Customer relationship management:
first of all, It is a methodology and set of strategies that a company adopting for managing their interactions and relations with current and potential/future customers. It also focuses on identifying and building loyalty with a marketer’s profitable customers and a two-way exchange with customers so that firms have an intimate knowledge of their interests, wants and buying the pattern.
CRM system is designed to collect information from potential customers through different channels like the company’s website, telephone, live chat, & social media.
It is a combination of the process of relationship management and information technology.
Process of Relationship Management + Information Technology = CRM
Components of CRM:
The only source of a company’s profit and future growth.because It helps in distinguishing and managing customers.
The relationship is established between a company and its potential customers for both long-run and short-run.as a result It involves communication and interactions between a company and the customer.
Because CRM is not an activity for the marketing department alone. Certainly A company manages its relationship with their customers for the growth of their business. It helps to retain their potential and profitable customers for long-run.
Characteristics of CRM:
1.Lifetime value of the Customer: Firms profitability can be increased if it develops a long-term relationship with customers and ensures repeat purchase.
2. A share of Customer: Its market share measures the success of a product. For example, if a company sold 100 million pairs of athletic shoes each year and a firm sales 10 million of them then it has a 10% market share. To increase the market share, the company needs to lower down the prices and increase its advertising.
3. Customer Equity: Companies are considering their relationship with customers as financial assets. Firms measure success by calculating customer equity and the financial value of the customer relationship throughout the lifetime of relationships. By doing this, firm compares the investments they make to retain potential customers.
4. Greater Focus on High-Value Customers: It seems like All customers are not equal. When it comes to profitability. The CRM system is used to generate the profile of each customer based on risks, profitability, interests, etc.
Importance of CRM:
|Customer-Centric Approach||Future Course of Action|
|Decision-Making Tool||Expansion of Business|
|Attracting and Retaining Customers||Customer Loyalty|
|Feedback and Information on Competitors||Reducing Cost|
- Customer-Centric Approach: It helps the organization to adopt the customer-centric approach. It involves the number of potential customers, gathering information about customers and focuses on customer market leadership. This leads to the growth of business and customer retention.
- The future course of Action: CRM helps in making future decisions. It provides customer-related data like customer name, address, issues and complaints and many more.
- Decision-Making Tool: Customer relationship management is essential for top-level management as it provides relevant data like customer satisfaction and efficiency of services. It helps top management deciding the future course of action.
- Expansion of Business: This system helps in expansion of business as it handles the enormous amount of data.
- Attracting and Retaining Customers: A CRM system is not only used to deal with old customers but also attract new customers and retain them for long-run. This also helps to find out who will be the profitable customer for the company.
- Customer Loyalty: It establishes long-term relationships with their customers. Because of the CRM system, companies make a better and long-term relationship with customers.
- Feedback and Information on Competitors: Feedback is the most important thing for any profitable company, as it helps to know them how they are performing in the market. Geeting customers from customers help organizations to compete with the competitors.
- Reducing Cost: This system requires less paperwork, less manpower, and usage of technology is cheap as compared to manual work.