Customer Relationship Management Takes a Research Paper
- Length: 10 pages
- Sources: 5
- Subject: Business
- Type: Research Paper
- Paper: #19970828
Excerpt from Research Paper :
The communication system may be able to facilitate the transfer of information, but an essential component of a CRM system is the transfer of responsibility. Somebody at the company must be responsible for every customer issue that arises. This is the only way that the company can ensure that its customers' needs are truly being met. Because of this need for responsibility, it is essential that customer relationship management become a second-nature activity, something that is ingrained in every facet of the organization and every action of its people. In other words, it must permeate the entire organization.
One component of customer relationship management is relationship marketing. Relationship marketing takes the relationship that has been developed between the company and its customers and applies it to the marketing function. The organization will through its CRM program gather information about the customer, and this will be used to help build a better marketing relationship with the customer. The underlying theory is similar to that of CRM -- that by building a strong, long-lasting relationship with the customer, the company will be better able to meet that customer's needs. This will result in higher sales, more frequent sales, better retention and more referrals.
The key difference between relationship marketing and conventional marketing is with respect to what is being sold. In conventional marketing, the firm sells to customers a product or service. The marketing focus is on the cost-benefit proposition of that product or service. In order to retain the customer, the firm may use incentives or it may market its brand in the hopes that a positive impression sticks with the customer. Relationship marketing takes a different approach. The focus of the marketing effort is on the relationship between the company and the customer. The company sells what the relationship brings to the customer. This may be service, it may be discounts, or it may be a superior understanding of the customer's needs or any number of other benefits. In relationship marketing, the relationship is a core of the service offering. It is not just a superior product or service being sold, it is a superior product or service from your specific company. Relationship marketing adds the new element of specificity to the transaction. When the relationship is strong, the customer and company will both see benefits.
At the heart of relationship marketing is the six markets model. This model suggests that there are six main markets that are the focal point of an organization's relationship marketing efforts. These are customer markets, internal markets, suppler & alliance markets, recruitment markets, influence markets and referral markets (Peck, Christopher & Payne, 1999). This model is based on the concept that the organization needs to build relationships with all of its key stakeholders, not just customers. The marketing function is enhanced through this relationship building, because it allows the company to better control the messages it sends to the marketplace, and better identify all of the opportunities that are present. By carefully developing and implementing plans for all stakeholder markets, the company is able to gain insight into all of the conditions, constraints and opportunities in the marketplace (Payne, Ballantyne & Christopher, 2005).
Internal market relationship marketing refers to the building relationships within the company. Different departments can help each other identify opportunities through enhanced communication and a clearly defined set of common objectives. Internal departments need to be highly coordinated because they are both suppliers and customers to each other, and the degree to which they work seamlessly together will impact on the ability of the company to meet its obligations to its customers. The recruitment market is vital to the development of strong internal markets because it helps the firm to identify potential employees capable of executing the corporate strategy (Peck, Christopher & Payne, 1999). Building strong internal markets requires the building of strong recruitment markets -- this is the essential first step to an effective relationship marketing program.
Supplier and other allied firms can be an excellent avenue for marketing -- they can help direct business to you if you build a strong relationship with them. As a supplier, it is in their best interest to do this, but many relationship management programs ignore this valuable source of information, contacts and future customers. The referral market is based on the premise the best marketing for the company is done by the existing customers. Cultivating referrals, however, is an active task that must be planned. While most companies are passive in their pursuit of referrals, those with a strong relationship marketing program leverage the relationships that they have cultivated with customers and non-customers alike to promote referrals and drive more business. Key non-customer groups include networks, multipliers, connectors and third party introducers and agencies (Peck, Christopher & Payne, 1999).
Influence markets are related. There are many individuals, groups and organizations that interact with the organization in an ancillary manner. These include stock analysts, lobbyists, politicians, media, consumer groups, unions and other interest groups. There is often an influence relationship that can be developed with these individuals and groups. Cultivating strong relationships with these groups will help the organization to not only control the communications messages that are transmitted about the organization, but such relationship-building can also facilitate the smoother realization of the company's objectives (Peck, Christopher & Payne, 1999). These groups are influencers because they can impact the business; relationship marketing requires that the company build relationships with these groups so that the impacts are positive rather than negative or neutral.
Relationship marketing and customer relationship management are two complementary ideas that, when implemented successfully in an organization, can yield tremendous competitive advantage. The underlying theme of both of these concepts is that business value can be derived from the cultivation of strong relationships both internally and externally. Relationships that were once defined in simply terms around single transactions are redefined as a complex set of interactions. How a company manages those interactions is a key determinant of success.
Communication, and the underlying systems that manage it, become a critical business function. In customer relationship management, each component of the organization must be committed to fostering a strong relationship with the customer. The result will be increased customer retention, increased sales from the customer and an uptick in new leads. In relationship marketing, the organization emphasizes focus on each set of stakeholders, as they all contribute in some way to the success of the business. My improving and carefully guiding these relationships, the company derives increased value from all stakeholders. Over time, incrementally, this will drive business value.
Put together, it is apparent that customer relationship management and relationship marketing require a total shift in the outlook of the organization. The organization must be focused on finding ways to cultivate mutually beneficial, long-term relationships. The closer the organization is to its customers and to other stakeholders, the more synergies can arise between the different groups and their interests. Bringing this outlook to the organization requires more than just investment in CRM software; it requires emphasis on information sharing, on recruitment and on training employees to view every action and every interaction, as a source of potential future benefit to the organization.
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Ghavami, a. & Olyaei, a. (2006). The impact of CRM on customer retention. University of Lulea. Retrieved March 6, 2010 from http://epubl.luth.se/1653-0187/2006/02/LTU-PB-EX-0602-SE.pdf
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