Customer relationship management (CRM) has been widely considered as a business strategy for the business organizations to develop and retain customers through increased satisfaction and loyalty. Nowadays, in a competitive, technology-enabled and connected business world, the expectations of the customers are rising and it is far more expensive to acquire a new customer than to maintain relationship with existing customer. At present it is easy for the customers to interact with different brands in different ways more widely. So it is very important for the marketers to develop beneficial long-term relationships and engage with customers actively.
In recent years academicians and practitioners understand the importance of effectively manage of customer relationships. Their studies suggest that Customer Relationship Management (CRM) provides improved business opportunity, though it has mixed performance reviews in the extant literature so far. CRM builds a long term and sustainable relationship with the customers of a business organization and it could manage and recognize customers who are the core of a business. CRM systems can assimilate customers data from the organization and analyze the data to predict the buying behaviour of the customers and can also distribute result for different purposes of the organization. By analyzing customer information form CRM systems, companies can identify the most profitable customers and can increase sales revenue.
The purpose of this research is to study of Customer Relationship Management process and its effect on business. It will also explore the impact of CRM on customer retention and customer loyalty. The relationship between CRM technology adoption, market orientation and relationship marketing will also be discussed.
Key Words: Customer Relationship Management, Customer Retention, Customer Loyalty, Relationship Marketing, CRM Process, CRM Strategy, Market Segmentation.
“The customer is always right” or “The customer comes first” are two very popular phrases and today in the competitive business world these words are truer than ever. The term Customer Relationship Management (CRM) became very popular in late 1990s. After that it offered business organizations to interact with its customers on a different level. According to Turban & Volonino (2010 p.383) “Customer Relationship Management (CRM) is an enterprise wide effort to acquire and retain profitable customer.” It supports effective marketing, sales and services processes. So many companies are beginning to focus on CRM because the services that CRM provides can create high customer loyalty which is helpful for company’s profitability.
Treat different customers differently is the main theme of CRM, because the value of the customers to the company and their needs may be different. It is an enterprise system which could manage and recognize customers who are the core of a business and the success of a business depends on effectively managing relationship with them (Turban & Volonino 2010). By analyzing customers’ information form CRM systems, companies can identify the most profitable customers and can increase sales revenue. CRM builds a long term and sustainable relationship with the customers of a business organization. In a small business it is possible for manager or business owner to know the customers face to face or on a personal basis but for a business which is regional, national or multinational it is impossible to know all the customers in the same intimate way. Research by Laudon & Laudon (2006) point out that it is very difficult to interact with the huge number of customers for the business organizations where all the information is collected in different ways such as over web, telephone, fax or even face to face. But CRM systems can assimilate the customers’ data from the organization and analyze the data to predict the buying behaviour of the customers and can also distribute result for different purposes of the organization. Laudon & Laudon (2006) illustrate that companies can get various benefits such as customer satisfaction, reduced marketing cost, more effective marketing and even lower cost for customer acquisition and retention by using CRM systems.
CRM is the generally accepted purpose for the business organization to better serve its customer through reliable processes (bring together various information about customers, sales, marketing effectiveness and market trends etc.) and interaction with those customers. By using CRM systems organization can learn more about customers’ needs and behaviours and can develop stronger relationships with them. CRM Strategy is based on the concept that an organization's most valuable asset is the customer and the organization must manage its customer relationships wisely. Having the various departments of the organization (such as: marketing, sales and service) gather qualified information will create a database which is of real value to the company. Establishing defined processes for data retrieval will allow effective use of the data and a uniform platform for customer relations management as well as optimal customer service. Thus, an in depth organizational change that supports CRM is required throughout the marketing, sales and service departments.
Nowadays companies are changing their business strategies rapidly. As a result companies are facing new situation every time. The first reason of changing strategy is, people are changing their lifestyle and consequently the patterns of consumption. And another reason is the rapid development of technology. Both companies and customers have affected by new technologies. By using different communication technologies customers are continuously informed about products and the knowledge of the customers about products are increasing significantly. This increased knowledge leads the customers discover new options which decreases customer loyalty. On the other hand with the use of new technologies companies are changing their way of marketing. Finally, business organizations are facing domestic as well as global competition on the market and this competition is increasing day by day. In order to reach success, companies must find new long-term competitive advantages.
Advance technology, the rapid increase of the internet, one-to-one marketing techniques and customer relationship management (CRM) has become a key factor of marketing (Payne & Frow, 2005). There has been a significant increase in CRM related research over the last few years (Kamakura et al., 2005; Ngai, 2005). Many academics claimed CRM is closely related to relationship marketing. Strong customer relationships are important for customer loyalty which leads in turn to corporate profitability and information technology can build strong customer relationships. CRM has become essential marketing and business philosophies for many business organizations. For a business it is very important to establish, maintain and enhance customer relationships.
Modern technologies enable businesses to implement CRM systems which can create linkage between marketing and technology and can establish long term relationship with large numbers of customers in a cost-effective manner (Peppers, Rogers, & Dorf, 1999; Reinartz & Kumar, 2000). By collecting customer information such as transaction, buying behaviour, media and channel preferences, marketers can create personalized product and service for the customer offerings that could build customer loyalty and enhance profit (Niraj, Gupta, & Narasimhan, 2001; Venkatesan & Kumar, 2004; Verhoef, 2003).
Despite these advance technologies and huge investment, CRM faces serious difficulties and implementation failures (Arnold, 2002; Davids, 1999; Doherty & Lockett, 2007; Ragowsky & Somers, 2002). There are various reasons for which CRM projects suffer high failure rates including the lack of corporate customer focus, management commitment to customers, management change, and people, technology and process issues (Kale, 2004; Raman & Pashupati, 2004). According to the research it has been estimated that 30% - 70% of all CRM projects fail to produce results during the year 2001 to 2009. A survey conducted by the data warehousing institute of 1,500 companies found that 91% of businesses plan to or already deployed CRM technology and among them 41% of the firms with CRM were experiencing significant problems (The Data Warehousing Institute, 2000). Davis (2002) claimed that many CRM implementations fail to meet basic business goals and up to 70% of companies do not realize the benefit of CRM projects.
In spite of the continuing implementation problems of CRM, many academics and practitioners continue to believe that CRM technology offers the potential for substantial benefits to business organizations through improved customer relationships, customer retention, satisfaction and enhanced profitability (Bohling et al., 2006; Payne & Frow, 2005). The challenge many enterprises face is realising the considerable advantage brought about by leveraging CRM technology and relationship marketing effectively (Chalmeta, 2006; Ngai, 2005).
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