Category: Customer Relationship Management

Abstract

• Purpose: The Purpose of this research paper is to understand the Effectiveness of CRM initiatives on the customer loyalty and retention.
• Research Implications: This paper provides a preliminary understanding of the CRM marketing initiatives on the customer loyalty in the long run. Future research should use alternative methods, and verify and elaborate the findings.
• Findings: “In the past, many companies took their customers for granted. Customers often did not have any alternative suppliers, or the other supplies were just as poor in a quality and services, or the market was growing so fast that the company did not worry about fully satisfying its customers. A company could loses 100 customers a week, but gain another 1000 customers and consider its sales to be satisfactory. Such a company, operating on a ‘ leaky bucket’ theory of business, believes that there will always be enough customers to replace the defecting ones.“

“Customer retention programs can be a powerful tool in the arsenal of CRM. Customer retention is important to most companies because the cost of acquiring a new customer is far greater than the cost of maintaining a relationship with a current customer.”

“For many firms, customer profitability is skewed in such a way that losing the most profitable customers has a very serious effect. In many banks, for example, the top 30 percent of customers (when ranked by profitability) can make up 100–150 percent of total customer profitability. That’s right the bottom eighty percent of customers may provide no profitability or, worse yet, destroy 50 percent of profitability.”

• Originality/Value: This paper talks about how the Customer Relationship affects the customer base and leads to customer loyalty and retention.
• Keywords: Customer loyalty; customers retention; automobile sector; customer preference; customer satisfaction.

Introduction

“Because of recent changes in a business environment, that is; increases in customer turnover and decrease in profitability, the company in all branches have come to understanding that the relations with customer are one of the most important assets which they possess. As a result they pass from focused on a product and a brand – the focused marketing approaches to the approach focused on the client . Really, retention of customers and restorative of their loyalty is very effective, but difficult method for increase in success of the company. Also, in medium-term competitive fight it is necessary to support and increase customer loyalty. Loyalty as a behavioral fact arises due to the fact that the customer perceives all the benefits that the product provides him.

On the road to profitability, companies are looking for a better marketing strategy. There are many marketing strategies. Some companies have transactional relations with consumers: they are focused on single purchases, don’t keep in contact with the clients and try to reach a big flow of consumers. Other companies argue that the grade of the attitude between buyers and sellers is much more important than the net number of contacts. This strategic route relates to the concept of customer relationship management (CRM). Basically, CRM is an ‘integrated approach to relationship management, focusing on customer retention and relationship development’. As a business strategy, it began to emerge in 1999. Customer relationship management (CRM) is the process of contraction and maintains of the favourable relations with customers, by affording products which are valuable to customer and build satisfied customers. CRM is the way that companies create relationships with customers in order to maintain customer loyalty . CRM emphasizes the significance of long-term relations with customers and increasing their loyalty and allegiance to a company. It offers various storage strategies and recommendations for creating customer loyalty.

The correlation between customer satisfaction and CRM is not from simple. Enlarged customer satisfaction is one of the CRM’s faiths. Customer satisfaction has become the declared goal of all business areas. In the settings of the service, customer satisfaction reports desirable result of the service encounters, which includes an assessment of whether the service meets customer needs and expectations. The importance of the concept of satisfaction is manifested in its alignment with customer loyalty, retention and profitability of the company. Increased customer satisfaction can lead to increased consumer loyalty and lead to an increase in the company’s market share.

Development of relationships with customers:

• Relationship Management.

CRM, along with the launch of the product and service policy, are the programs of long-term cooperation of the company with customers. Within the framework of the organization, the fulfillment of this task includes the elaboration of two components: ‘external’ and ‘internal’. Within the external component, the company develops loyalty programs and sales promotion. Under the loyalty program, it is necessary to understand the long-term client project, which is aimed at increasing the client’s attachment to the company for account tangible material and emotional values, as well as to increase the profitability of the company. It is proposed to distinguish two groups‟ loyalty programs:

• · bonus programs: rewarding customers for profitable behavior for the company (use of additional services, intensity of treatment, recommendations, etc.);
• · additional services: a set of services focused on individual customers or specific segments.

Customer retention:

• Motivation for mutually beneficial relationships.

The motivation of customer consists in the presentation of informing the customer on them so that the last had had a desire in transaction on maintenance in his receiving. Motivation helps the customer to feel the difference between the present and the desired state to realize the need to complete the transaction. Particularly relevant is the time to make a positive impression on the customer, to inspire confidence and to place him to himself.

• Stimulating mutually beneficial relationships.

For each subsequent request for assistance in obtaining a service to the company, the client may be provided with various types of additional services, or provision of services for obtaining a product at a discount, or granting other privileges to such a customer.

Customer service

“Great service is about attitude. And a service attitude leads to a richer quality of life, not only in the commercial sector” (Leonard Berry).

Customer service is one of the important component of customer relationship management. Companies only know the strength and drawbacks with the results of provided customer services. Different service company promote the mantra TLC; think like customer while designing their service interactions. Due to mishandling on how customer think, many service company results miss opportunities to become truly excel-lent. Understanding customer psychology at a deeper level can help company to provide excellent services.

Loyalty Programs

Customer loyalty program seek to set customers bond to a company by offering additional encouragements. In a small business informal loyalty programmers may take in from of giving treat as a way of thanking to a regular customers periodically. Consumers are loyal to several brand while rejecting others, sometimes describes as polygamous loyalty. In such instant the marketing goal becomes one of the strengthening the customer preference for brand x over brand y. Marketers need to check three psychological effects to assess the potential of loyalty programme to alter patterns of behavior; brand loyalty verses deal loyalty where marketer should focus on loyalty programmers that directly supports the value of the product instead of creating difference between brand loyalty versus deal loyalty, several elements combine to determine a loyalty programs to value customer should anlaysed and marketers should focus on solution to send customer indicating progress towards reaching particular milestone and promoting the rewards that might be forth coming when that point is reach on time. Customer loyalty programs reinforce loyalty by rewarding frequent users.

Obviously, in order to successfully implement a strategy that is aimed at the customer, it is necessary for the company to carry out interrelated organizational transformations that include changes in the structure of the company, a review of its business processes, service and the transformation of the corporate culture. All this activity must be subject to a single goal of the company.

Benefits of customer relationship management

The reasons that companies have adopted customer relationship management because it can improve productivity across the perfect range of key marketing functions: detecting prospects, acquiring customers, developing customers through cross-selling and up selling, managing customer migration, serving, retaining, and increasing customer loyalty and win back defectors. Many organizations have realised the benefits of customer relationship management as retaining and pleasing the right kind of customers, gaining repeatedly purchasing customers and increasing profitability.

CRM is a technology or software that helps track data and information about the customers to enable better service. Customer relationship management help to acquire profitable customers, to be focus on enterprise customers as a key to competitive advantage. It helps to retain profitable customers longer, win back profitable customers and eliminate unprofitable customers. Companies can upsell additional products in a solution, cross-sell other products to customers, referrals, and word of mouth benefits and reduce service and operational cost.

Customer retention as a key to business performance

Customer retention has more impact on profit than market share, economies of scale and other variables that are considered to provide complete advantages for a firm. While acquisition strategies are necessary to fill the pipeline with customers to counter inevitable attrition, it should be remembered that customer equity is more dependent on customer retention than customer acquisition. For most firms, improving customer retention can lead to very significant increases in profitability. Customer retention strategies work best when industry retention levels are high and there is a significant step in the Company’s customer base. Only five percent increase in retention can increase a company’s profitability to over 85percent. Customer retention strategies are profitable not only because of the increased revenue from loyal customers but also, because of the reduced costs of serving long-time customers.

Research Objectives

• To study the impact of CRM initiatives on customer loyalty
• To analyze the factors which positively and negatively influence customer loyalty
• To suggest measures to enhance CRM initiatives

Review of Literature

• Impact of customer relationship management (CRM) on customer satisfaction and loyalty: A systematic review(2015)

In this study, we review literature on Customer Relationship Management (CRM), focusing specifically on the impact of the CRM on customer satisfaction and customer loyalty. CRM is a set of practices that organizations adopt to maintain and increase their customer base.

• Customer Relationship Management and Customer Retention in the Amica Restaurant at Valmet Oy Ltd. (2003)

The aim of the thesis was to increase the understanding of customer retention by investigating a service company able to improve their customer retention through customer relationship management. Companies may choose to apply different parts of customer relationship management to their businesses through technology and other means of communication with their customers, various training programs, and other resources devoted towards the employees of the company.

Evaluating the past and present behaviour makes it possible for the company to adopt the most effective business strategy.

Significance and Importance

CRM Nowadays is considered as an important business strategy, in the changing marketing trends and high-edge competitions. Customer Loyalty is directly proportional to high profitability and Market power of the organization. Various strategies are used by the organisation to retain their customers via loyalty programs, club systems, preferential customers, etc.

Many companies are increasingly adopting customer relationship management as means to take their competitive advantages. The firms are under a tremendous pressure to adjust quickly to rapid changes in a marketplace with re-goods to customer, technology and market function. Customers are not only becoming more value conscious but also less loyal and less service level oriented and less tolerant. Consequently, markets are becoming more fragmented, making differentiation more difficult and completion instant. This change is driving companies to become customer centric and shifting their marketing function from product based to customer based.”

Limitation of the Study

The study is not exploratory as it relies only on secondary sources like online journals, articles, websites, et cetera.

Conclusion

Loyalty of consumers provides the company with many advantages. First, the loyal consumer is less sensitive to the actions of competitors, so it is not so easy to entice. Secondly, a loyal consumer is inclined to recommend a company to which it is loyal or, at least, to speak positively about it when asked. Thirdly, such a consumer will always forgive the company some inaccuracies in the work and remain its client. Thus, it is really necessary to develop customer loyalty. Several years ago, marketing strategies were focused on attracting new customers, but recently the focus has shifted to preserving the existing ones, forming their loyalty and loyalty to the enterprise. The reason for these changes is the recognition that long-term relationships with customers are economically viable; because they guarantee regular purchases, they require less marketing costs for each customer and, because of the recommendations of loyal customers, their number increases. This document examines the impact of CRM on customer loyalty through mediating satisfaction customer factor. The concepts of satisfaction and loyalty and ways of their influence were studied, as well as its elements and sources. According to the research results, customer loyalty is determined by a high level of satisfaction. The customer perceives all the advantages provided by the company. The CMR significantly impact on the satisfaction and as we now satisfaction creates the loyalty of customers. When the companies have the stronger CRM strategy, it means that they have the higher satisfaction and loyalty.

References

1. Javalgi, R.G., Martin, L.C. & Young, R.B. (2006), “Marketing research, market orientation, and customer relationship management”, a framework and implications for service providers. Journal of Service Marketing, 20(1), 12-24.
2. Adele M., Edhi J.,” The Impact of CRM strategy and social CRM on customer loyalty’, International Conference for Emerging Markets, January 22, 2015.P. 182-190.
3. Beltman, E. P. 2013, Customer Relationship Management. Edinburg Gate: Pearson Education limited
4. Bennett, R. & Rundle-Thiele, S., (2002). A comparison of attitudinal loyalty measurement approaches. Journal of Brand Management, 9(3), 193-207
5. Bharadwaj, A.S. (2000). A Resource-Based perspective on information technology capability and firm performance: An Empirical Investigation. MIS Quarterly, 24(1), 169-196.
6. Arezu Ghawami, The Impact of CRM on Customer Retention, 2006
7. Marianne Chisos, Effective tips for Customer Retention Strategies in CRM, Tech Funnel, July 12, 2018.
8. Dalla Pozza I., Goetz O., Sahut J.M., Implementation effects in the relationship between CRM and its performance, Journal of Business Research, Volume 89, 2018

Introduction

In now days in business world, Marketing Management playing a most important role. Most of aspects of the business world are highly depending on how successfully that business is practice in the Marketing Management. This assignment are more focusing on how the marketing principle of Customer Relationship Marketing (CRM) are practically used for the success of the business. This assignment based on research that used for marketing strategies to successes in business world. Now for this assignment I choose Hermès of Paris as my luxury retail company. Hermès International S.A., sometimes also referred to as Hermes of Paris or Hermes is a French luxury good manufacturer. It has been consistently ranked as the world’s most valuable luxury retail company and ranking studies published by leading consultancies. Here is some review of the background of Hermes. Thierry Hermes founded the company in 1837 as a harness workshop in Paris. Originally, his intent was to serve the needs of European nobleman. Thierry’s son Charles-Emile Hermes moved the company’s shop to 24 Rue Du Faubourg Saint-Honore in Paris, where it remains to this very day and is the company’s global headquarters. It gradually, the company’s product offerings expanded through generations. The company’s iconic duc-carriage-with-horse logo and signature orange boxes were introduced in the 1950s. In the 1970s, the company established a subsidiary La Montre Hermes in Bienne, Switzerland. The company acquired tableware manufacturers like Puiforcat, Saint Louis and Perigord in the 1980s and consolidated its position in there segments of the luxury retail market. Hermes is not a conglomerate in real sense of the word and does not own a portfolio of brands like its key competitors, which include LVMH, Richemont and Kering. Currently, the range of products under the Hermes brand mane includes leather goods, lifestyle accessories, perfumes and ready-to-wear. The leather goods and saddlery category is the biggest contributor to the company’s revenues, followed by ready-to-wear and accessories, silk, textiles and fragrances. In February 2015, Hermes has announced an increase of its turnover of 9.7%, which more than €4 billion in sales. The increase is internationally visible. In Asia, excluding Japan, where the turnover grew in 7%. In America, with 10% rise, in Europe, where it grew 7% growth and generated a good performance in the group’s stories. In March 2018, Hermes opened its largest, multi-storey shop in Middle East, at the Dubai Mall. In 2019, the Hermes of Paris brand was ranked 33rd in Forbes list “World’s most valuable Brands”. Hermes International S.A. has using some key of success factors in many ways to examine these factors form Customer’s point about them and purpose to retain its current customers. Therefore, this assignment is going to discuss about Customer Relationship Management (CRM) strategies, advantages and disadvantages of CRM that using by Hermes International S.A. in their business to retain them customers.

Description of the CRM Strategies

First and foremost, Hermes International implement so many of customer relationship management (CRM) strategies to their company to achieve their goals in business world. There are few strategies that Hermes International S.A. can used for their business. Firstly, Hermes International S.A. implement are set a destination. Set a destination are help your company to achieve more goals. As such, you first step into implementing a CRM strategies to identify these goals in future. Once you know what Hermes International S.A. are trying to do. Your next step will be how or to determine how to plan on reaching your objectives. For examples, the goal of Hermes International S.A. is to become top place in the customer’s daily lives. According to the top place concept, one ‘first place” is the home, which I the place where one lives in. By aiming to become the customer’s top place, Hermes International S.A. had set a destination in order to feel satisfy when customers spend time in Hermes International S.A… Moreover, Hermes International S.A. also implement the improve customer relation rate and pricing strategies. Hermes International S.A. implements CRM programs to improve their customer relation rate and pricing strategies. For example, Hermes International S.A. has been set its price by conception, manufacturing and distribution. Therefore, the high-end-position of its products enables the company has set its price by avoiding the competitive influence. Price premiums, the strength of Hermes enable its brand command the highest price while all customers are willing to pay for its iconic products. Besides that, improvement in customer relation rate and pricing strategies follow the Hermes International S.A. to have so much of more cross selling opportunities in their business. For example, Hermes International S.A. has been selling other products such as jewellery, handbags and etc. To improve customer relation rate, Hermes tried to provide better services and deliver conveniences to the customers. Other than that, Hermes also can use distributions strategies. One of the key strategies is retail environment. The company operated in the worldwide market including France, Japan, Europe, the USA and Asia Pacific which are hot fashion districts. The company has distributed its products through 267 exclusive shops around the world which can reinforce its brand image. All products of Hermes have sold only its traditional shop, and it has no desire online shopping. The distributions in make upscale worldwide like Japan, China, the USA and Europe are an international strategy of Hermes to expand customer base and increase sales. Especially in China is currently the largest luxury market in world. Moreover, customers also understand more about what Hermes International S.A. can do for them. Therefore, it also can helps Hermes International S.A. to generate new and innovative ideas too. Another strategy that Hermes International S.A. organisations use to create a high level of customer intimacy is through customer interaction. Hermes International S.A. use schemes which allow employers to either speak face to face with a customer or give them a platform to have their voice heard. “By giving your customers a platform for reaching prospects, your marketing efforts become more objective and inclusive” (Rast, 2012). This customer interaction can be seen in many different forms, varying form feedback surveys, forums or mystery shopper visits. This can be seen in many different department which are customer focused. For example, online survey or feedback forms which can be found for most organisations customer.

Discussion on Advantages of CRM to their business

Secondly, Hermes International S.A. also using so many of CRM program into their business. There are few of advantages of CRM that Hermes International S.A. used for their business. Firstly, customer relationship marketing enables the company to provide excellent real time services by fastening close relationship with every regular customer using the method of effective individual account information. For examples, Hermes International S.A. using CRM creates a singles truth that about each relationship that is accessible form a consistent interface wherever people work. Other than that, by developing CRM advantages is created delivering extra scale and offering greater choice so that customers can find solutions and do business with organisations on their own terms. Besides that, Hermes International S.A. also using safeguarding business as advantages of CRM at their business. A control access to your important customer and business information by securely storing data in the cloud, with advanced protection and automatic back up, this data is proceed from unexpected forms or events. Hermes International S.A. are settings enforce controls so that teams and individual users have appropriate permissions to access records consistent with their role. For example, Customer Relationship Management (CRM) helps a lot to safeguard the multiple business is by providing the best technology that will helps the organisations to digitally transform and will be develop a new business models which has been ensure future competitiveness. Through out of a smarter process, connected apps and new sights gained from business data, customer relationship management (CRM) also will help to organisations a develop new customer centric business models that support strategic growth plans. Moreover, improvement in allow the company to improve their growth potential of each of the customers by shared income, cross selling and up selling. For example, improvement in business performance is increase in profit margin. One of reasons, Hermes International S.A. is able to generate higher profit margin is customers buy more since they are able to get the higher satisfaction form Hermes International S.A.. This will revenue earned to grow and lead to increase in profit margin. Moreover, the customer will buy the product even though the price is higher than compared to the competitors. Customer might buy more the quantity of the products since the customer does not think that Hermes International S.A. product is much expensive so that this will help Hermes International S.A. to generate the more revenue effectively. In addition, Hermes International S.A. also use enhances better customer service as advantages of customer relationship management for their business. The Customer Relationship Management system that provide businesses with numerous strategic advantages. One of such is the capability to add a personal touch to existing relationship between the business and the customers. It is possible to treat each client individually rather than as a group, by maintaining a repository on each customer’s profiles. This system allows each employee to understand the specific needs of their customers as well as their transaction files. For example, Hermes International S.A. was looking for a modern customer relationship marketing solution that is cloud-based, flexible and has secure interfaces to other programs and database. The goal wa to implement an integrated solution within the Hermes Omni channel strategy. The primary aim was to achieve functional optimization of data flows. Modern usability, technical expandability, simple access control and compliance with data protection criteria were also among the high requirements.

Discussion of Disadvantages of CRM to your business

Thirdly, Hermes International S.A. also face off so many of struggles of Customer Relationship Management (CRM) in their business are approaches of past buying behaviour of consumer mightn’t be same in the future. Majority of CRM move towards with collect data in the past purchasing behaviour of customer and undertaking it as the probable behaviour in the customer constrains keep on shifting and various upon the criticality of the purpose and the level of disappointment with the existing alternative. For example, poor customer service and experience 2009 churn rates of around 50% per annum are level of disappointment Hermes International S.A… However, the 50% are used to regular customer of Hermes International S.A… Besides that, not easy to process are also one of the disadvantages of Customer Relationship Management (CRM). The assessment of CRM process and its functioning is not an easy mission. It requires multidimensional performance, and multifactor customer situation mostly score card or in metric format, which is often difficult to practise and understand them. A survey found that conducted by reset organisations who have implanted the CRM have difficulties at implantation. According Pries, C. & Stone. M. (2004) Aberdeen Group ranged among of “somehow satisfied” and “satisfied” range from one (not stratified) and to five (completely satisfied) which depend on customers. Other than that, training also can be a small disadvantages of Customer Relationship Management (CRM) to Hermes International S.A. Large company need to roll out training schedules for all their employees. For large-scale, CRM, this can make mean hiring professionals to training their Hermes’s employee’s and also require a period of learning and business training to know how it is in business world. For example, the Hermes International S.A. have need to send out their employee’s to CRM training, so that their employees can learn to manage it and set to use to using it. The CRM training is also different for managers compared to their regular staff, because most CRMs have specialized functions for their managers and executives, so that Hermes International S.A. management must send their executive and manager to Customer Relationship Management training. Ultimate the human element form the equation of your company also one of the disadvantages of Customer Relationship Management (CRM). Processes are automated when the CRM software is installed, which also means that the potential customers lose part of the human element that the commercial task sometimes requires. There is a differences between being assisted by a real person when making a phone call than by an automated customer service system. Sometimes it is good to make tasks more automatic, but it is also good to have a little personalised help to avoid losing the value of the human element. In addition, approaches of past buying behaviour of consumer mightn’t be same in future to also can be as disadvantages of customer relationship management. Majority of CRM move towards with collect data on the past purchasing behaviour of consumer and undertaking it as the probable behaviour in further too. This could be an immoral supposition in a number of perspectives. Customer constrains keep on shifting and varies upon the critically of the purpose and the level of disappointment with the existing alternatives. For example, Hermes International S.A. dissatisfaction rate due to poor customer service and experience around 2009 churn rates of around 20% per annum. However the 20% are used to regular customer of Hermes International S.A.

Conclusion

Nevertheless in the end of the report is explicable that, in the spite of that, Customer Relationship Management has become a maximum prior CRM implantation as “in many completive markets”, business invest substantially in CRM implantation lately thought, companies have be the majority of them are failing short of the expectations that precede them and are therefore considered failures, The success of a CRM strategy based on advantages and disadvantages of customer relationship management in business world. According to Anderson (1996) comments as “it is a higher response cross-selling efforts and better word-of-mouth publicity”. The understanding it as a business strategy keeping the main focus on their customer and their satisfactions. Therefore, it is useful to establish the brand creditability and gaining trust of customers in their brand. In the other hand, Hermes International S.A. is the first come to customer mind is high quality provided. In the end, Hermes International S.A. doing well. Although the cast to implantation a CRM program is expensive but it is worth implant it. This is a win-win situation, both parties get what they need. In a life cycle of strategic brand management, the brand should aware the value of maintaining and improving the brand thereby keeping the valuable assets. The brand can increase value of products expanding franchise and brand equity. The ability of the brand to provide its special products and unique image through many communications such as the media, advertising and public relations enables the brand to exploit it competitive advantage and disadvantage over the rivals. Improving its products and considering for the future. However, though some disadvantages and argument has been placed but it is should be remind that CRM assists a company concentrate on the customer as an assets side by side consumers are not forced to by necessity in the same organization. Many companies waste a lot of money obtain new customers and squander it by failing to acquire to know and comprehend their customer, retain and keep in handle with them. Therefore, the company should setup CRM system based on allow to customers to handle their relationship with multiple suppliers rather than the other way encompassing.