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Introduction and Significance of Customer Relationship Management 1

Unit 1: Introduction and Significance of Customer


Notes
Relationship Management
Structure
1.1 Introduction
1.2 Evolution of CRM
1.3 Need for CRM
1.4 Benefits of CRM
1.5 Transaction vs. Relationship Orientation
1.6 Introduction and Objectives of CRM Process
1.7 Insight into CRM, e-CRM and m-CRM
1.8 Summary
1.9 Check Your Progress
1.10 Questions and Exercises
1.11 Key Terms
1.12 Further Readings

Objectives
After studying this unit, you should be able to:
z Understand the concept of CRM
z Discuss the need and benefits of CRM
z Explain objectives of CRM
z Discuss Transaction vs. Relationship orientation

1.1 Introduction
Customer satisfaction has always been a key element in the pursuit of corporate goals
and objectives. However, the current competitive environment fostered by liberalization
and globalization of the economy, and the rising customer expectations for quality;
service and value have prompted many companies to organize their business around
customers they serve, rather than around product lines or geographic business units.
This is partly because customer contact, care and insight have been rendered
increasingly more practicable and economical through computers, telecom technology
and internet, historically, customer relationship existed even in the pre-industrial era due
to the direct interaction between producers and customers as between farmers and
buyers of agricultural products, or as artisans and craftsmen produced customized
products for each customer. It was when mass production of goods in the industrial era
led to the emergence of middlemen and transaction-oriented marketing, that direct
interaction between producers and customers became less frequent.
Sophisticated analytical techniques are then applied to this customer information to
better understand and predict customer behaviour. CRM can then be used to
strategically implement acquired customer knowledge in every area of the company,
from the highest management level to all employees who come into direct contact with
customers. CRM thus enables an organisation to address its customers’ preferences
and priorities much more effectively and efficiently. CRM is a tool that can help

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2 Customer Relationship Management

organisations to profitably meet the lifetime needs of customers better than their
competitors.
Notes
1.2 Evolution of CRM
Customer Relationship Management (CRM) is a model for managing a company’s
interactions with current and future customers. It provides a 360 degree view of
customer data. It involves using technology to organize, automate, and synchronize
sales, marketing, customer service, and technical support.
Customer Relationship Management is a concept that became very popular during
the 1990s. It offered long-term changes and benefits to businesses that chose to use it.
The reason for this is because it allowed companies to interact with their customers on
a whole new level. While CRM is excellent in the long-term, those who are looking for
short term results may not see much progress.
One of the reasons for this is because it was difficult to effectively track customers
and their purchases. It is also important to realize that large companies were
responsible for processing tremendous amounts of data. This data needed to be
updated on a consistent basis.
In the last few years, a number of changes have been made to customer
relationship management that has allowed it to advance.
These capabilities have allowed CRM to become the system that was once
envisioned by those who created it. However, the biggest problem with these newer
systems is the price. A number of personalized Internet tools have been introduced to
the market, and this has driven down the cost of competition. While this may be a bane
for vendors who are selling expensive systems, it is a bonanza for small companies that
would otherwise not be able to afford CRM programs. The foundation for CRM was laid
during the 1980s.
During this time, it was referred to as being database marketing.
The term “database marketing” was used to refer to the procedure of creating
customer focus groups that could be used to speak to some of the customers of the
company. The clients who were extremely valued were pivotal in communicating with
the firm, but the process became quite repetitive, and the information that was collected
via surveys did not give the company a great of information. Even though the company
could collect data through surveys, they did not have efficient methods of processing
and analysing the information. As time went on, companies begin to realize that all they
really needed was basic information. They needed to know what their customer
purchased, how much they spent, and what did they do with the products they
purchased.
The 1990s saw the introduction of a number of advances in this system. It was
during this time that term Customer relationship management was introduced. Unlike
previous customer relationship systems, CRM was a dual system. Instead of merely
gathering information for the purpose of using for their own benefit, companies started
giving back to the customers they deserved. Many companies would begin giving their
customers gifts in the form of discounts, perks, or even money. The companies believed
that doing this would allow them to build a sense of loyalty in those who bought their
products.
Customer relationship management is the system that is responsible for introducing
things such as frequent flyer gifts and credit card points. Before CRM, this was rarely
done. Customers would simply buy from the company, and little was done to maintain
their relationship. Before the introduction of CRM, many companies, especially those
that were in the Fortune 500 category, didn’t feel the need to cater to the company. In
the minds of the executives, they have tremendous resources and could replace
customers whenever it became necessary. While this may have worked prior to the
1980s, the introduction of the Information Age allowed people to make better decisions

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Introduction and Significance of Customer Relationship Management 3
about which companies they would buy from, and global competition made it easier for
them to switch if they were not happy with the service they were getting.
Notes
Today, CRM is being used to achieve the best of both worlds. Companies want to
maintain strong relationships with their clients while simultaneously increasing their
profits. The CRM systems of today could be called “true” CRM systems. They have
become the systems that were originally envisioned by the pioneers of this paradigm.
Software companies have continued to release advanced software programs that can
be customized to suit the needs of companies that compete in a variety of different
industries. Instead of being static, the information processed within modern CRM
systems is dynamic. This is important, because we live in a world that is constantly
changing, and an organization that wants to succeed must constantly be ready to adapt
to these changes.
Table 1.1: Landmarks in the History of CRM: 1960-2010

1960s Mass Production/Mass Product


1970s Mass Market
1980s Total Quality Management
1990s Customer Relationship Management (CRM)
2000s Customer Relationship Management (CRM)
2010s e-Customer Relationship Management (e-CRM)

Mass Production/Mass Product: Mass Production is a system of manufacturing


based on principles such as the use of interchangeable parts, large-scale production,
and the high-volume Assembly Line. Although ideas analogous to mass production
existed in many industrialized nations dating back to the eighteenth century, the
concept was not fully utilized until refined by Henry Ford in the early twentieth century
and then developed over the next several decades. Ford’s success in producing the
Model T automobile set the early standard for what mass production could achieve. As
a result, mass production quickly became the dominant form of manufacturing around
the world, also exerting a profound impact on popular culture. Countless artists, writers,
and filmmakers used the image of the assembly line to symbolize either the good or the
evil of modern society and technological prowess.
Mass production techniques maximized the profit making ability of corporations, but
it dehumanized the lives of workers. Frederick W. Taylor introduced Scientific
Management at the beginning of the twentieth century, which used time and motion
studies (often timing them with a stopwatch) to measure workers’ output.
Taylor’s goal was to find the ideal process and then duplicate it over and over. In
the abstract, scientific management was a giant leap forward, but in reality, mass
production led to worker unrest, turnover, and social conflict. Unionization efforts,
particularly the struggles to organize unskilled workers by the Congress of
Industrial Organizations (CIO) in the 1930s and 1940s, and battles between
management and employees intensified as workers became more alienated because of
the factory setting.
Mass Market: Mass Marketing is a market coverage strategy in which a firm decides
to ignore market segment differences and go after the whole market with one offer. It is
type of marketing (or attempting to sell through persuasion) of a product to a wide
audience. The idea is to broadcast a message that will reach the largest number of
people possible. Traditionally mass marketing has focused on radio, television and
newspapers as the medium used to reach this broad audience. By reaching the largest
audience possible exposure to the product is maximized. In theory this would directly
correlate with a larger number of sales or buy in to the product. As the name says it’s
mass so you are trying to get as many as you can.

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Mass marketing or undifferentiated marketing has its origins in the 1920s with the
inception of mass radio use. This gave corporations an opportunity to appeal to a wide
Notes variety of potential customers. Due to this, variety marketing had to be changed in order
to persuade a wide audience with different needs into buying the same thing. It has
developed over the years into a worldwide multi-billion dollar industry. Although sagging
in the Great Depression it regained popularity and continued to expand through the 40s
and 50s. It slowed during the anti-capitalist movements of the 60’s and 70’s before
coming back stronger than before in the 80’s, 90’s and today. These trends are due to
corresponding upswings in mass media, the parent of mass marketing. For most of the
twentieth century, major consumer products companies held fast to mass marketing-
mass producing, mass distributing and mass promoting about the same product in
about the same way to all consumers. Mass marketing creates the largest potential
market, which leads to lowered costs.
Total Quality Management: Total Quality Management (TQM), a buzzword phrase
of the 1980’s, has been killed and resurrected on a number of occasions. The concept
and principles, though simple seem to be creeping back into existence by “bits and
pieces” through the evolution of the ISO 9001 Management Quality System standard.
“Total Quality Control” was the key concept of Armand Feigenbaum’s 1951 book,
Quality Control: Principles, Practice, and Administration, in a chapter titled “Total Quality
Control” Feigenbaum grabs on to an idea that sparked many scholars interest in the
following decades, that would later be catapulted from Total Quality Control to Total
Quality Management. W. Edwards Deming, Joseph Juran, Philip B. Crosby, and Kaoru
Ishikawa, known as the big four, also contributed to the body of knowledge now known
as Total Quality Management.
The American Society for Quality says that the term Total Quality Management was
used by the U.S. Naval Air Systems Command “to describe its Japanese-style
management approach to quality improvement.” This is consistent with the story that
the United States Navy Personnel Research and Development Centre began
researching the use of Statistical Process Control (SPC); the work of Juran, Crosby,
and Ishikawa; and the philosophy of W. Edwards Deming to make performance
improvements in 1984. This approach was first tested at the North Island Naval Aviation
Depot. Companies who have implemented TQM include Ford Motor Company, Phillips
Semiconductor, SGL Carbon, Motorola and Toyota Motor Company.
The latest changes coming up for the ISO 9001:2000 standard’s “Process Model”
seem to complete the embodiment. TQM is the concept that quality can be managed
and that it is a process.
Total Quality Management (TQM) is a management strategy aimed at embedding
awareness of quality in all organizational processes. TQM has been widely used in
manufacturing, education, government, and service industries, as well as NASA space
and science programs.
Total = Quality involves everyone and all activities in the company.
Quality = Conformance to Requirements (Meeting Customer Requirements).
Management = Quality can and must be managed.
TQM = A process for managing quality; it must be a continuous way of life; a
philosophy of perpetual improvement in everything we do.
Customer Relationship Management (in 1990): Customer Relationship
Management (CRM) is one of those magnificent concepts that swept the business world
in the 1990’s with the promise of forever changing the way businesses small and large
interacted with their customer bases. In the short term, however, it proved to be an
unwieldy process that was better in theory than in practice for a variety of reasons. First
among these was that it was simply so difficult and expensive to track and keep the
high volume of records needed accurately and constantly update them.

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Introduction and Significance of Customer Relationship Management 5
In the last several years, however, newer software systems and advanced tracking
features have vastly improved CRM capabilities and the real promise of CRM is
becoming a reality. As the price of newer, more customizable Internet solutions have hit Notes
the marketplace; competition has driven the prices down so that even relatively small
businesses are reaping the benefits of some custom CRM programs.
In the beginning…
The 1980’s saw the emergence of database marketing, which was simply a catch
phrase to define the practice of setting up customer service groups to speak individually
to all of a company’s customers.
In the case of larger, key clients it was a valuable tool for keeping the lines of
communication open and tailoring service to the clients needs. In the case of smaller
clients, however, it tended to provide repetitive, survey-like information that cluttered
databases and didn’t provide much insight. As companies began tracking database
information, they realized that the bare bones were all that was needed in most cases:
what they buy regularly, what they spend, what they do.
Advances in the 1990’s: In the 1990’s companies began to improve on Customer
Relationship Management by making it more of a two-way street. Instead of simply
gathering data for their own use, they began giving back to their customers not only in
terms of the obvious goal of improved customer service, but in incentives, gifts and
other perks for customer loyalty.
This was the beginning of the now familiar frequent flyer programs, bonus points on
credit cards and a host of other resources that are based on CRM tracking of customer
activity and spending patterns. CRM was now being used as a way to increase sales
passively as well as through active improvement of customer service.
e-CRM: This is a web based Sales Force Automation tool that helps you to focus on
un-covered customer-revenue opportunities that are not possible in a manual sales
process. The architecture of the product brings your Customers/Sales Teams/Channel
partners into a single centralized structure. This will help you overcome the stumbling
block of remote accessibility of information across your organization. It’s easy to use
web based interface, faster deployment and effective implementation will streamline
your sales process quickly and in a cost effective way. It records enquiries, follow ups,
complaints and details of any other interaction with the client which helps to build and
maintain lifelong relation with the customer.

Goals of CRM
The idea of CRM is that it helps businesses use technology and human resources to
gain insight into the behaviour of customers and the value of those customers. With an
effective CRM strategy, a business can increase revenues by:
z Providing services and products that are exactly what your customers want
z Offer better customer services
z Cross selling products more effectively
z Helping sales staff close deals faster
z Retaining existing customers and discovering new ones.

1.3 Need for CRM


Customer Relationship management is the strongest and the most efficient approach in
maintaining and creating relationships with customers. Customer relationship
management is not only pure business but also ideate strong personal bonding within
people. Development of this type of bonding drives the business to new levels of
success.

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Once this personal and emotional linkage is built, it is very easy for any organization
to identify the actual needs of customer and help them to serve them in a better way. It
Notes is a belief that more the sophisticated strategies involved in implementing the customer
relationship management, the more strong and fruitful is the business. Most of the
organizations have dedicated world class tools for maintaining CRM systems into their
workplace. Some of the efficient tools used in most of the renowned organization are
Batch Book, Sales force, Buzz stream, Sugar CRM etc.
Looking at some broader perspectives given as below we can easily determine why
a CRM System is always important for an organization.
1. A CRM system consists of a historical view and analysis of all the acquired or to be
acquired customers. This helps in reduced searching and correlating customers and
to foresee customer needs effectively and increase business.
2. CRM contains each and every bit of details of a customer, hence it is very easy for
track a customer accordingly and can be used to determine which customer can be
profitable and which not.
3. In CRM system, customers are grouped according to different aspects according to
the type of business they do or according to physical location and are allocated to
different customer managers often called as account managers. This helps in
focusing and concentrating on each and every customer separately.
4. A CRM system is not only used to deal with the existing customers but is also
useful in acquiring new customers. The process first starts with identifying a
customer and maintaining all the corresponding details into the CRM system which
is also called an ‘Opportunity of Business’. The Sales and Field representatives
then try getting business out of these customers by sophistically following up with
them and converting them into a winning deal. All this is very easily and efficiently
done by an integrated CRM system.
5. The strongest aspect of Customer Relationship Management is that it is very cost-
effective. The advantage of decently implemented CRM system is that there is very
less need of paper and manual work which requires lesser staff to manage and
lesser resources to deal with. The technologies used in implementing a CRM
system are also very cheap and smooth as compared to the traditional way of
business.
6. All the details in CRM system is kept centralized which is available anytime on
fingertips. This reduces the process time and increases productivity.
7. Efficiently dealing with all the customers and providing them what they actually
need increases the customer satisfaction. This increases the chance of getting
more business which ultimately enhances turnover and profit.
8. If the customer is satisfied they will always be loyal to you and will remain in
business forever resulting in increasing customer base and ultimately enhancing net
growth of business.
In today’s commercial world, practice of dealing with existing customers and thriving
business by getting more customers into loop is predominant and is mere a dilemma.
Installing a CRM system can definitely improve the situation and help in challenging the
new ways of marketing and business in an efficient manner. Hence in the era of
business every organization should be recommended to have a full-fledged CRM
system to cope up with all the business needs.
Customer relationship management currently, a much talked about issue is not a
fad, but is very vital for companies in the present highly competitive scenario. However,
across the organization the attitude towards customer service should be inculcated and
this should be driven from the top most downwards.
z Companies have to increasingly pursue a customer centric competitive
strategy rather than a product centric one: Two trends have brought CRM to the
forefront.

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Introduction and Significance of Customer Relationship Management 7
First, with increased global competition and easy access to the latest technology,
products have become harder to differentiate; hence companies are increasingly
pursuing a customer-centric competitive strategy rather than a product centric one. Notes
Second, now it is possible to put customer information from all over the enterprise
into a single system rather than a no different systems and access it from anywhere
in the world through the internet.
z E-customers demand constant access, immediate response, and a
personalized touch: Customers in the e-business age expect constant access to a
company, through emails; call centres, faxes and websites. They demand
immediate response and a personalized touch meeting their needs, placing new
demands on the enterprise, which CRM alone can satisfy.
z Focus is shifting from supply chain to demand chain effectiveness: With the
product quality at all-time highs, manufacturers find it increasingly difficult to gain
competitive advantage based solely on product attributes. Therefore the focus now
is on channel operations and customer relationships, when there is great potential
for adding value and differentiating the offerings. Increasingly companies are
applying sophisticated information technology to identify, acquire and retain the
most profitable customers by continuously improving the highest levels of customer
experience, and creating and sustaining the highest levels of customer satisfaction.
Thus, in the era of e-business, the key source of competitive advantage is shifting.
Thinking firms are revising their strategy to focus on demand chain effectiveness
that is, a continuously improving their ability to identify, acquire and retain profitable
customers.
z Better understanding and intelligent management of customer relationships
is essential for survival: The effect of increased commoditization of products and
production processes is that customers now have more and more choices. Hence
giving them better, more personalized product offerings and services is the only real
way to make a difference winning the battle for share of mind and share of wallet in
this new economy depends on understanding and intelligently managing
relationships with customers. It is no longer the privileged domain of particularly
successful companies; it has become the make-or-break challenge for every
company.

1.4 Benefits of CRM


The benefits of customer relationship management are considered abound. It allows
organisations not only to retain customers, but enables more effective marketing,
creates intelligent opportunities for cross selling and opens up the possibility of rapid
introduction of new brands and products. To be able to deliver these benefits,
organisations must be able to customize their product offering, optimize price, integrate
products and services and deliver the service as promised and demanded by the
customer base. Keeping the customer happy is obviously one way of ensuring that they
stay with the organisation. However, by maintaining an overall relationship with the
customer, companies are able to unlock the potential of their customer base and
maximize the contribution to their business. Whilst the value of customer relationship
management has been identified by organisations, the full implications and benefits are
yet to be evaluated. Those responsible for delivery are perhaps the most informed
about these strategic benefits yet the transformation is a long-drawn-out process.
The strategic benefits of customer relationship management allow companies to
reduce the cost of customer acquisition and give established players the ability to react
like a new market entrant, the very people they are battling against. Ironically these are
increased and the potential of customers can be then capitalized through cross selling
of other products and services. It is important to understand the key benefits of CRM for
most companies. These benefits generally fall into three categories; cost savings,
revenue enhancement, and strategic impact.

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8 Customer Relationship Management

Benefits of CRM to Organization


Notes The benefits of CRM to organization are:
z Increased revenue through acquisition of new customers, retaining existing
customers, and increased share of wallet through up selling, cross-selling, etc.
z Reduced costs: The ability to differentiate between customers on the basis of their
long-term profitability helps the organisation to plan better, cost-effective marketing
strategies to derive better returns on marketing investments.
Automation of many services and ability to provide many services as self-services
further reduces the cost.

Cost of CRM to Organization


Costs of CRM to organization are:
z CRM requires the organization to make significant investments in IT infrastructure.
z The organization has to incur the cost of process change arising out of alteration in
the habitual pattern of accomplishing tasks. Employees find it far easier to carry on
traditional transaction marketing. The company might need to spend significant
amount of efforts to make employees adapt to CRM.

Benefits of CRM to Customers


The benefits of CRM to customer are:
z The continuity derived from a relationship with the same seller results in a simplified
buying process and reduction in customer’s perceived risk. This, in turn, increases
the feeling of safety and comfort.
z CRM provides more avenues for customers to communicate and explain their
needs to the organisation through numerous contact points Customers get
increased satisfaction and a feeling of being special and important because of the
increased personalization of services and customization of goods offered to them.

Cost of CRM to Customers


Costs of CRM to customer are:
z Possible or inevitable loss of privacy. Many customers don’t want a company to
collect and store information about them. Online companies must disclose their
privacy policies to the customers and give them the right not to have their
information stored in a database.
z Opportunity cost associated with ignoring other offers from competitive sources –
once a habit is formed most customers would refrain from exerting the effort to
assess the options and prices offered by others.

1.5 Transaction vs. Relationship Orientation


While all marketing focuses on gaining clients and increasing profits, relationship
marketing and transactional marketing take different views of the role of the client. The
transactional approach views the client solely as a vehicle for sales, while relationship
marketing establishes a relationship with the person behind the sale.
Relationship Marketing is a relatively new concept in marketing. The concept is
catching more attractions by organizations day by day because of the longevity of
relationship with customers and low cost of retaining customers.
Marketing has moved from customer acquisition to customer retention to customer
selection. The importance of relationship marketing in retention of few profitable
customers has become even more important than ever. Smith and Taylor in their book
“Marketing Communication: an integrated approach” are of the view that organizations

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Introduction and Significance of Customer Relationship Management 9
today do not look at customers as buying one can of beans, one car or photocopying
machine but they think of them as buying thousands of cans of beans, dozens of cars
and photocopiers during their life time. Today selling has moved away from short term, Notes
quick scale scenario and selling today is more about “partnering” and relationship
building, you don’t sell to people you partner with them and photocopiers during their life
time. Today selling has moved away from short term, quick scale scenario and selling
today is more about “partnering” and relationship building, you don’t sell to people you
partner with them.

Relationship Marketing vs Transactional Marketing


Transactional marketing is a business strategy that focuses on “single point of sale”
transactions. The emphasis is on maximizing the efficiency and volume of individual
sales rather than developing a relationship with buyer. On the other hand relationship
marketing is a business strategy that seeks to establish long term relationship with its
customers rather than focusing on single transaction, not only does it focus on
individual customers but on all the stakeholders in order to manage a relationship that
adds value to each person.
Varey and Lewis in their book “Internal Marketing Directions for Management”
describe in detail how transactional marketing differs from relationship marketing.
z Focus: The transactional marketing focus on recruitment of customers for single
sale; Relationship marketing focus on customer retention
z Orientation: Transactional marketing is oriented on product features; Relationship
Marketing orientation is on product benefits and system solutions
z Time Horizon: Transactional marketing has short time horizon: Relationship
marketing has long term horizon
z Customer Focus: Transactional Marketing has little customer focus: Relationship
Marketing has high customer focus
z Information: Transactional Marketing information is content of communication;
Relationship Marketing information is product of communication.
z Contact: In Transactional Marketing there is low contact with customers; In
Relationship marketing there is high contact with customers
Egan in his book “Relationship Marketing 3rd Edition” says that relationship
marketing has a dual focus both on customer retention and acquisition strategies. It has
become underpinning conviction of relationship marketing that it encourages retention
marketing first and acquisition marketing later on. The academics are of the view that
customer retention offers significant advantage than customer acquisition, particularly in
saturated markets.

Benefits of Relationship Marketing over Transactional Marketing


Relationship Marketing is rooted in the idea that it is cheaper to retain an existing
customer than to recruit a new one. There are many benefits of relationship marketing.
The first and foremost is that it focuses on providing value to its customers and places a
great emphasis on customer retention. Secondly relationship marketing approach is an
integrated approach to marketing, service and quality and therefore it helps in gaining
competitive advantage. The long term customer may do the word of mouth promotions
and referrals and many studies have revealed that cost to retain existing customer is
just fraction of the cost to acquire new customers. Mudie and Perrie in their third edition
of their book “Services Marketing Management” assert that relational customer also
tend to increase their purchases overtime either because they are consolidating their
purchasing onto preferred supplier due to grown business/ family and it has also been
found that there is less need to offer price promotions to this group as these customers
are likely to be less price sensitive than others.

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10 Customer Relationship Management

Trend towards Relationship Marketing

Notes Nowadays more and more organizations are adapting relationship marketing approach.
The big examples in this case are Club Card by Tesco and Nectar Card by Sainsbury
and other partner organization. The points scored are not only tempting to customers
for repeat buying but the data collected also gives the organizations an insight into the
buying habits of their customers. It helps in making a more customised marketing
strategy directed at individual customers and time to time customers are sent
information on promotions and new products. Some organizations go even further and
send gifts and cards on birthdays or other such special occasion of customers.
With time organizations have realized that the cost of attracting new customers is
very high and retaining customer results not only in increased profits but word of mouth
marketing and positive referrals also help in generating more business leads.
Relationship marketing has become the approach for 21st century and soon enough
longevity of relationship with customers will be key in determining success of
businesses in today’s highly competitive environment.
Relationship marketing and transactional marketing are two contrasting marketing
concepts that define marketing in the modern world. These two classes of marketing
are contrasting and somewhat different.
The essence of this discussion is to examine the changing dynamics in marketing in
the modern media. Core marketing theories in modern business communication has
culminated in a conflict between transaction marketing and relationship marketing. The
conflict relates to which of the two is the right model for the development of modern
marketing.
This literature review would include a critical examination of important documents
and secondary sources that describe the elements and structures of modern business
and modern marketing. The research would critique the two methodologies and
approaches to marketing and identify how they interact with each other. It would
continue to identify the gaps in research and provide guidelines and implications for
practise.

Marketing
There are numerous angles through which the concept of 'marketing' can be examined.
Marketing is a common business unit that most businesses maintain. The common
conception of marketing is that it exists to help a business to sell its products to
consumers. However, there are different angles through which the concept of marketing
can be examined.
“Marketing covers the activities that relate the organisation to those parts of the
outside world that use, buy, sell or influence the outputs of products and the benefits
and services it offers” (O'Shaughnessy, 2011: p4). This definition means that marketing
is a unit of a business that links up with external stakeholders who have the obligation
of unleashing and presenting products to consumers with the hope of getting them
interested and happy about the prospects of the product. This suggests that marketing
relates to how the products of a given company can be made available to consumers.
Another definition of marketing provides a very different view of the concept and/or
business function. The definition put forward by Shaw states that “marketing is the
management process responsible for identifying, anticipating and satisfying customer
requirements with the view of attaining profitability” (2009: 1). This second definition of
marketing is very different from the other definition. It purports that the fundamental
essence of marketing is to spend time appraising the expectations and needs of
consumers with the view of meeting customer expectations and also attaining a level of
profitability to the company. This definition suggest that marketing is about finding what
consumers want and producing it for them with the view of charging them an extra
amount in profits. This is in contrast with the idea that marketing is about selling a
company's products to consumers. This creates a division of a consumer-centred
marketing as opposed to an organisation-centred marketing which is interested in
profits only.

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Introduction and Significance of Customer Relationship Management 11
A third definition, which might be seen as a reconciling or universal definition of
marketing states that “marketing encompasses managing, integrating and controlling
supervision of all company efforts that have a bearing on sales” (Reid and Bojanic, Notes
2012: p8). This definition indicates that marketing is a function that relates to sales.
Hence, it can be said that marketing relates to how a company would sell its products
and how it would satisfy consumers in the best way possible. This means that
irrespective of the product or approaches used by the company, marketing is about how
to sell the company's products and also satisfy consumers' needs.
From the three definitions, there can be the segregation of a traditional marketing
from the modern approach to marketing. The next section of the literature review would
delve deep into the differences between the two classes of marketing.

Traditional Marketing vs Modern Marketing


Maheswari makes a distinction between traditional marketing and modern marketing
(2011). According to Maheswari, traditional marketing involves a situation whereby a
company produces a set of products and finds ways of selling the product to
consumers. This means that traditional marketing relates to producing a set of products
that are of interest to a set of consumers on the market. Thus, the business finds ways
of selling this general class of products to consumers through 'marketing'.
Modern marketing on the other hand, integrates the requirements and needs of
consumers in the design of the product and the offering of the product to consumers
(Maheswari, 2011). This means that modern marketing is about selling products that
consumers want to have and estimating and anticipating what they would need further
and giving it to them (Shaw, 2009). Modern marketing is consumer-oriented whist
traditional marketing is company-oriented. Thus, whilst consumer needs and
expectations form the basis of modern marketing, company offering and company views
of consumer expectation form the basis for traditional marketing.
Baker et al (2009) studied the history of modern marketing. They identify that until
1939, most marketing drives were of the traditional type viz. producers perceived what
consumers wanted, produced them and offered it to consumers. However, after the
Second World War, the concept of consumer sovereignty grew in most Western nations
(Baker et al, 2009). This is because business concepts like state ownership of
production systems and monopoly were discouraged. The United States had anti-trust
laws whilst most nations in Europe and the developed world had competition laws which
promoted easy entry for businesses into industries and production lines. As a result of
this, there were many producers in every industry. This led to competition since there
were many producers in every line of business.
With a Capitalist market structure, businesses that 'thought' for the consumers were
at a risk of losing customers if they failed to attain a reasonable degree of harmony with
consumers. In other words, a business that had offerings that were not liked to or
preferred by consumers was at a risk of losing customers. This is because the
consumer were wont to automatically switch to another producer that was offering what
they wanted and needed.
Kundus (2011) goes further to state that “under modern marketing concept,
planning starts with the consumer... the modern marketer constantly asks himself
“would more value be communicated to the consumer if we did it this way or that way”
(p211). Thus, modern marketing dictated that marketing came with the examination of
consumers' needs and expectation. Once this was done, there was the adjustment of
the company to produce exactly what the customers wanted and supplied them in the
right way and manner.
A business has the onus to learn and understand what consumers want. Once this
was done, the marketers had to position itself in relation to the 7Ps of marketing [price,
place, promotion, physical existence, product, process and people] in order to adjust to
what consumers on the markets want and expect (Pulai and Bagavathi, 2010). This is
because consumers' needs and expectations was central and important, hence
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12 Customer Relationship Management

marketers had to ensure that they were discharging all those expectations before they
set out to promote or market their products or services.
Notes
Thus, modern marketing is connected with selling the products of a company in a
way and manner that preserves competitive advantage (Cundiff et al, 2011). This is
because it relates to providing a product offering that makes the best use of the
resources of a firm and also provides the best option to consumers in the target market.
Without that, most businesses fail to attract and retain customers. Thus, it is important
and vital for the business to ensure the interrelatedness of products and marketing with
consumers' views of what is ideal.
From this section of the research, it has been established that there are significant
differences about traditional and modern marketing. Traditional marketing involves
producing goods that are in demand by consumers. It involves finding ways of selling
the products and offering the products to the consumers through a set of channels that
the producer deems fit. Thus, traditional marketing is a form of take-it-or-leave-it offering
whereby producers offer products and services without significant attempts to meet the
consumer half-way.
Modern marketing on the other hand requires a degree of congruence between the
producer and consumer. Thus, the essence of marketing in the modern context is to
produce and offer goods through a system that is appropriate and acceptable by
consumers. Modern marketing goes beyond just trying to sell. It involves an effort to
identify consumers' expectations and working hard to meet them in a way and manner
that is best for consumers.
The fundamental difference between modern marketing and traditional marketing
gives rise to two types of marketing: transactional marketing and relationship marketing
(Baker et al, 2009). Whereas transactional marketing draws parallels with traditional
marketing, relationship marketing has to do with modern marketing which requires
some degree of interconnectedness between the company and consumers. The next
section of the paper would examine transactional marketing and relationship marketing.

Transactional Marketing
Ferrel and Hartline state that in transactional marketing “the focus is on acquiring
customers and making the sale, not necessarily in attending to customers' needs and
want” (2010: p23). This is because in transactional marketing, the company does not
have an interest or desire for a relationship with a customer. The primary objective and
desire is to sell the product. It is all about the transaction. The sale is the ultimate end.
Thus, a company only has one aim when they pursue transactional marketing. They just
seek to sell a product or volume of products. They have no vision or desire whatsoever
to stick around and have any kind of longer term relationship with the consumers.
Under transactional marketing, “the marketing process ends when the sale has
occurred, the sale is the objective and the end result of the marketing effort.” (Brendt
and Brink, 2011: p4). This shows the short term orientation of transactional marketing.
Transactional marketing also has a conscious feature inherent in it that excludes
loyalty and long-term relationships. “In transactional marketing, the fact that a customer
has bought a product does not forecast the probability of a new purchase, not even if a
series of purchases are made” (Brendt and Brink, 2011: p4). This means that
transactional marketing seeking repeated purchases from a single customer was out of
the question. The main end is to create a system where stocks are sold Sales are
devoid of forecasts and other customer loyalty and customer relations efforts. Every
single sale is conducted on the assumption that a new set of customers are going to be
served in the new sale. As Brendt and Brink put it, “transactional marketing therefore
has no ambition to climb the loyalty ladder” (2011). Transactional marketing does not
consider the longer-term implication. It is about how to sell a given volume of products
and nothing else.

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Introduction and Significance of Customer Relationship Management 13
Kotler et al. (2011) identified seven main elements of transactional marketing and
this include the following:
z Focus on a single sale: Transactional marketing focuses on a single sale and
Notes
does not think of sales that would be carried out in the future. It is about what is sold
instantly at a given point and not about other related sales.
z Orientation on product features: It is about the features of a given product
because that is what the producers make available to consumers in a transaction.
Thus, the features of the product are the primary elements that are marketed.
z Short timescale: Transactional marketers think of the immediate transaction and
short term. It focuses on selling a set of stocks and does not bother about future
stocks that would be brought back onto the market. It is about the 'now' factor and
not about the future.
z Little focus on customer service: Once a sale is completed, there is a limited
interaction between the seller and the customer. Customer services which involves
collecting criticisms and trying to improve the product are non-existent.
z Limited commitment to customer: The sale is a single commercial transaction. It
does not create any kind of relationship between the buyer and the seller. It is one-
off and once it is completed, there is nothing between the buyer and the seller.
z Moderate customer contact: The seller only makes a connection that is sufficient
to make the product available to the consumer and collect money from the sale.
There is no attempt for interpersonal relationships between the buyer and the seller
in a transactional marketing effort.
z Quality is the concern of the production department: The company's production
team comes up with the design and quality requirements unilaterally. The
production team does not rely on the view of consumers or any outsiders. They only
produce goods that they believe consumers would be interested in. They make no
effort to meet the desires of consumers because a sale is about getting rid of
products and has little connection with the consumer.
Another set of characteristic of transactional marketing are given by Kong (2011)
who identified the following features of transactional marketing which include:
™ It involves doing the deal and disappearing.
™ The price of the product is fixed and it is a push price meant to get consumers
interested, pay for the product and accrue a fixed profit.
™ It involves short-term thinking and acting.
™ In all transactional marketing drives, there is a view of getting new customers.
™ There is no structure for ongoing business which is related to customers' views
and expectations.
™ The focus of transactional marketing is to sell.
™ There is a short-term vision and short-term empathy expressed by the marketer
to the consumer.
™ There is an incentive given to the marketer for doing well.
™ The foundation of the sale is about telling and selling.
™ After-sales services come at an additional cost.
Once a sale is completed, the deal is ended and closed permanently and there is
nothing that would be done for the consumer (Kong, 2011: p28). And it is all about
selling and acquiring the commercial worth of goods that are sold.
Blythe goes on to emphasize on the fact that transactional marketing involves
moderate customer conduct and the seller just ensures that the job is done and does
not satisfy himself or herself in another area of the customer's concerns or expectations
(2011: p11). Also, the quality standards for transactional marketing are set by the seller

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and they dictate it to the consumer who has no right to contribute to the marketing
process (Blythe, 2011: p11).
Notes
Another view of how transactional marketing operates is that it is static and there is
no room for dynamism (Henning-Thurrau, 2009: p5). This is because it involves the
production team producing and the marketers selling the product. Emergent issues that
can prompt dynamism is not recognized (Lancaster and Massing ham, 2010). It is
eliminated and replaced by the need to make a short-term sale to consumers
(Lancaster and Massing ham, 2010).

Disadvantages and Limitations of Transactional Marketing


There are several criticisms that have come up against the use of transactional
marketing. These writers focus on the main limitations and restrictions of transactional
marketing and this goes against them in many ways. Smith et al (2008) identify that the
main limitation of transactional marketing is that consumers are given what producers
want to give them. In other words, producers identify and dictate what they want to offer
to consumers and consumers are expected to accept it on a take-it-or-leave-it basis.
This is very negative and can go against the competitive posture of a given business
that uses this type of marketing.
Another demerit of transactional marketing is that it is financially demanding
because in the long-run, a business would spend more and disproportionately high
sums of money on marketing (Stokes and Lomax, 2011).This is because a business will
normally have to spend more money in every new drive of marketing that they embark
on. Unlike a long-term oriented marketing drive, every consumer would be seen as a
new consumer and a lot of money would be invested to attract such a new customer to
a given entity. This is generally expensive. Paddington identifies that it costs seven
times more money to attract a new customer than to convert an existing customer to a
returning customer (2009).
Innovation is highly limited when a business pursues transactional marketing.
Napier et al (2011) identify that it is not be possible to ascertain what customers desire
and integrate them into production. The implication is that innovation and improvement
of products would be slower than normal. The business in question is likely to fail to
succeed and there would be significant issues and problems with the company's ability
to attain and maintain competitive advantage.

Relationship Marketing
Another concept of marketing that has evolved to counter transactional marketing is
relationship marketing. Relationship marketing is meant to “establish, maintain and
enhance relationships with customers and other partners at a profit so that the
objectives of the parties involved are met. This is achieved by mutual exchange and
fulfillment of processes” (Little and Marandi, 2011: p22).
This definition of relationship marketing means that marketing is not just about a
sale or a commercial activity that exchanges goods or services for money. It involves
creating and nurturing a relationship between buyer and seller. This also involves a
situation whereby the producer builds a relationship that seeks to satisfy the consumer
and hence promote a win-win situation between the two parties through optimum
satisfaction of needs and expectations.
Pieczka states that relationship marketing is a “...move from one-off transactions to
develop relationships that are nurtured over time and leads to beneficial relationships”
(2011: p68). This means that relationship marketing goes beyond the normal level of
providing a commerce oriented relationship that has no bearing on building a longer
term relationship.
In a different view, Milne and MacDonald provide a relatively simple definition of
relationship marketing. They say it involves “attracting, maintaining and enhancing
customer relationships” (Milne and MacDonald, 2010: p54). In essence, relationship

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Introduction and Significance of Customer Relationship Management 15
marketing is about more than just selling. It involves building a relationship that would
be maintained with the view of building a stronger relationship with the consumer.
Through this relationship, better services are carried out for the best interest of the Notes
consumer.
“It is a marketing process which includes several parties or actions and the
objective is mutual exchange and the fulfillment of promises – a fact that makes trust an
important element of marketing” (Shajahan, 2011: p32). Thus, relationship marketing is
about solving the problems of the consumer and trying to do so on a more permanent
basis rather than in a one-off interaction.
Beamish and Ashford go on to state that in relationship marketing, quality is the
concern of all staff members and it is ascertained by listening to the demands and
requests of consumers and integrating it to all the departments and units of a business
(2012: p205).
There are three levels of relationship marketing and it links the consumer with the
business through different ways and forms (Biswas, 2009). This include:
z Price: This is a preference based pricing system that is given to consumers to
encourage them to continue purchasing and an example of this is the offering of
coupons to cut down on consumers' payments.
z Feelings: The feelings of consumers and their emotions could be increased
through these relationship marketing drives. This is typically done through the
recognition of consumer connection to a company and other rewards.
z Structured relationships: This includes conscious programmes meant to attract
and encourage consumers to continue to purchase from the same company.
Examples of such structured operations include loyalty programmes (Biwas, 2009).
Beamish and Ashford identifies seven important features of relationship marketing.
They are:
z Orientation to customers
z Continuous customer interaction.
z Focus on customer needs
z Long term orientation
z High customer service activities
z High commitment to meeting customer expectations
z Quality is a common concern of all staff members not just the production
department (Beamish and Ashfrod, 2012: p205).
In order to carry out relationship marketing, there is the need for companies to build
some degree of connection through some activities and drives. This includes customer
relationship management, technology and databases, and word-of-mouth
advertisements. There is also the need for ethics to guide and shape the operation of
companies in relationship marketing.

Customer Relationship Management


Customer relations management refers to “a process to compile information that
increases understanding of how to manage an organization's relationship with
customers” (Pourasghar, 2009: p2). This involves a process whereby a company
acquires information about customers and identifies the best ways and means through
which the relationship with the customers can be preserved.
Another definition states that customer relationship management is “a
companywide, ongoing process whereby customer information is identified and used to
serve customers more efficiently, thus optimizing customer satisfaction and profits”
(Pourasghar, 2009: p2). This means that customer relationship management relates to

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16 Customer Relationship Management

how information would be acquired and gathered in order that they would be used to
improve the offering of the company to its consumers.
Notes
The end of customer relations management is to create relationship equity.
Relationship equity is defined by Kotler as “customers' tendency to stick with the brand”
(Schaefer, 2011: p13). Thus, customer relations management aims to create brand
loyalty and help consumers to become closer and more attracted to a given brand or
company.
Stone and Woodcock (2011) state that there are four stages of customer
relationship management. The first stage is to build a strong focus on customers. The
second phase involves the integration of different activities and interactions into
operations by identifying and documenting all what consumers do. The third element is
that the views of consumers are integrated to the supply chain of the company and
used to improve the service offering. Finally, customer relationship management
involves the integration and sensitivity of technology.

Technology & Database in CRM


“Technology-enabled relationship management happens when a firm obtains detailed
information about a customer's behaviour, preference, needs and buying patterns and
uses the information to set prices, negotiate terms, tailor promotions and add product
functions” (Schneider, 2011: p191). Technology therefore provides a better way of
acquiring information about consumers and also enhances the way the information is
analysed. Technology produces information that is used to carry out the customer
relationship management function of a business.
Fjermstad and Romano (2009) identify that technology is used to gather information
about consumers and also assist the people charged with management in making
decisions about how to improve the company's offering to consumers. Kincaid adds that
the fundamental addition that technology gives to customer relationship management is
that it brings speed, accuracy and efficiency in the collection and analysis of consumer
information (2010).
“Database management is the use of customer databases to enhance marketing
productivity through more effective acquisition, retention and development of
customers” (Blattberg, 2011: p4). A database is a collection and classification of
consumer information (Baird, 2010). Customer relationship management involves the
use of data to improve consumers' experiences. Operation data is integrated in the
operation of a business and allows operation and processing to be done efficiently
through thorough analysis (Dyche, 2009).

Individual Referral and Relationship Marketing


“Customer relationship marketing is based on word of mouth referrals. Hence a pleased
customer would tell others and this would possibly ascertain the interest of new
customers” (Radmalatha, 2009 p442). In other companies, this is encouraged through
referral programmes that allows consumers to get a commission for every single referral
they make (Smith and Taylor, 2011: p396).
Affiliate marketing programmes are conscious programmes that are carried out to
give consumers the right to get a structured income through referring others to a given
company or brand (Knox et al, 2008: p227). Affiliate marketing allows businesses to get
information about consumers and encourage the appropriate action to attract and retain
new customers.

Ethics
The fundamental ethic that governs relationship marketing is the fact that consumers'
privacy is important and vital (Baran et al, 2011: p441). This is because consumers
have a right to privacy. However, if this right is not observed and honoured, consumers
can have a recourse to damages if they sue. This is because there are laws and rules

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Introduction and Significance of Customer Relationship Management 17
that prevents companies from abusing and misusing privileged information about their
consumers.
Notes
In the UK, the Data Protection Act 1988 prevents the disclosure of people's
personal information to third parties without their prior consent (Pride and Ferrell, 2011:
p168). There is therefore the need for companies to store the information they receive
from customer relations drives more carefully and diligently. Consumers can go to court
and sue if they feel that their right to privacy has been infringed upon.
Additionally, consumers must have the right to opt out of customer relations
programmes (Pride and Ferrell, 2011: p168). This is because no consumer can be
forced or coerced to enter any kind of sales and purchase arrangement. Thus, it is the
right of a consumer to choose whether to join or stay out of such an activity or drive.
Wright (2011) identifies that there is the need for two things to be respected and
acknowledged in relationship marketing. They are adherence to relevant laws and
sensitivity to cultural and moral expectations. Since corporate entities are required to
follow all laws, there is the need for companies to identify and acknowledge the laws
relating to consumers and their rights in a given nation that they carry out their customer
relations activities. Also, the culture and moral requirements of the community is
important and must be observed and followed appropriately. This would prevent a
situation where a customer relations activity would become detrimental.

Gaps in Research
Marketing is a fundamental function that links products of a business to the outside
world. However, there are different views on how it must be carried out and how it
relates to a company. One view is that marketing is about providing goods to
consumers and giving consumers what they actually need. Another view of marketing
argues that marketing is about appraising the needs of consumers and providing it.
These two schools of thought define the traditional and the modern schools of
marketing thought. The traditional school of marketing sees the function as a means of
selling and making goods and services available to consumers. The modern system on
the other hand involves identifying customer needs and expectations and discharging
them by influencing internal structures of the company to attain this end.
Transactional marketing and relationship marketing are two themes in the two
classes of marketing. Transactional marketing is seen by most scholars to be the selling
of the products of the firm with no view or desire to build a long-term relationship with
the customer. Transactional marketing is viewed by most scholars to be a form of
marketing that does not involve forecasting and integrating consumers' views on what
should be done. The producer just dictates what customers might want and produces
goods along those lines.
There are many downsides of transactional marketing. Most scholars base their
argument on the fact that transactional marketing is about giving consumers a limited
offering. This is because it is only focused on giving consumers what the producers
think is important for them. On the other hand, consumers might want other things and if
they find other producers offering that, they would switch to such producers.
Another group of scholars argue that in the long-run, transactional marketing is very
expensive. This is because, in every single transaction, they spend money to attract
customers anew. And research has shown that marketing campaigns that targets fresh
consumers is extremely more expensive than attracting an existing client.
Viewed differently, some academics argue that transactional marketing kills
innovation and product development. This is because the production department is the
only department that is responsible for improving products. What the consumers think is
not very vital. In the long run though, transactional marketing prevents a business from
attaining competitive advantage in their operations.

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18 Customer Relationship Management

From the literature review, it is apparent that most scholars identify relationship
marketing as the opposite of transactional marketing. In practice, relationship marketing
Notes evolved as a superior form of marketing in relation to transactional marketing.
Relationship marketing involves building a connection with consumers.
One school of thought identifies that there are three ways that relationship
marketing is built: price advantages, emotional campaigns and structured programmes.
This is steeped in the fact that relationship marketing is built through the giving out of
some form of consideration in return for the relationship. Thus, giving price benefits and
building emotional bridges or using a structured campaign, makes a business build a
relationship with a company.
Other scholars identify that relationship marketing is based on four pillars. The first
is that it is oriented towards consumers. It seeks to get consumers to build a
relationship with the company. Secondly, relationship marketing is connected to an
emergent strategy which is based on integrating consumers' views and opinions into the
operation of a firm. Thirdly, whatever feedback that consumers give to a company in
relationship marketing affects all relevant units of the company. Also, relationship
marketing is steeped in a long-term oriented.
Customer relationship management is a component of relationship marketing.
Customer relationship marketing is defined by some scholars as a structured way of
taking information from consumers and using it to take decisions about how best to
meet the objectives of the company or organisation. Customer relationship
management is alternatively described as a method of collecting information about
consumers and managing the information collection systems and utilizing it for the best
way and manner for the completion of the objectives of the business.
Some academics also view customer relationship management as a tool for
building customer loyalty. It is about a way of getting customers to become loyal and
remain connected to the company in question. Customer relationship management is
an essential element and arm of an emergent strategy for an organisation.
Customer relationship management focuses on consumers and identifies
consumers' views and needs. It integrates consumer views into the supply chain system
and also allows technology to be used to enhance the offerings and services of a
company. Technology is an indispensable element of customer relationship
management. It is a central pillar for the enhanced operation of customer relationships.
Technology helps to gather information about a given consumer. Technology also
allows decision-makers to analyse information about consumers and use it to make
decisions for the company. Technology provides faster and more accurate information
for the attainment of results.
Any company that wants to carry out customer relationship management needs to
obey rules and remain sensitive to the ethics of the area. This is because there have
been issues and incidents with companies that failed to be sensitive to privacy and
other ethics.

Conclusion
Modern marketing has evolved to replace transactional marketing. Transactional
marketing seeks to provide goods and services to consumers according to the views of
producers with no effort to integrate consumer views. Transactional marketing is
focusing on sale and nothing else. However, relationship marketing which is an epitome
of modern marketing provides companies the opportunity to provide services to
customers by integrating their needs.
Relationship marketing relies heavily on consumers’ needs and demands and this is
done through customer relationship management. Customer relationship management
revolves around creating and maintaining a structured system of collecting information
about consumers and using it in decision making.

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Introduction and Significance of Customer Relationship Management 19
Technology is an essential element and aspect of customer relationship
management. It provides fast and efficient methods of gathering information and using it
for the best result of the company. Also, customer relationship management can only be Notes
successful if the company is sensitive to the ethics and obeys the relevant laws relating
to privacy and customer rights.

1.6 Introduction and Objectives of CRM Process


Customer Relationship Management refers to the holistic approach an organization can
take to manage their relationships with customers, including policies related to contact
with customers, collecting, storing and analysing customer information and the
technologies needed to perform these tasks. You should think of
CRM as a strategic process that will help you understand your customer’s needs
and how you can meet those needs and enhance your bottom line at the same time.
CRM (Customer Relationship Management) is a comprehensive strategy and process
of acquiring, retaining and partnering with selective customers to create superior value
for the company and the customer. The basic objective of CRM is to increase marketing
efficiency and effectiveness. It is co-operative and collaborative processes that help in
reducing transaction costs and overall development costs of the company. CRM can be
defined as an alignment of strategy, processes and technology to manage customers
and all customer-facing departments & partners. CRM in short is about effectively and
profitably managing customer relationships throughout the entire lifecycle.
Most CRM initiatives begin with a strategic need to manage the process of handling
customer related information more effectively.
For beginners it could simply mean better lead management capabilities or sales
pipeline visibility. However, as organizations mature in their CRM initiatives, shall
visualize as a tool to acquire strategic differentiators, t includes adoption of IT related
systems, training of employees and amendments in business processes related to
customers. It is not just software but an approach to update and enhance business
methods to improve customers’ relationship with the organisation.
Some of the CRM Software systems now offer marketing modules which
specifically integrate a marketing campaign, seamlessly into a sales effort, then on to
customer management as a single CRM Software package. Some CRM vendors offer
the Marketing Software module separately, and others include it with the basic CRM
Software.
CRM is a comprehensive approach which provides seamless integration of every
area of business that touches the customer – namely marketing; sales, customer
service and field support – through the integration of people, process and technology,
taking advantage of the revolutionary impact of the Internet. CRM creates a mutually
beneficial relationship with your customers. In the rapidly expanding world of e-
Commerce, there is a new generation of empowered customers emerging who demand
immediate service with the personalized touch.
Relationship marketing is a term often used in marketing literature. It is sometimes
used interchangeably with CRM.
Relationship marketing has been defined more popularly with a focus on individual
or one-to-one relationship with customers integrating data-base knowledge with long-
term customer retention and growth strategy. Some writers have taken a strategic view
and shifted the role of marketing to genuine customer involvement (communicating
shared knowledge) rather than manipulating the customer (telling & selling). Overall, the
core of CRM and relationship marketing is the focus of co-operative and collaborative
relationships between the firm and its customers and for other marketing factors. It
must, however, be noted that CRM programs now envisage a wider spectrum of efforts
other than data-based one-to-one relationship with customers, which characterizes
relationship marketing.

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20 Customer Relationship Management

The development of CRM as a strategy is attributable to certain emerging factors.


One is the process of disinter-mediation in many industries i.e., direct interaction with
Notes end-consumers. This is due to the easy accessibility of companies to the sophisticated
computer and telecom technologies. Thus, in the case of financial institutions including
banks, insurance companies, computer software, household appliances and even
consumables, the process of disinter mediation is making relationship marketing more
popular.
This development is also due to the growth of service sector. In so far as services
are supplied directly to the customers, it minimizes the role of middlemen. There is
inevitably a greater emotional interaction between service provider and user, which is
found necessary to be sustained and enhanced.

1.7 Insight into CRM, e-CRM and m-CRM


e-CRM
The eCRM or electronic customer relationship marketing concept is derived from e-
commerce. It also uses net environment i.e., intranet, extranet and internet. Electronic
CRM concerns all forms of managing relationships with customers making use of
information technology (IT).
eCRM (electronic customer relationship management) does not fundamentally differ
from CRM (Friedlein, 2001). Development in information and communication technology
has facilitated the scale and scope of CRM, leading to the growing use of eCRM. By
integrating and simplifying the customer-related processes through the internet, eCRM
helps improve customer acquisition, customer development and customer retention
(Chang, Liao & Hsiao, 2005). Below is an illustration of an eCRM model, showing the
different and the abilities gained.

Figure 1.1: An e-CRM model

Creating a Customer Database


Creating a database is fundamental for any CRM activity (Winer, 2001). Doing so gives
the company an understanding of its customer’s preferences and past activities. The
database also enables the company to segment the customer based on various criteria
in order to easily retrieve and trace customers (Ab Hamid, 2005). By implementing data
warehousing, large amount of data can quickly be retrieved for analysis and reporting
(Anton, 2000). The use of data mining enables the company to gain knowledge of
customers and predict future behaviour of its customers.

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Introduction and Significance of Customer Relationship Management 21
Customer Selection and Targeting
By using data warehousing and data mining the company can strategize their marketing Notes
activities to target selective customers (Ab Hamid, 2005). The customer insight that is
attained enables the company to segment its customers based on need instead of
demographics, gaining an understanding for what works and what does not work with
certain customers (Friedlein, 2001).

Personalization
eCRM also has the ability to personalize information that is available to the customer
(Friedlein, 2001). By doing so, the customer has the ability to filter the information
based on his or her preference, giving the customer personalized information at all time
(Fienberg & Kadam, 2001).

Performance Monitoring
Accountability is improved with eCRM. The company has the ability to track against a
variety of metrics; for example page impressions, repeat visits, loyalty, in order to
ensure high performance (Friedlien, 2001).

eCRM Tools and Benefits


Some important eCRM tools and their benefits include;
z E-mail and automated response: E-mail being the dominant way of
communication between the company and the customer, it is an important part for
maintaining customer relationships. Instant feedback to customers is an importance
consideration. Customers expect feedback response to be quick. Automating of e-
mail reply based on key words and common queries in one way of speeding up the
company’s feedback response (Ab Hamid, 2005).
z Web chat & electronic bulletin board: Web chats and electronic bulletin boards
enable the customer to receive prompt feedback from service personnel and other
customers (Fienberg & Kadam, 2001).
z Order tracking: Order tracking gives the customer the ability to see where the
status on orders. By keeping the customer apprized at all time of what stage the
order is in, customer satisfaction is maximized (Fienberg & Kadam, 2001).
Adebanjo (2003) describes how eCRM creates value for a company, contributed to:
z Reduction in costs relating to contacting customers.
z Transfer of some responsibility to the customer, which reduces administrative and
operational costs for the business, therefore adding value to the business.
z Integration of eCRM applications with back office systems may improve workflow
which leads to efficiency, which in turn might leads to further cost saving, for
example salespeople using hand-held devices to initiate orders or checking stock.
z Improving sales through customer profiling, automating campaign management,
email marketing, etc.
z Overall improvement in customer interaction which leads to better service and
customer satisfaction, as well as loyalty and ultimately customer lifetime value.

Difference between eCRM and CRM


According to Friedlein (2001) there is not any fundamental difference between eCRM
and CRM, there does however exist differences in the skills required to implement
eCRM. The following list below describes some characteristic differences between the
two concepts;
z Do (real-time) personalization to degrees you cannot with CRM
z Interact with customer in ways, at speeds and through channels that you cannot
through CRM

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22 Customer Relationship Management

z Track behavioural trends in ways you cannot with CRM


z Empower customers in ways you cannot with CRM
Notes
z Exploit the benefits of an internet-based rather than client/server technical
architecture (Friedlein, 2001).
Friedlien (2001) goes on to explain the unimportance of arguing the differences
between eCRM and CRM, citing;
‘In short, it is not worth spending time worrying about the terminological differences
between CRM and eCRM, as they are fundamentally the same thing.’

mCRM
The possibilities that are created by mobile medium have enabled companies and
industries to exploit this medium to promote CRM activities (Sinisalo et. al., 2006). By
using mobile medium, according to Sinisalo et al. (2006), companies wish to advance
activities with customer in the sense of saving time, cost and inconvenience. These
authors define mCRM as “utilizing mobile medium for the purpose of managing
customer relationships and activate customers to start dialogue with company via
mobile medium. The concept of mCRM is argued accordingly to the authors as to be
involved of the following characteristics (Sinisalo et al, 2006):
z Communication, for the purpose of building and maintaining customer relationships
between company and its customer.
z The communication would be about sales, marketing, and customer service
activities conducted through mobile medium between the company and the
customer.
z Communication can be initiated by either the company or the customer.
z Communication thorough SMS (short message service), MMS (multimedia service),
JAVA applications and browsing.
z One of the parties engaged in the communication must be human and, naturally,
communicate through mobile medium.
z Mobile medium is seen as a complementary channel for CRM activities instead of
seeing it as a substitute of traditional ones.
According to Deans (2004), the convergence of mobile internet and wireless
communication technology has promised users the concept “anytime anywhere”, which
implies access to information for work and personal communication. The mobile
medium and wireless technology enable companies’ four reasons to build relationships
with its customers, which are:
z Personalize content and services
z Track customers or users across media and over time.
z Provide content and service at the point of need.
z Provide content with highly engaging characteristics.
The current most interested services for consumers are high mobile values that
meet spontaneous and time critical needs, for example checking stock quotes, driving
directions, and short messages (Deans, 2006).
Other definitions of mCRM are the ability to use handheld devices to manage sales,
sales contacts, and customer service activities (Bitpipe, 2006).

Benefits of mCRM
The new area of mobile medium makes it possible to promote CRM activities, which
were not possible before (Sinisalo et. al., 2006). According to the authors Sinisalo et al.
(2006), consider mobile medium of being a powerful opportunity to reach customers, by
offering different ways for companies to plan and implement more advanced ways to

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Introduction and Significance of Customer Relationship Management 23
communicate with their customers. One particular way is SMS, which is seen to be
immediate, automated, reliable, personal, discreet and customized channel, which
allows an efficient way to reach customer directly. Other benefits that the authors see Notes
with mCRM are that mobile medium allows high speed message delivery, relatively low
cost and high retention rates. In this sense, mCRM is also suited for industries like
retailing, involving plenty of communications with their customers. Interactivity is
however the most essential characteristics that differentiates the mobile medium form
the traditional media. This is the two-way communication in real-time between
companies and their customers. In that sense, Sinisalo et al. (2006) believe that the
mobile medium may not have a comparative alternative when it comes to building a
continuing dialogue between the company and the customer.

Problems with mCRM


On the surface mCRM might seem to be an easy way of implementing CRM in a mobile
form. However there are certain barriers related to the implementation of mCRM.
Although there is not much mention of barriers of mCRM in research literature,
there is an abundance of information to be found on reputable internet sites, in the form
of articles, discussion topics and interviews with CRM vendors. In 2001 technological
barriers were the topic of discussion. The communication standards utilized within
mCRM, being in their infancy, hindered mCRM from being readily adopted (Hayes,
2001). Although the technical development within communications technology has
come a long way since 2001, there are other issues that have been lifted to the
forefront. Hildreth (2006) states that the issue of security is a concern within mCRM.
Although security is not completely satisfied to date, improvements are steadily made
by mCRM vendors.
Not suitable in all situations – Certain businesses maybe more suited for mCRM
than others. According to vice president at Gartner, William Clark, sales force
automation and field service automation are areas that have been the main focus of
mCRM (Hildreth, 2006).
Need – According to Hildreth, (2006) there also exists a misalignment in terms of
what mCRM applications offer, and what the end users needs. In Hildreth’s opinion the
user only needs basic data and functionality.
Inexperience with mobile applications (migration problems) – Many companies do
not have experience with using mobile applications (All, 2006). Due to this issue the
learning curve for some companies may be higher than others.

Mobile Devices
A company that decides to implement a mCRM solution has a variety of options in
terms of hardware. Although there is not much mention of mobile devices in the mCRM
literature, the authors of this thesis have identified some commonly used mobile
devices.

Notebooks
Most mCRM applications are supported for PC use. Although notebooks are vastly
superior in terms of performance and flexibility, due to size, these are not always
suitable (Heinze et. al, 2004).

Handheld Devices
Handheld devices are according to Schierholz, Kolbe and Brenner (2006) the most
commonly used mCRM devices. They offer the user a blend of mobility and flexibility
that the user does not get from a notebook. As there does not exist a universal standard
device for using mCRM applications, the company has to choose appropriate mobile
devices. Schierholz et al. (2006) describes different considerations that companies
ought to take into consideration when choosing a mobile device. Different devices run

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24 Customer Relationship Management

on different platforms, or operating systems. The mCRM application might not be


supported by the device, as the vendor of the application might not support a specific
Notes platform. For instance, Microsoft’s mCRM application, Microsoft Dynamics CRM3.0
Mobile, only supports Windows Mobile operating system (Microsoft, 2006). There are of
course mCRM vendors that offer alternatives that are run through web browser, also
known as thin mCRM clients. Because mCRM thin clients are only usable in connected
mode, they require that the device being used has the ability to connect to i.e. the
internet (Schierholz et al., 2006). According to the authors, choice of mobile device can
have implications on potential future design decisions.

Examples of mCRM
According to Sinisalo et al. (2006) mCRM is defined as an application of a CRM system,
which is designed to provide customer with company functions such as sales, marketing
and service through mobile phones. Three examples within each function will be
described.

Marketing
A Finnish restaurant chain exploits the mobile medium in various marketing related
activities, such as sending SMS messages to loyal customers such as invitations and
information to the parties arranged only for loyal customers. Other offerings could be
coupons and free tickets. This restaurant chain as well as sending offers from
themselves, sends offers which are provided by their partners. This could be movie
tickets and product discounts, based on customer preference (Sinisalo & Karialuoto,
2006).

Sales
A Finnish magazine, which is backed up by the internet provides ordering from mobile
mediums. After joining the loyalty program of the company, the customer can order the
products they want, by simply sending a SMS including the product code. This way, the
company can send mobile marketing message to their loyal customers based on their
preferences. When receiving the advertising, the customer can reply to the message
and instantly order the offered product (Sinisalo & Karialuoto, 2006).

Service
The first one to adopt a mobile phone service is Finnair – the national airline of Finland
(Sinisalo et. al. 2006). This particular mobile service enables loyal customers to check-
in in advance for the scheduled international flights. This means that passengers can go
directly to the departure gate without the need of waiting on the check-in line. The
airline sends a check-in proposal before departure and the customer replies to check-in.
The SMS will then works as a confirmation message including the details of a flight.
This will be stored on the mobile phone and are accessible whenever needed; which
implies time saving and being easy to use. (Sinisalo & Karialuoto, 2006).

Electronic Customer Relationship Management (e-CRM)


It involves the integration of Web channels into the overall enterprise CRM strategy with
the goal of driving consistency within all channels relative to sales, customer service
and support (CSS) and marketing initiatives. It can support a seamless customer
experience and maximize customer satisfaction, customer loyalty and revenue-CRM is
enterprises using IT to integrate internal organization resources and external marketing
strategies to understand and fulfil their customer’s needs. Comparing with traditional
CRM, the integrated information for eCRM intra-organizational collaboration can be
more efficient to communicate with customers. As the Internet is becoming more and
more important in business life, many companies consider it as an opportunity to reduce
customer-service costs, tighten customer relationships and most important, further
personalize marketing messages and enable mass customization.

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Introduction and Significance of Customer Relationship Management 25
ECRM is being adopted by companies because it increases customer loyalty and
customer retention by improving customer satisfaction, one of the objectives of eCRM.
E-loyalty results in long-term profits for online retailers because they incur less costs of Notes
recruiting new customers, plus they have an increase in customer retention.
Together with the creation of sales force automation(SFA), where electronic
methods were used to gather data and analyse customer information, the trend of the
upcoming Internet can be seen as the foundation of what we know as eCRM today. As
we implement eCRM process, there are three steps life cycle:
z Data collection: About customers preference information for actively (answer
knowledge) and passively (surfing record) ways via website, email, questionnaire.
z Data aggregation: Filter and analysis for firm’s specific needs to fulfil their
customers.
z Customer interaction: According to customer’s need, company provide the proper
feedback them. CRM can be defined as activities to manage customer relationships
by using the Internet, webbrowsers or other electronic touch points. The challenge
hereby is to offer communication and information on the right topic, in the right
amount, and at the right time that fits the customer’s specific needs

1.8 Summary
CRM is a comprehensive approach which provides seamless integration of every area
of business that touches the customer – namely marketing; sales, customer service and
field support – through the integration of people, process and technology, taking
advantage of the revolutionary impact of the Internet. CRM creates a mutually beneficial
relationship with your customers. In the rapidly expanding world of e-Commerce, there
is a new generation of empowered customers emerging who demand immediate
service with the personalized touch.

1.9 Check Your Progress


Multiple Choice Questions
1. CRM stands for:
(a) Customer Retention Management
(b) Customer Retention Mathematics
(c) Customer Relationship Management
(d) None
(e) A critical logistics function
2. Customer relationship management is a concept that became very popular during:
(a) 1670
(b) 1990
(c) 1790
(d) 1975
3. ............... as a strategic process that will help you understand your customer’s
needs and how you can meet those needs and enhance your bottom line at the
same time.
(a) CRM
(b) Supply chain
(c) Retailing
(d) Storage

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26 Customer Relationship Management

4. The basic objective of CRM is to increase................ and effectiveness.


Notes (a) Merchandising
(b) Supply chain
(c) Customer loyalty
(d) marketing efficiency
5. ...................... also has a conscious feature inherent in it that excludes loyalty and
long-term relationships.
(a) brand-name specialty retailer
(b) Merchandise storage
(c) Transactional marketing
(d) Merchandise quality
6. .................... is a business strategy that focuses on “single point of sale”
transactions.
(a) Inventory
(b) Merchandise
(c) business intelligence software
(d) Transactional marketing
7. Web chats and................ enable the customer to receive prompt feedback from
service personnel and other customers.
(a) Buying
(b) electronic bulletin boards
(c) tracking
(d) Cataloguing
8. .................. on the other hand requires a degree of congruence between the
producer and consumer.
(a) Modern marketing
(b) Economy
(c) Transactional marketing
(d) Merchandise
9. ................. was used to refer to the procedure of creating customer focus groups
that could be used to speak to some of the customers of the company.
(a) Money
(b) Sales Promotion
(c) Database Marketing
(d) Multiple software programs
10. ................... is a management strategy aimed at embedding awareness of quality in
all organizational processes.
(a) Multi-channel retailing
(b) Cataloguing
(c) Total Quality Management (TQM)
(d) Strategising

1.10 Questions and Exercises


1. Define CRM. What is the significance of Customer Relationship Management?
2. Explain the marketing strategies for building effective relationship with a customer.

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Introduction and Significance of Customer Relationship Management 27
3. Explain various approaches of customer acquisition.
4. Throw light on the needs and goals of CRM.
Notes
5. Describe the significance of CRM.
6. Discuss insight into CRM and e-CRM.
7. Discuss Transaction vs. Relationship orientation.
8. List objectives of a CRM process.
9. Discuss benefits of CRM.

1.11 Key Terms


z Customer Relationship Management (CRM): It is a model for managing a
company’s interactions with current and future customers.
z Database Marketing: It was used to refer to the procedure of creating customer
focus groups that could be used to speak to some of the customers of the company.
z Mass Production: It is a system of manufacturing based on principles such as the
use of interchangeable parts, large-scale production, and the high-volume
Assembly Line.
z Mass Marketing: It is a market coverage strategy in which a firm decides to ignore
market segment differences and go after the whole market with one offer.
z Total Quality Management (TQM): It is a management strategy aimed at
embedding awareness of quality in all organizational processes.
z e-CRM: This is a web based Sales Force Automation tool that helps you to focus on
un-covered customer-revenue opportunities that are not possible in a manual sales
process.

Check Your Progress: Answers


1. (c) Customer Relationship Management
2. (b) 1990
3. (a) CRM
4. (d) marketing efficiency
5. (c) Transactional marketing
6. (d) Transactional marketing
7. (b) electronic bulletin boards
8. (a) Modern marketing
9. (c) Database Marketing
10. (c) Total Quality Management (TQM)

1.12 Further Readings


z Paul Greenberge, CRM – Essential Customer Strategies for the 21st Century, Tata
McGraw Hill, 2005.
z William, G. Zikmund, Raymund McLeod Jr., Faye W. Gilbert, Customer
Relationships Management, Wiley, 2003.
z Alex Berson, Stephen Smith, Kurt Thearling, Building Data Mining Applications,
2004.
z CGI Group Inc. White Paper, Building Competitive Advantages through Customer
Relationship Management, January 2001.
z Anderson, Paul and Art Rosenberg, The Executive’s Guide to Customer
Relationship Management, Doyle Publishing Company, Houston, 2000.

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28 Customer Relationship Management

CASE STUDY: “TOUCHY-FEELY” RESEARCH: PSYCHING OUT CONSUMERS


Notes

C onsumers often don’t know or can’t describe just why they act as they do. Thus,
motivation researchers use a variety of probing techniques to uncover underlying
emotions and attitudes toward brands and buying situations. These sometimes
bizarre techniques range from free association and inkblot interpretation tests to having
consumers form daydreams and fantasies about brands or buying situations. One writer
offers the following tongue-in-cheek summary of a motivation research session:
“Good morning, ladies and gentlemen. We’ve called you here today for a little consumer
research. Now, lie down on the couch, toss your inhibitions out the window, and let’s try a
little free association. First, think about brands as if they were your friends.
Imagine you could talk to your TV dinner. What would he say? And what would you say to
him? Now, think of your shampoo as an animal. Go on, don’t be shy. Would it be a panda
or a lion? A snake or a wooly worm? For our final exercise, let’s all sit up and pull out our
magic markers. Draw a picture of a typical cake-mix user. Would she wear an apron or a
negligee? A business suit or a can-can dress?
Such projective techniques seem pretty goofy. But more and more, marketers are using
such touchy-feely approaches to dig deeply into consumer psyches and develop better
marketing strategies. For example, Shell Oil used motivation research in an attempt to
uncover the real reasons behind a decade-long sales slump.
The manager of corporate advertising for Shell oil, Sixtus Oeschle, was at his wits’ end.
For months, he and his team of researchers had pumped the consumer psyche. For
months, they’d come up empty. “We tried psychographic memory triggers,” he recalls. “We
tried dream therapy.” All to no avail. At one point, respondents were even given mounds of
wet clay and urged to mould figures that expressed their inner feelings about Shell.
It was time, Oeschle decided, to try something radical. To craft a more potent appeal for its
brand of gasoline, Shell would have to go deeper – much deeper. Oeschle called in a
consumer researcher who specializes in focus groups conducted under hypnosis. The
results, Oeschle says, wowed even the sceptics. “I’ve got to tell you, it was fascinating,
fascinating stuff,” he says. After dimming the lights, the researcher took respondents back,
back-back all the way to their infancy. “He just kept taking them back and back,” Oeschle
says, “until … he’s saying, ‘Tell me about your first experience in a gas station.’ And
people were actually having memory flashbacks. I mean, they were going there. They
were saying, ‘I was three and a half years old. I was in the back of my dad’s brand new
Chevy’. It was like it was yesterday to them. I was stunned.”
The real breakthrough, however, came after the respondents awoke out of their trance.
“When he brought them all back out, he asked them who’d they prefer as a gasoline
purveyor,” Oeschle says. “What staggered me was that, to a person, it was always linked
to that experience in their youth.” One woman volunteered that she always made a point of
filling up at Texaco. “We asked her why”, Oeschle recalls. “And she said, ‘I don’t know, I
guess I just feel good about Texaco.’ Well, this was the little three-and-a half- year-old in
the back of her daddy’s car speaking.
Shell is now designing new marketing approaches base on the insights gleaned from the
groups of mesmerized motorists. Where Shell had gone wrong, it seems, was in reasoning
that, since people don’t start buying gas until at least age 16, there was no need to target
the tiniest consumers, “They weren’t even on Shell’s radar,” Oeschle laments. “It dawned
on us…that we’d better figure out how to favourably impact people from an early age.”
Similarly, Daimler Chrysler used a dose of deep motivation research to create a successful
new concept car.
A few years back, Daimler Chrysler set out to find the next, “wow car,” the “segment
buster” that would reach across age and income lines, into the subconscious. That meant
doing more than the usual focus group research. So Daimler Chrysler hired psychologist
Clothaire Rapaille to probe consumers’ innermost feelings. The underlying premise: The
products we buy mean something; they form part of a greater whole. “The more we learn
about American culture, the more we see how our vehicles fit into our psyche – the more
we see how it is that we fit into the overall scheme of living,” says David Bostwick, director
of market research at Daimler Chrysler.

Contd…

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Introduction and Significance of Customer Relationship Management 29

Rather than convening traditional focus groups, Rapaille used a method known as
“archetype research”. He had participants lie on soft mats, listen to mood music, and free- Notes
associate in the dark.
According to Bostwick, this re-creates the same brain activity you have when you first
wake up from a dream. “It’s a very special brain activity”, he says. “It allows us to actually
access some of those unconscious thoughts.”
When the lights came back up, Rapaille had learned that Americans are entrepreneurial,
individualistic, freedom loving, and inventive – but also juvenile and self-indulgent. More
important, he discovered that many suffered nostalgia pangs. In these complex and often
unsettling times, car buyers yearned for the good old days – for a time when things
seemed simpler and more secure, and when people felt good about themselves. “What
that said to us is that people are looking for something that offers protection on the
outside, and comfort on the inside,” says Bostwick. “We communicated that to our design
team.”
The result: The PT Cruiser, Daimler Chrysler’s phenomenally successful retro-style car.
Described by the Wall Street Journal as “part 1920s gangster car, part 1950s hot rod, and
part London taxicab,” the PT Cruiser is what one analyst calls “a focus group on wheels –
an actual chrome-and-sheet-metal incarnation of the popular will.” Its nostalgic look and
protective exterior, combined with a well-appointed and highly functional interior, inspires
an emotional reaction from almost everyone. In just two years following its introduction,
U.S. consumers snapped up more than 225,000 PT Cruisers. “We didn’t set out to create
a market,” Bostwick says earnestly. “We just tapped into what people had in their heads in
the first place…. The vehicle takes you back, but not to a particular time in the century. It
just takes you back to a time you felt cool.”
Some marketers dismiss such motivation research as mumbo jumbo. However, like Shell
and Daimler Chrysler, many companies are now delving into the murky depths of the
consumer unconscious. “Such tactics have been worshipfully embraced by even the no-
nonsense, jut-jawed captains of industry,” claims an analyst. “At companies like Kraft,
Coca-cola, Proctor & Gamble, and Daimler Chrysler, the most sought- after consultants
hail not from (traditional consulting firms like McKinsey.) They come from brand
consultancies with names like Archetype discoveries, Psychologies and Semiotic
solutions.”
Questions
1. Analyse the case and interpret it.
2. Write down the case facts.
3. Which projective techniques seem pretty goofy?
4. Define archetype research method.

Source: http://www.adb.org/Documents/Conference/Simplifications_of_Customs/part3.pdf

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30 Customer Relationship Management

CASE STUDY: 'STELJES COMMSCENTRE' BY STELJES


Notes

S
teljes is a distributor of technology products in the corporate and education markets,
offering a range of products from a growing list of vendors.
It is a privately owned, independent business employing approx. 170 people.
Steljes sell through an established network of reseller partners. While Steljes activate end-
user marketing campaigns they are naturally reliant on resellers being pro-active in
creating their own leads and driving sales. Resellers are equally reliant on Steljes to give
them the tools to achieve this.
Like many technology distributors, Steljes had largely been reactive to requests from
resellers for marketing material. This demand was handled by the Steljes marketing team,
aided by one inhouse artworker, who between them didn't have sufficient capacity as the
business grew. The lack of pro-active channel support was impacting on both the
bandwidth of the marketing team and the service provided to reseller partners. A different
solution was sought.
The wish list was ambitious:
z increase the level of support in the form of marketing collateral offered to resellers
z get marketing campaigns and supporting material into the channel more quickly
z allow materials to be personalized
z retain brand control over personalised collateral
z reduce the time burden on Steljes marketing team
z use the solution as a driver for reseller recruitment, retention and loyalty
z minimise the financial investment required
This change was part of a wider business growth programme that included greater
channel resourcing, new channel and reseller training, customer satisfaction research and
the restructuring of channel co-funding to target new and growing markets.
Outsourced resource
The solution came via a marketing services agency, Oliver Marketing, who created a
bespoke service package.
The Steljes in-house artworker was transferred across and another designer recruited to
create a permanent, outsourced, on-site studio. Their work includes all Steljes artwork and
a significant percentage of end user and channel based design requirements.
A print buying resource was brought on board plus dedicated procurement, work flow and
templating software deployed.
Welcome to Steljes CommsCentre!
The vision for the project was making 'our team, your team', giving partners access and
freedom to put their own stamp on marketing collateral.
This approach dramatically improves the value Steljes add by helping partners to take
products to market faster and more cost effectively in a way that is unique to them.
How it works
The CommsCentre solution includes the deployment of a user friendly, web-based
marketing and print tool.
The in-house team design material with reseller partners in mind. A template is then built
that allows controlled customisation. This can be as simple as adding contact details or as
complicated as changing colours, choosing images and products and free text entry.
Crucially, it does this without the need for any design experience and without
compromising the design or key messaging to guarantee brand consistency and control.
This way, material delivered to the end user as unique to the reseller, empowering
businesses that haven't previously undertaken marketing activity before.
Steljes CommsCentre provides instant access to a complete toolkit of static and
rebrandable marketing collateral.
z no specialist software or training required

Contd…

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Introduction and Significance of Customer Relationship Management 31

z access the complete product image, lifestyle image and logo library
z use the pre-created bank of product marketing copy and web content
Notes
z create personalised marketing materials using ready-made templates
z DM including postcards, letters, emails, special offer fliers, etc.
z product brochures and factsheets
z adverts and posters
z portfolio mini-catalogues
z build-your-own fliers and adverts
valid for the UK and Eurozone with a simple drop down choice between Sterling or Euro
The output varies:
z unlimited, free of charge PDF downloads
z subsidised print-on-demand (through a combination of Steljes subsidy and Oliver
Marketing's buying power)
z DM fulfillment, including data upload, through a registered third party mailing house,
also at subsidised rates.
z As a web based system, users have access 24/7.
The whole process, from logging on to downloading the output or ordering print, takes just
minutes to complete.
A growing band of evangelists
From April 09 and April 10 the system has grown through more aggressive and consistent
promotion to the channel.
Over 12 month period, Steljes traded with 1200 reseller partners with a core trading group
of 300.

Steljes CommsCentre Yr-on-Yr increase April 2010 April 2009


Registered Reseller Partners 173 per cent 246 90
Registered Reseller Users 181 per cent 648 231

Average number of users per reseller = 2.6


percentage of core trading group registered to CommsCentre = 75 per cent
"The Steljes CommsCentre is such a useful resource. It enables us to be very nimble,
creating fully branded company literature in minutes, which normally would take a week."
Accessing a forever changing toolkit
A soft launch of the system took place in the Autumn of 2008 with a small number of
vendors represented. Since April 2009 material for a further 12 has been added, delivering
considerable added value to both vendor and reseller partner.

Steljes CommsCentre Yr-on-Yr increase April 2010 April 2009


Reseller Downloads - Images 262 per cent 257 71
Reseller Downloads - product info 162 per cent 118 45
/ mktg templates
Trading figures show an increase in activity and loyalty.
In April 2010, retention figures tracking the number of resellers who had traded in each of
the previous three months peaked at 54 per cent (average since 2007 = 47 per cent
A cost neutral solution
The saving made by reducing the reliance on creative agencies, coupled with a contracted
minimum 15 per cent saving on print, have made the packaged solution cost neutral.
Freeing the marketing team of the majority of channel responsibilities has allowed them to
re-focus on creating end-user campaigns for channel partners to utilise.\Despite difficult
trading conditions, pressures on budgets and high financial scrutiny, the deployment of
CommsCentre has empowered Steljes and their Channel partners to grow market share.

Contd…

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32 Customer Relationship Management

A Sample Campaign
Notes New Year in Education - 20pp product catalogue template targeting educational
establishments preparing for a new school year.
Seven resellers personalised the template and sent it to 500 contacts through SCC =
7,500 contacts not known by Steljes
Cost to print & fulfill £4,792
Over £42,000 uplift in orders tracked in the following three months.
ROI = 776 per cent
Conclusion
Steljes CommsCentre has revolutionised the level of marketing support provided to
reseller partners.
By communicating to, and communicating through resellers, Steljes has pushed its reach
far deeper into organisations.
Cost neutral, CommsCentre achieved all the original objectives and now forms the
cornerstone of an umbrella framework of reseller support that focuses on stimulating
demand in established, new and emerging markets.
Resellers have responded by putting more business through Steljes, by value and
frequency.

Amity Directorate of Distance & Online Education

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