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Contents
Introduction Relationship marketing vs. relationship management Definitions of customer relationship management Forms of relationship management Managing customer loyalty and development Reasons behind losing customers by organizations Significance of customer relationship management Social actions affecting buyer-seller relationships
Introduction
In marketing, it is often said that retaining customer is more important than acquiring one. Organizations use communication tools to make the consumer aware about their products and brands. It uses supply chain and human resources to sell its products. All these have a cost to the company and in this competitive world organizations want to reduce cost. For this organizations develop a database which helps in creating loyalty programs. Many Indian companies like Infosys, Wipro and others started offering CRM software to companies. The benefits of CRM software are quicker, better quality, and timely services to the customers. This increases the word of mouth communications and reduces the cost of mass media.
Learning Objectives
After studying this unit, you will be able to Explain the meaning, need and relevance of customer relationship management. Mention the forms of relationship management. Cite the reasons for losing customers by organizations. Bring out the significance of customer relationship management.
CRM is not a new concept but a very old practice, which has grown because of the benefits it offers in the present marketing scenario. CRM today is a discipline and also a set of software and technology which automates and improves the business process associated with managing customer relationships in the area of sales, marketing, customer service and support. CRM helps companies understand, start and develop long-term relationships with clients as well as help in retaining current
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Long-term exchanges between firms and customers, particularly in the services marketing area. 7. Relational exchanges of working partnerships as in channels of distribution. 8. Exchanges involving functional departments within a firm. 9. Exchanges between a firm and its employees, as in internal marketing. 10. Within firm relational exchanges involving such business units as subsidiaries, divisions or strategic business units.
1. Suspect: Suspect is everyone who might conceivably buy the product or service. 2. Prospects: Prospects are those people who have a strong potential interest in the product and the ability to pay for it. The company rejects the disqualified prospects because they have poor credit or would be unprofitable. 3. First time customers: The company wants to convert the qualified prospects into first time customers. 4. Repeat customers: The company wants to convert satisfied first time customers into repeat customers. First time and repeat customers may also buy from the competitors. 5. Clients: The company then tries to convert repeat customers into clients. Clients are those people who buy only from the company.
6. Advocates: The next step is to convert the clients into advocates. Advocates are those people who speak good about the company and encourage others to buy from it. 7. Partners: The ultimate goal of the company is to convert advocates into partners. After reaching this stage, the customer and the company work actively together. Some customers may become inactive or may drop out due to many reasons leading to end of the relationship. The challenge is to re-activate dissatisfied customers through customer win back strategies
1. Price related reasons: A customer tries to match the price of a brand with the value of the brand. If there is a mismatch between the price and the value, he would switch over to a competitors brand. Also, if the price of brand goes beyond his affordability, he would switch over to a low priced brand. Thus, the role of price in customer retention is very significant. 2. Product related reasons: Due to technological advancement, the new brand which enters the market would offer better performance as compared to the already existing brand. This would encourage the customers to switch over to the new brand. 3. Services related reasons: The customers focus is not only on the brand, but also on the services offered at three different stagespre-sales, during sales and after sales. Any dissatisfaction with services would cause the customer to switch over from the brand.
4. Benefit related reasons: The customers may be attracted by greater benefits offered by the competitors. Such benefits may be more attracting and cause customers to change brand. 5. Competitor related reasons: Technological advancement, attractive offers, value added services, etc., offered by competitors may also encourage customers towards brand switching. 6. Personal reasons: The personal reasons for brand switch over may be The customer has moved away from the market area where the brand is sold. Role changes in life cycle may lead to changes in brand preference. Anger, disgust, distress developed during the process of product delivery. Sentimental reasons. Influence of other members of the family.
Companies should understand that besides customers, their stakeholders are equally important for organizations success. The stakeholders of an organization would include: investors, the financial community, vendors and suppliers, employees, competitors, the media, neighbors and community leaders, special interest groups, and government agencies. These stakeholders can affect and be affected by a companys marketing programme. Kotter and Heskett (1992) found that firms that emphasized the interests of three communities customers, employees and stakeholders performed better than those that emphasized only one or two.
Soft and Hard Versions of Relationship Marketing Soft version of relationship marketing suggests humanistic relationship development, whereas the hard version reflects a utilitarian instrumentalism. The soft version focuses on the term relationship, thus laying importance on relationship management. It strongly advocates that all management is basically relationship management and all managers are relationship managers. It focuses on developmental humanism as a foundation to build and develop long lasting relationships in marketing exchanges. On the other hand, the hard version stresses on the idea of marketing, that is something to be used unemotionally and in a formally sensible