Customer Relationship Management CRM

¶ … quality customer relationship program improve sales performance?

Introduction customer is certainly the most important asset of any organization or a business venture that depends on sales and repeat sales. Since the basic purpose of every business is to not only generate but hunt down ways to maximize profits, sales performance is one such area that comes under strict scrutiny. Moreover, since satisfied customers play a vital role in improving sales performance, organizations big and small are on the look out for the right tools and techniques for drafting most suitable customer relationship programs as one way of improving sales performance. However, it has been often observed that many organizations and individuals for that matter fail to clearly draw a line that differentiates the two overlapping concepts of sales and customer relations. Thus, by reviewing the plethora of literature on the due importance of Customer Relationship Programs in the advancement as well as amelioration of sales performance, this dissertation proposal will base the entire research work upon these theories.

Literature Review

As W.B. Ellington has quoted in his 25th chapter titled "Sales and Customer Relations," "a distinction should be drawn between sales and customer relations, even though the two tend to overlap and mutually support each other" (Ellington, Sales and Customer Relations). According to the experts in this field, activities concerning sales pertain to promoting the products and services "through personal contact and advertising" (Ellington, Sales and Customer Relations). On the other hand, "customer relations activities relate to the ongoing dialogue between managers and customers about the quality" of the product in this case which will be the quality as well as the functioning and the performance of the car once a sale has been made. Thus, "the regularity and the success of customer relations will significantly affect subsequent sales" (Ellington, Sales and Customer Relations).

Nonetheless, to date the concept of as well as the relationship between customer relationship programs and sales performance does not yield general agreement. According to Keefe (2001, p. 4), "some CRM experts argue that there is little consensus about what CRM actually is, or how to best execute or measure it." Proving her assertion, Keefe, in one of her research articles "reports on an interview with Heidi Wisbach, manager of CRM Analytics in the New York office of Cap Gemini Ernst & Young, who specialize in CRM initiatives in the manufacturing, hospitality, financial services and telecommunications industries" (Keefe, 2001, p.4). Wisbach is one of the designers of the Customer Relations Management Index, the function of which is to assist companies in gauging the degree "to which they use actual CRM techniques and to compare their standing against competitors" (Keefe, 2001, p.4). Wisbach defines "a company's CRM readiness as a function of having: 1) a way to track customer information; 2) metrics -- a means of evaluating customer performance; and 3) the ability to impact change. The industries that tend to be more CRM -- ready are those which are aware of distinct contact with the customer and those which are really competitive, thus requiring individual companies to differentiate themselves significantly. Examples include, but are not limited to, the airline, manufacturing, hospitality, financial services, telecommunications, publishing and tobacco industries" (Keefe, 2001, p.4). What experts mean by improving customer relations thereby increasing sales is to promptly respond to the needs, problems and demands of the customers thereby gaining their satisfaction. Lord (2000,p. 40-43) identifies the following needs of the customers and stresses on the word "relationship" in customer relationship management or customer relationship programs: "Quality products, twenty-four hour accessibility, easy ordering, removal of geographic boundaries, on-time delivery and responsive service" (Lord, 2000,p. 40-43).

Thus, with the help of the research conducted by some of the best experts in the related field as well as reviewing the line of reasoning of the experts in the literature review section, it is evident to the reader that there exists a clear link between customer relationship programs and the sale performance.

How customer relationship programs are linked with improved sales performance or increased sales?

There are different advantages of a lucid and a functioning customer relation program. First of all, a sound customer relationship program yields a sound relationship between companies and their customers. The strength of this relationship helps the retailers and the companies to create "committed customers" (Lim, 1997, p. 101) who have "emotional attachment" in the form of the trust that the customers place in the company's ability to respond to their needs promptly or likeness that they exhibit (Fournier, 1998, p. 355). Thus these customers bring in more customers through positive and encouraging word-of-mouth recommendations and are more challenging to the opponent's offers thereby affecting the sales performance of the company directly. Secondly, sound customer relationship programs "facilitate cross-selling complementary products as well as "selling up" to higher quality substitutes" by "leveraging the customer base" (Bejou, 1998, p. 21-22). Moreover, sound customer relationship programs yield improved and controlled customer relations management. Improved customer management in turn results "in lower sales and service costs, higher buyer retention and, thus, lower customer replacement expenditures" (Reichheld, 1996).

Nevertheless, experts highlight several mistakes that companies make that first affect the strength and soundness of their customer relationship programs and then the subsequent sales. David (1999, pp. 22-26) points out the inability and the negligence of the firms that fail "to consider the "lifetime value" of a customer." According to him, "companies must be willing to treat different customers differently. For example, American Airlines offers different priority upgrades for its platinum and gold customers. Many companies just have not been tracking their customers. Still others have either taken too long to start up their CR programs or have been discouraged by overestimating what is needed to begin one" (David, 1999, pp. 22-26). David advocates "scoring early, quick hits" suggesting "that Western Union's database of 26 million customers was built in only five months. Furthermore, this expert advises "using whatever data and information technology capabilities the organization already possesses to begin the CRM process" (1999, pp. 22-26).