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CRM is the main business strategy that incorporates internal processes as well as functions and external networks to produce and distribute value to selected customers at a profit margin. It is based on high quality data related to the customer as enabled by information technology. Therefore, CRM is not just about information technology but rather integration of processes and functions strategically to generate profit while creating an absolute customer satisfaction (Buttle 2008, p. 15).
Management Consideration in Introduction of CRM
The management consideration in consideration of a CRM is an important element to ensure that it meets the company customer requirements and objectives. The management must consider that the CRM should be able to identify the customers of the organization and build deep understanding of them. Also, it bust differentiate the customers so as to enable the management know those customers who currently have most value thus providing good future prospects of the company. The CRM should also interact with the customers and create an understanding on their requirements and their relations with competitors. In addition, the management should consider a CRM that customize the communications to the customers and offer absolute customer satisfaction (Buttle 2008, p. 19).
Moreover, the management should consider the impact of the CRM on the profit of the organization. There should be an understanding whether the adoption of a particular CRM is bound to grow the revenues of the company. This is because with the satisfied customers out of an effective CRM they are able to buy additional range of products or services (Buttle 2008, p. 36). This has a good impact on the revenue trends of the organization. Thus the management should consider adopting only those CRMs that are able to grow the company revenue.
Another thing to be considered by the company is the costs involved to acquire or develop the system as well as the continued support. The benefits should be able to exceed the costs involved so as to make an economic sense for the organization. With an effective CRM system in place, the customers will not demand more than what the company cannot satisfy. This is because both the supplier and the customer are in agreement with effective CRM (Buttle 2008, p. 36).
The management should also consider the impact of the CRM on the customers. The good impact created out of absolute customer satisfaction should be able to increase the customer base out of referrals and word of mouth. The company could benefit from this cheap form of advertisement when it has an effective CRM system in place. This will also create a customer loyalty where the customer will even be willing to pay a higher price for a product or service out of satisfaction (Buttle 2008, p. 37). Thus the choice of CRM has a direct effect on the marketing activities of the company. A successful marketing is achieved with effective CRM which creates absolute customer satisfaction.
The term “relationship” as used in the context of CRM stands for the series of interactive encounters between the organization and the customers. In real speaking, the relationship is developed over time and as such it does not just mean a one time buyer but rather consistent. An encounter in the view of a sales representative is the process such as making purchase, enquiring about a product, making the sales call, negotiation of terms, responding to complaints, resolving and invoicing dispute and so on (Buttle 2008, p. 37).
With each encounter, there are a series of interactions whereby each interaction involve an action and its response. Therefore it creates a whole process of communication by speech and body language. With these interaction, comes emotions and attachments for effective connection. This is the relationship that will have been created between the organization and the customers. Thus a relationship is more to do with continued interactions up to the point of the creation of bonds of attachment. Therefore “relationship” customers are those customers of the organization out of several encounters. They are dependent on the organization for provision of their desired products and services (Buttle 2008, p. 37).
The marketing strategy for “relationship” customers is level two and three whereby they involve social bonds and personalized products and services. They are aimed at satisfying specific needs of those customers in which the company has created a proper understanding and can influence their purchasing patterns with innovative products (Baran, Galka & Strunk 2007, p. 107).
These are customers who respond to company events such as advertisements yet they do not stay on so that the company can built a relationship. This basically refers to those customers that buy the products or services for once or rarely come back. The “transaction” customers are expensive to be maintained by an organization since a lot of money is spent on them yet it cannot transform to quality relations (Baran, Galka & Strunk 2007, p. 107).
Therefore, frankly speaking the organizations should not stop targeting these customers but rather develop budgets that are affordable by the company. This should maintain the profitability whereas it meets requirements of all the customers thus satisfying the CRM. The organization’s CRM ensures that all customers are satisfied which include the transactional customers. The appropriate marketing strategy for this group of customers is the level one marketing which relies primarily on pricing incentives. These incentives have an impact of pooling in several “transaction” customers at one given time which may be through advertisement or any other media (Baran, Galka & Strunk 2007, p. 107 & 108).
The CRM has been a useful system that interfaces with other business processes for effective overall performance. The CRM is able to gather the crucial data concerning the customer needs and requirements. This is very important information to be used in the TQM systems. The quality requirement of the organization as set out by the TQM will be achieved with the interfacing with CRM. This is because it will allow benchmarking and collection of feedback from the customers.
The other business processes that work effectively with the CRM is the enterprise resource planning. With the information requirements of the customers as gathered by the CRM, the allocation of resources to produce the best customer requirements is possible to be done. Thus it is able to be integrated into the business processes to give more efficient performance of an organization.
An example of an organization that has interfaced the CRM with other business processes and achieved the desired success in performance is a banking organization. The bank has developed CRM which solves all the banking requirements of the customers. The bank will in turn use this information in its TQM system so as to improve the quality of its services as well as know the needs of employee allocation to specific departments of importance to the customer absolute satisfaction.