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Key Words in Marketing - Customer Relationship Management - Essay Example

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From the paper "Key Words in Marketing - Customer Relationship Management", CRM can be defined as a company’s framework to create long-term relationships with current and potential consumers through the effective coordination of its marketing, post-marketing, sales, and after-sales service efforts…
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Key Words in Marketing - Customer Relationship Management
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Relationship Management (CRM) Introduction CRM can be defined as a company’s framework to create long-term relationships with current and potential consumers through the effective coordination of its marketing, post-marketing, sales and after-sales service efforts. Following the Industrial revolution and subsequent industrialisation of countries, however, the companies and consumers grew more and more distant, owing to quicker manufacturing techniques, complex organisational hierarchy and employee-maintained distribution channels. This gave rise to the era of transactional marketing, where the relationship enjoyed was purely based on delivering products and receiving payment. Nevertheless, in the modern times, numerous reasons have reignited the need for companies to form a closer relationship with its customers. Hence, this relationship has received the formal name of Customer Relationship Management and has undergone scientific analysis and modernisation. This paper understands the concept of CRM, its place in the field of marketing, reasons for its emergence, its constituent components and contemporary usage. Definition of CRM CRM can be defined in various ways. As per Das Gupta (2005), it is a framework of a company that helps it achieve a consumer-oriented business process and high customer loyalty. It is a tool that helps integrate various data collected about consumers, business transactions, performances of various marketing efforts, consumer reception of products or services and new developments in target market. Feinberg and Kadam (2002) defined CRM as an approach of a company concerning its commerce and marketing efforts that amalgamates business method, technology and all other actions, keeping the consumer at the centre. Parvatiyar and Sheth (2001) noted that CRM is an inclusive scheme that involves obtaining, maintaining and collaborating with consumers to generate a high degree of value. While in practice they were different approaches, at least in theory, CRM holds the same meaning as relationship marketing and the two are often used as substitutes of one another (Parvatiyar and Sheth, 2002). These two expressions have been applied to various ideas and contexts, that either present a constricted practical viewpoint of marketing or an expanded viewpoint encompassing a company’s orientation (Nevin, 1995). The constricted viewpoint of CRM is the effort of marketing by use of databases of current and potential consumers, highlighting the promotion-related characteristics concurrent with data recording. Yet another viewpoint, given by Vavra (1992) is that CRM is the sum total result of a company’s quest for retaining consumers through various post-marketing strategies that enable the company to foster a favourable relationship with the consumers, even after sales transactions are made. Thus, to sum up all efforts by different scholars, CRM can be defined as a company’s framework to create long-term relationships with current and potential consumers through the effective coordination of its marketing, post-marketing, sales and after-sales service efforts. CRM’s place in Marketing CRM is a diverse concept and encompasses all aspects of marketing. It is a tool used to create a personal one-to-one relationship with each consumer, as opposed to a restrictive company-customer relation. This helps in getting higher business out of consumers by locating high-value consumers, understanding their needs better and offering them an unprecedented quality of personalised service. The process not only rewards with high degree of customer satisfaction and loyalty, but also greater profits. CRM is also used to manage financial risks and make sales transactions a pleasurable experience for both the company and its consumers. For example, people who enjoy great relationships with their salesmen are more likely to provide contacts that can easily be converted into active consumers. Besides providing leads, such people are also likely to continue giving business to the company over a longer time. On the contrary, people who do not enjoy a good relationship with their salesmen are not only unlikely to provide fruitful contacts, but are themselves highly prone to discontinue doing business with the company. Another aspect of CRM is the collection of sales data about consumers and sharing such data among the sales force as well as other teams such as, marketing and customer service. This helps in coordinating marketing, sales and support services and eliminates chances of losing high value consumers through uncoordinated, duplicate and annoying efforts. Such data also help a company to forecast future demand fluctuations in advance. Lastly, CRM enables a company to deliver an exemplary quality of customer service by focussing on individual requirements of consumers, providing them with customised solutions and offering special deals to high value consumers. Such a feat is possible only if the customer serviceman has access to all the valuable data of a customer from marketing and sales teams at his/her fingertips (Rouse, 2006; Measures, 2013). Emergence of CRM As Sheth and Parvatiyar (1995a) concluded, precursors to the modern CRM outdate even the Industrial Revolution; when one-to-one dealings occurred between cottage industry owners or crop producers and consumers. Likewise, craftsmen and sculptors also have traditionally created personalised works for individual consumers. These one-to-one dealings resulted in a company-consumer relationship, which was not scientifically analysed and studied at the time. Following the Industrial revolution and subsequent industrialisation of countries, however, the companies and consumers grew more and more distant, owing to quicker manufacturing techniques, complex organisational hierarchy and employee-maintained distribution channels. This gave rise to the era of transactional marketing, where the relationship enjoyed was purely based on delivering products and receiving payment. Nevertheless, in the modern times, numerous reasons have reignited the need for companies to form a closer relationship with its customers. Hence, this relationship has received the formal name of Customer Relationship Management and has undergone scientific analysis and modernisation. Some of the reasons for the renewed interest in CRM include simplification of organisational hierarchy due to computerisation of many processes and communication advancements enabling companies to connect with consumers belonging to any part of the world. As different levels of organisational hierarchy get eliminated, the top level executives increasingly find themselves in close proximity with consumers and stand directly accountable for the company’s conduct of business. Also, as technology replaces manual labour, tasks that required people with specialised skills can now be done by anybody armed with a complex and comprehensive software. Since a one-time investment in good software turns out cheaper than appointing a full-time employee for the same job, companies logically choose the former, thereby bringing themselves closer to the end users. Lastly, empowering consumers with tools such as, tele-ordering and online purchase has also necessitated the beginning of a formal relationship management effort from the company’s end. Other reasons for the development of CRM include the emergence of the services sector, where the service provider is in direct contact with the consumer (Crosby, Evans and Cowles, 1990; Berry and Parsuraman, 1991; Gronroos, 1995; Bitner, 1995; Crosby and Stephens, 1987); companies’ quest to make the value chain more efficient, resulting in closer cooperation between companies, suppliers and consumers (Frazier, Spekman, and O’Neal, 1988); intense market competition forcing companies to look beyond transactional marketing and focus on customer satisfaction and loyalty (Reichheld, 1996; Dick and Basu, 1994); and a global target market forcing companies to connect with consumers on a personal level to understand their unique cultures, values and requirements. Components of CRM CRM chiefly comprises of three different components: involvement of stakeholders, use of technology and implementation of a special course of action. Involvement of stakeholders Effective CRM depends greatly on the involvement of all the stakeholders of a company. This includes the top level management, the managers of different functions, all the employees of the company and end users. Since the success of CRM cannot be directly evaluated and measured, prima facie it may seem like an additional expenditure and burden on the company. Thus, obtaining the top level management’s trust and belief on the process is very important. Similarly, managers have to recognise the importance of CRM as a tool to the company and share the vision of the top management with their employees. Managers should instil confidence among the employees that changing their work process is going to pay over the long run and impart training to the employees to have a people-oriented approach to work. Engaging consumers in CRM is also crucial, since the entire concept is centred on them. Therefore, it is necessary to explain the importance of CRM to customers so that they can provide the company with purposeful data that can be analysed to reward them with exceptional products, services and relationship. Lastly, CRM also requires the integration of suppliers in the process to ensure that needs or problems of customers are translated into quick solutions amicably and without any delay (JISC CETIS, n.d.; The National B2B Centre Limited, n.d.). Use of technology Since a large portion of CRM encompasses collecting, evaluating, analysing, collating and sharing data among different employees of the company, technology is an integral part of CRM. The various choices of technology include CRM software, elaborate hardware networks and cloud-based online solutions. Choosing a suitable technology depends on multiple factors such as, requirements of the company, adaptability of the employees and financial constraints (JISC CETIS, n.d.; The National B2B Centre Limited, n.d.). Implementation of a special course of action As Phinney (2001) noted, the success of a company depends on its course of action adopted. The way a company acquires customer, completes a business transaction and provides after sales service and ancillary support varies distinctly from other companies. Different companies perform these same activities in very different ways, based on the strategies they formulate independently. In short, the courses of actions followed by different companies are unique from one another. Since course of action directly influence success, it is important for a company to assess its existing business process and make necessary alterations to accommodate CRM and create a special framework. It should also consider the needs and problems of employees, since they would be the people adopting and adapting to the framework (JISC CETIS, n.d.; The National B2B Centre Limited, n.d.). Uses of CRM The primary objectives of CRM are to increase the efficiency of marketing efforts of a company and create a high degree of value for both the company and its consumers by providing exceptional products, services and support (Sheth and Parvatiyar, 1995b). Thus, as discussed earlier, CRM is used heavily in every aspect of marketing. Specifically, it is used to develop relevant marketing and promotional strategies, address needs and wants of consumers in a better way, create a high degree of customer satisfaction and loyalty, lower the cost of acquiring new customers by retaining existing loyal customers, reduce products delivery expenses and make order-handling and stock management more efficient. It is used to create a personal one-to-one relationship with each consumer, concentrate marketing efforts on high-value consumers to derive more business out of them, obtain substantial leads from satisfied consumers that can be converted into active users and collect relevant data about consumers and share among teams to coordinate marketing, sales and support services and eliminate chances of annoying and losing high value consumers through uncoordinated, duplicate efforts. CRM is also used to better understand the demand-supply curve and forecast future demand fluctuations in advance. Lastly, CRM enables a company to improve customer service by accessing valuable data of a customer from marketing and sales teams, focussing on individual requirements of consumers, providing them with customised solutions and offering special deals to high value consumers. Conclusion CRM is a diverse concept that is extensively used in marketing. It comprises of three different components: involvement of stakeholders, use of technology and implementation of a special course of action. It is a tool used to create a personal one-to-one relationship with each consumer and to get higher business out of consumers by locating high-value consumers, understanding their needs better and offering them an unprecedented quality of personalised service. The process rewards with high degree of customer satisfaction, loyalty and greater profits. Thus, although the success of CRM cannot be directly evaluated and may seem like an additional burden on the company, it is probably the most important tool for every company to gain competitive advantages over others. Reference List Berry, L. L. and Parsuraman, A., 1991. Marketing Services – Competing Through Quality. New York: Free Press. Bitner, M. J., 1995. Building Service Relationships: It’s All About Promises. Journal of the Academy of Marketing Science, 23(4) pp. 246-251. Crosby, L. A. and Stephens, N, 1987. Effects of Relationship Marketing and Satisfaction, Retention, and Prices in the Life Insurance Industry. Journal of Marketing Research, 24(4), pp. 404-411. Crosby, L. A., Evans, K. R., and Cowles, D., 1990. Relationship Quality in Services Selling--An Interpersonal Influence Perspective. Journal of Marketing, 54, pp. 68-81. Das Gupta, S., 2005. CRM: beyond technology. Network Magazine: Technology Decisions for the Enterprise. [online] Available at: [Accessed 1 January 2014]. Dick, A. S. and Basu, K., 1994. Customer Loyalty: Toward an Integrated Conceptual Framework. Journal of the Academy of Marketing Science, 22(2), pp. 99-113. Feinberg, R. and Kadam, R., 2002. E-CRM Web service attributes as determinants of customer satisfaction with retail Web sites. International Journal of Service Industry Management, 13(5), pp.432 – 451. Frazier, G. L., Spekman, R. E., and O’Neal, C., 1988. Just-in-Time Exchange Systems and Industrial Marketing. Journal of Marketing, 52(4), pp. 52-67. Gronroos, C., 1995. Relationship Marketing: The Strategy Continuum. Journal of the Academy of Marketing Science, 23(4), pp. 252-255. JISC CETIS, No Date. What is CRM? [online] Available at: [Accessed 1 January 2014]. Measures, A., 2013. CRM Role in Sales Strategy. [online] Available at: [Accessed 1 January 2014]. Nevin, J. R., 1995. Relationship Marketing and Distribution Channels: Exploring Fundamental Issues. Journal of the Academy Marketing Sciences, 23(4), pp. 327-334. Parvatiyar, A. and Sheth, J. N., 2001. Conceptual Framework of Customer Relationship Management, in Customer Relationship Management—Emerging Concepts, Tools and Applications. New Delhi: Tata/McGraw-Hill. Parvatiyar, A. and Sheth, N., 2002. Customer Relationship Management: Emerging Practice, Process, and Discipline. Journal of Economic and Social Research, 3(2), pp. 1-34. Phinney, S., 2001. The role of process in CRM. [online] Available at: [Accessed 1 January 2014]. Reichheld F. F., 1996. The Loyalty Effect. Massachusetts: Harvard Business School Press. Rouse, M., 2006. CRM (customer relationship management). [online] Available at: [Accessed 1 January 2014]. Sheth, J. N. and Parvatiyar, A., 1995a. The Evolution of Relationship Marketing. International Business Review, 4 (4), pp. 397-418. Sheth, J. N. and Parvatiyar, A., 1995b. Relationship Marketing in Consumer Markets: Antecedents and Consequences. Journal of the Academy of Marketing Science, 23(4), pp. 255-271. The National B2B Centre Limited, No Date. Using People, Process and Technology to achieve a Successful CRM Implementation. [online] Available at: [Accessed 1 January 2014]. Vavra, T.G., 1992. Aftermarketing: How to keep customers for life through relationship marketing. Illinois: Business One Irwin. Read More
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