Benefits of Customer Relationship Management (CRM):
Implementation of customer relationship management (CRM) consumes considerable time, effort, and money. However, it offers potential uses and benefits to the business organisations. The important benefit accrued from the CRM is maintaining relationships with the existing customers and retaining them which offers the following benefits;
- Anticipating and responding to the customer needs in time and thereby resulting in increased sales.
- Identifying needs more effectively by understanding specific customer requirements.
- Exploring cross-selling and up-selling opportunities to the existing customers.
- Communicating effectively to the targeted group of customers.
- Enhance the business opportunities by offering customized products and services to the customers.
- Ensuring and enhancing the reputation of the organisation through customer delight and retention.
- Improved profitability to the organisation by enhancing the value from the current customers.
Customer Relationship Management emphasizes on retaining existing customers and then starts thinking of creating new customers and expanding the business opportunities. It becomes easier to the business organisation in identifying the new customers only after knowing much better about the existing customer.
Even though the business organisations accumulated with huge information about the customers and gained sufficient knowledge about them, there’s always scope for further improvement. The needs and wants of customers change from time to time and provides the scope for the organisations to create new product and service offers by making use of technology like CRM.
Today majority of the companies are adopting CRM systems only because of a perception that it is the latest technology and most their competitors are using it. Some statistics that supports this behaviour are presented as follows:
- By Pareto’s principle, it is believed that 80% of a company’s profits are generated by 20% of its customers.
- In the case of industrial markets, a sales person need to make eight to ten calls to sell the product to a new customer, whereas it takes two to three calls to an existing customer.
- Many research findings indicate that retaining a customer is five to ten percent cheaper than acquiring a new customer.
- Many studies also found that dissatisfied customer shares his bad experiences with the product to eight to ten people. So satisfying the existing customer will create good image to the company.
Knowing the every customer through data mining technique and a customer-centric business strategy make the organisation proactive and offer the products and services in consistent with the customer changing needs and wants and thereby achieve retention and loyalty for a longer period. Peppers and Rogers1 (1999) refer to this as maximizing “lifetime customer share”, resulting in customer retention and customer profitability.
Implementation of CRM:
The implementation of a customer relationship management solution consists of six-stages. It starts from collecting information about the customers and processing it to using that information for maximizing the marketing efficiency and customer experience.
- Stage one – Collecting information: The first step in CRM IS to collect the information needed to identify the customers, categorize their behaviour and segment them accordingly. The companies that are having web portals and performing online services have the potential advantage of capturing customer data when the later maintains his or her own details when they buy.
- Stage two – Storage of information: The most effective way to store and manage the customer information is through centralised database systems. This centralised database system will allow the users to get up-todate information about the customers.
- Stage three – Accessing information: With information collected and stored centrally, the next stage is to make this information available to the users in the most useful format.
- Stage four – Analyzing customer behaviour: Data mining tools provides the customer data in spreadsheets to the users. This will be useful to the decision makers to identify the consumer behaviour pattern and thereby profile the customers and thereby prepare the suitable strategies.
- Stage five – Marketing more effectively: Majority of the organisations found that a small percent of their customers bring a high percent of their profits. The use of CRM will enable the users to gain a better understanding of customers’ needs, desires and self- perception, and can reward and target the most valuable customers.
- Stage six: – Enhancing the customer experience: As it was identified that a small group of customers are bringing more profits to the company, a small number of complaining customers often take up a less amount of staff time. If these customers’ problems can be addressed and resolved quickly, the staff will have more time for other categories of customers.
Methods of Initiating and Improving CRM:
According to Vinas2 (2001) CRM is a business strategy, which involves forecasting, planning, executing, commitment and change. Any customer having a need of contacting with the employees of organisation should be regarded as “CRM user”. Excellence in CRM is not possible only through the technological tools and marketing communications. The ‘soft’ aspect of the CRM should not be ignored.
The following methods will suggest the various ways of initiating and improving CRM programmes in an organisation.
- Defining CRM: The core of the CRM knows about the customer and the possible way of interacting with him. CRM is all about the customer knowledge and not about the sophisticated software. So the implementer should define the purpose of installing the CRM system.
- Staff involvement: The major hurdle in CRM implementation is the employees support and involvement. CRM demands the employees to capture more information to do more things. Some employees may not like this approach, since they believe that it may slows them down and if they have not been shown the value, they reject it. Organisations must get their employees excited with some key benefits and initiations. The organisations need to assure their employees that if they put information into CRM systems they will get value out of it.
- Top management commitment: the role of top management in the implementation of CRM is critical. One of the major problems in the CRM implementation is employees’ resistance. Top management has the power of minimizing the resistance to change by the employees. Also, the top management is responsible for making CRM strategy simple to make it workable.
- Integration of CRM systems: Perceiving customers by various departments in the organisation varies. The marketing manager always thinks of selling more to the existing customer as long as he keeps on buying the product. Finance manager may think of stop selling to the customer if the later fails to pay the bill promptly. This is the area where there is a need to integrate the business systems by CRM. Value profiling of customers is only possible through CRM and this might help the organisation in continuing with the profitable customers. Successful CRM is all about having a real time access to the right information about the customers.
- Research CRM tools and technologies: Business organisations should keep vigilance on the changes that are happening in the technological field to update itself to stay competitive in the market. The technological aspects in CRM keep on changing from time to time and if the company wants to make use of this concept in full potential it should keep on searching for the latest CRM tools and techniques. The technological breakthroughs in CRM can be traced as emergence of SMS messaging, digital phones, interactive TVs, Web portals, e-mail, etc.
- Long-term view: the organisations aspiring for nurturing the full potential of CRM system should have patience. The full benefits of CRM cannot be accrued in short term. It will take a long time to extract the potential benefits. The expensive CRM systems incurring huge investments may only be realized in the long run.
- Manage consultant and vendor relationships: Although there exist a friction between consultants and vendors, these two groups need to be collaborated to get the real benefits of CRM. These two groups are only can see the “bigger picture”. It is therefore important for organisations to manage the relationships and develop mutually reasonable expectations.
- Measure the success of CRM strategy with patience: The success of CRM may come to know in the long run and companies need to be patience in quantifying the success they accrued with CRM investments. Also they should develop proper measuring metrics to evaluate the CRM success.
- Keep it simple: The customer relationship management requirements will be unique for each organisation. The organisations should not tend towards implementing CRM systems in every aspect of their business. In the implementation process, the concerned groups like IT people, technical people, and consultants will try to work in their own way. Synchronization is needed here to make CRM more meaningful. A big CRM system might take two years to get installed completely and then suddenly the organization’s requirements and directions have changed. So, it is always advisable to keep the CRM system unique to every organisation and make it simple.
- Outsourcing: If the organisation does not feel up to the CRM learning curve, consider outsourcing. Outsourcing will often recruit, train and manage contact centers on behalf of clients. The customer does not care about the person they are talking to is sitting as long as their needs are met. Today, outsourcers that get customer information which they sell back to the organisation or uses to manage CRM for the organisation are becoming more and more common.
For citing this article use:
- Kumari, J. V. J. (2015). A study on customer relationship management in insurance sector.
- Peppers, D., Rogers, M., &Dorf, B. (1999). Is your company ready for one-to-one marketing? Harvard Business Review, 77(1), 151-160
- Vinas, T. (2003).Industry Week/IW.1252(5). 4-33