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What is CRM?
CRM is a business strategy that aims to understand, anticipate and manage the needs of an organisations current and potential customers .
It is a comprehensive approach which provides seamless integration of every area of business that touches the customernamely marketing, sales, customer services and field support through the integration of people, process and technology
CRM is a shift from traditional marketing as it focuses on the retention of customers in addition to the acquisition of new customers The expression Customer Relationship Management (CRM) is becoming standard terminology, replacing what is widely perceived to be a misleadingly narrow term, relationship marketing (RM)
Definition of CRM
CRM is concerned with the creation, development and enhancement of individualised customer relationships with carefully targeted customers and customer groups resulting in maximizing their total customer life-time value.
Cookies A cookie is a parcel of text sent by a server to a web browser and then sent back unchanged by the browser each time it accesses that server. HTTP cookies are used for authenticating, tracking, and maintaining specific information about users, such as site preferences and the contents of their electronic shopping carts (5). - Illustration: The online store, flipkart, uses cookies to provide a personalised service for its customers. Flipkart requires customers to register with the service when they purchase items. When registered customers log in to Flipkart at a later time, they are greeted with a welcome message which uses their name (for e.g. Hello John). In addition, their previous purchases are highlighted and a list of similar items that the customer may wish to purchase are also highlighted.
CRM software- Front office solutions Many call centres use CRM software to store all of their customer's details. When a customer calls, the system can be used to retrieve and store information relevant to the customer. By serving the customer quickly and efficiently, and also keeping all information on a customer in one place, a company aims to make cost savings, and also encourage new customers (7)
Face-to-face CRM
CRM can also be carried out in face-to-face interactions without the use of technology Staff members often remember the names and favourite services/products of regular customers and use this information to create a personalised service for them. For example, in a hospital library you will know the name of nurses that come in often and probably remember the area that they work in. However, face-to-face CRM could prove less useful when organisations have a large number of customers as it would be more difficult to remember details about each of them.
Benefits of CRM
reduced costs, because the right things are being done (ie., effective and efficient operation) increased customer satisfaction, because they are getting exactly what they want (ie. meeting and exceeding expectations) ensuring that the focus of the organisation is external growth in numbers of customers maximisation of opportunities (eg. increased services, referrals, etc.) increased access to a source of market and competitor information highlighting poor operational processes long term profitability and sustainability
Implementing CRM
When introducing or developing CRM, a strategic review of the organisations current position should be undertaken. Organisations need to address four issues : What is our core business and how will it evolve in the future? What form of CRM is appropriate for our business now and in the future? What IT infrastructure do we have and what do we need to support the future organisation needs? What vendors and partners do we need to choose?
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Research paper
Metrics of CRM effectiveness (Kim, Suh & Hwang (2003) ) Rationale for selecting the paper : any activity in marketing wiz not measured cannot be managed better
Kim, Suh & Hwang (2003) propose an application framework for evaluating CRM effectiveness. In the framework, each perspective is evaluated by appropriate metrics. reasons why performance measurement is so powerful in enhancing business. 1.measurement removes the ambiguity and disagreement that surround highlevel strategic concepts. 2.measurement provides the precise language for clearly communicating at all levels what the organization wants to accomplish and how it intends to accomplish it. 3.Measurement allows the continual evaluation of organizational alignment on strategic objectives. measurement not only improves the probability but also speeds the pace at which change occurs. 4.The four perspectives are customer knowledge, customer interaction, customer value,and customer satisfaction
FRAMEWORK
Customer knowledge
In order to adopt the current customer-centric business environment, organizations use data mining and data warehousing technology. A major problem is filtering, sorting, analyzing, and managing this data in order to extract information relevant to CRM activities. With the shift from mass marketing to one-to-one relationship marketing. Data mining tasks are used to extract patterns from large data sets
Technology learning is also important towards understanding customers. Consumer information security. (e,biz)
Customer interaction
Many communication channels are developed to interact with the customer effectively. To manage various communication channels effectively, managers make an effort to monitor the business processes. The processes can be divided into internal and external processes Internal processes determine operational excellence and external processes determine channel management effectiveness. Customer interaction has the following components 1. Contacts with organizational staff-front line and other 2. Outbound contact management-mail, telephone, sales visits, and deliveries 3. Physical service environment 4. Transaction - price, value, and terms
Customer value
Customer value describes tangible and intangible benefits gained from CRM activities, which help to arrange the relationship with the customer successfully. In order to determine the customer value, organizations need to analyze such information as marketing campaigns, number of retention customers, and net sales. CRM initiatives should provide mutually beneficial value to the customer and the organization. Calculating customer value potential and using it as a guideline will be profitable in the future.
Customer Satisfaction
Customer satisfaction is difficult to measure because it is hard to quantify the satisfaction level. It represents a modern approach for quality in organizations, and serves the development of a truly customer-focused management and culture. Measuring customer satisfaction offers an immediate, meaningful, and objective feedback about customer preferences and expectations. Among the four perspectives, the customer satisfaction perspective is the most important because customer satisfaction is directly linked to an organizations profits.
Service delivery via various channels of IT applications has emerged as an important attribute in satisfying customers. Proper CRM practices can potentially impact customer satisfaction ratings and can potentially lead to increased customer retention.
References
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Liz Shahnam. Whats really CRM? CRM Today. [Online] [Accessed November 2008] Adrian Payne. Customer relationship management. Cranfield University. [Online] [Accessed June 2006, no longer available online] Francis Buttle. The S.C.O.P.E of Customer Relationship Marketing. Macquarie Graduate School of Management. [Online] [Accessed June 2006, no longer available online] Manchester Business School. 2003. Customer Relationship Management: Where do you start? Wikipedia. HTTP Cookie. Online] [Accessed November 2008] Brian Woolf. What is loyalty? The Wise Marketer. [Online] [Accessed June 2006, no longer available online] Wikipedia. Customer Relationship Management. [Online] [Accessed November 2008] BusinessBulls. Customer Relationship Management. [Online] [Accessed November 2008]
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