers are equally profitable (Infact in some cases 80% of the sales come through 20% of the customers).

The company must therefore be selective and tailor its program and marketing efforts by segmenting and selecting appropriate customers for individual marketing programs. In some cases, it could even lead to “ outsourcing of some customers” so that a company better utilize its resources on those customers it can serve better and create mutual value.


However, the objective of a company is not to really prune its customer base but to identify appropriate customer programs and methods that would be profitable and create value for the firm and the customer. Hence, CRM is defined as:

Customer Relationship management is a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer.


As is implicit in the above definition, the purpose of CRM is to improve marketing productivity. Marketing productivity is achieved by increasing marketing efficiency and by enhancing marketing effectiveness.


In CRM, marketing efficiency is achieved because cooperative and collaborative processes help in reducing transaction costs and overall development costs for
the company.

Two important processes for CRM include proactive customer business development and building partnering relationship with most important customers. These lead to superior value creation.


The basic concept is that the customer is not someone outside the organisation, he is a part of the organisation.
 
What is Customer Relationship management?

Before we begin to examine the conceptual foundations of CRM, it will be useful to define what is CRM. A narrow perspective of customer relationship management is creating a team relationship among sales, marketing, and customer support activities within an organization.

Another narrow, yet relevant, viewpoint is to consider CRM only as customer retention in which a variety of after marketing tactics is used for customer bonding or staying in touch after the sale is made.

Shani and Chalasani define relationship marketing as “an integrated effort to identify, maintain, and build up a network with individual consumers and to continuously strengthen the network for mutual benefit of both sides, through interactive, individualized and value-added contacts over a period of time”.

The core theme of all CRM and relationship marketing perspectives is its focus on co-operative and collaborative relationships between the firm and its customers, and/or other marketing actors.

CRM is based on the premise that, by having a better understanding of the customers’ needs and desires we can keep them longer and sell more to them.

Growth Strategies International (GSI) performed a statistical analysis of Customer satisfaction data encompassing the findings of over 20,000 customer surveys conducted in 40 countries by Infoquest.

The conclusions of the study were:

• A Totally Satisfied Customer contributes 2.6 times more revenue to a company as a Somewhat Satisfied Customer.

• A Totally Satisfied Customer contributes 17 times as much revenue as a Somewhat Dissatisfied Customer.

• A Totally Dissatisfied customer decreases revenue at a rate equal to 1.8 times what a Totally Satisfied Customer contributes to a business.

• By reducing customer defection (by as little as 5%) will result in increase in profits by 25% to 85% depending from industry to industry.

An important facet of CRM is “customer selectivity”. As several research studies have shown not all customers are equally profitable (Infact in some cases 80% of the sales come through 20% of the customers).

The company must therefore be selective and tailor its program and marketing efforts by segmenting and selecting appropriate customers for individual marketing programs. In some cases, it could even lead to “ outsourcing of some customers” so that a company better utilize its resources on those customers it can serve better and create mutual value.


However, the objective of a company is not to really prune its customer base but to identify appropriate customer programs and methods that would be profitable and create value for the firm and the customer. Hence, CRM is defined as:

Customer Relationship management is a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer.


As is implicit in the above definition, the purpose of CRM is to improve marketing productivity. Marketing productivity is achieved by increasing marketing efficiency and by enhancing marketing effectiveness.


In CRM, marketing efficiency is achieved because cooperative and collaborative processes help in reducing transaction costs and overall development costs for
the company.

Two important processes for CRM include proactive customer business development and building partnering relationship with most important customers. These lead to superior value creation.


The basic concept is that the customer is not someone outside the organisation, he is a part of the organisation.

Hey dear, i really liked your effort that you made and i am sure that everyone would appreciate your work. Moreover, i have also got some important information on CRM and going to share it with you.
 

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