MGT301: Solution of Assignment 1

Define Customer Relationship Management (CRM) & its purpose.

Customer Relationship Management (CRM)

The ability of an organization to effectively identify, acquire, foster and retain
loyal profitable customers [1].
CRM, or Customer Relationship Management, is a company-wide business strategy
designed to reduce costs and increase profitability by solidifying customer satisfaction,
loyalty, and advocacy [2]. As good customer relationship is the heart of business, CRM
oriented companies learn more about customers’ needs and behaviours, plan and execute
and strategy to meet those needs and wants, win and retain customer satisfaction and
loyalty.

Purpose of CRM
CRM focus on delivering quality products and services that create ongoing favourable
customer experiences [2]. Customer Relationship Management reduces the cost of
marketing by retaining existing customer loyalty as making a new customer is 5 to 10
times more costly than retaining an existing customer. The longer a company retains and
satisfies the customer, the more profit it gains from them. Moreover, managing and
focusing on good relations with customers, knowing their needs and wants, a company
can make quick and timely decisions to improve its product and services, and participate
in the market. A company then earns more profit, customer satisfaction, good-will, and
more opportunities to expand and survive. Elaborate your answer with the help of
example.

Elaborate your answer with the help of example?

Companies and organizations focusing on customer relations sometimes introduces
attractive programs and packages and entertain their customer to win their satisfaction. In
Pakistan, Standard Chartered Bank (SCB) has introduces some delighted programs to his
customers.

1
 • On buying some deals from KFC shops, SCB customer can enjoy 40%
discount by using SCB debit or credit card.
• SCB is offering web based online banking, and attracting its customers to
use it. Customers can win laptops, blackberries, and lot more prizes by doing online
transactions.
• By making two transactions of Rs. 500 or more on any POS (Point of
Sale) using SCB debit card, a customer gets Rs. 250 back deposited into his account.
• SCB is also offering discount to his customers on using its credit card on
Fuel Stations.

Why CRM is different from traditional marketing?

In traditional marketing, a company or organization produces its product, make the
customer aware of this product, and develop the knowledge about the product and
intention to buy it. When customers are ready to buy, product is sold to them. CRM takes
over after the sale for existing customers by stimulating the intention to buy and
sometimes after the sale through post-purchase reinforcement.
For many years the process of traditional (or business-to-business) marketing has used
several reliable, but expensive, techniques, such as:
• Public Relations
• Advertising
• Direct Mail
• Trade Shows
These marketing activities are designed to generate responses from people who are
interested in learning more about the company’s products. In other words, they are
designed to generate leads, lots of unqualified leads. Each of these marketing techniques
performs well under the right circumstances; however there are problems with traditional
marketing:
• It takes too much time for an inquiry to be processed.
• It is too expensive to generate the inquiries.

2
For years marketers relied on traditional mass marketing methods to spread a general
message across a broad spectrum of potential prospects. But times have changed.
Customer Relationship Management has become the need of time. CRM emphasized
on:
• 360-degree view of the customer
• One-to-one relationship marketing to understand the customer
• 24/7 readiness to serve the customer
In other words, we now live in a customer-driven, value-focused environment where
marketers and salespeople work as an integrated team to understand each prospect and
customer. [4]

3
References

1. http://www.realmarket.com/required/sedonacorp1.pdf
2. http://www.destinationcrm.com/Articles/CRM-News/Daily-News/What-Is-
CRM-46033.aspx
3. http://www.ducttapemarketing.com/article/articles/237/1/The-Real-Purpose-
of-CRM/Page1.html
4. Part c of the solution in derived from
http://www.coravue.com/documents/Coravue_CRM_White_Paper.pdf