Can relationship management contribute customer retention

can relationship management contribute customer retention

omer relationship management systems, can earn and retain their customers' .. customer is a contributing factor in enhancement of companies' profitability. Customer relationship management (CRM) is a leading new . contributions, and do whatever is possible to help customers solve their. The secret lies in that one word: relationship. And while CRM software does not manage customer retention by itself, it will provide you with.

CRM can be achieved by: You must also adapt your business to the needs of your customers. However, there are many potential benefits.

can relationship management contribute customer retention

A major benefit can be the development of better relations with your existing customers, which can lead to: The more you know about your customers, the easier it is to identify new prospects and increase your customer base. Even with years of accumulated knowledge, there's always room for improvement.

Customer needs change over time, and technology can make it easier to find out more about customers and ensure that everyone in an organisation can exploit this information.

The better the relationship, the easier it is to conduct business and generate revenue. Therefore using technology to improve CRM makes good business sense. CRM solutions fall into the following four broad categories. Outsourced solutions Application service providers can provide web-based CRM solutions for your business.

can relationship management contribute customer retention

This approach is ideal if you need to implement a solution quickly and your company does not have the in-house skills necessary to tackle the job from scratch. It is also a good solution if you are already geared towards online e-commerce. Off-the-shelf solutions Several software companies offer CRM applications that integrate with existing packages. Cut-down versions of such software may be suitable for smaller businesses. This approach is generally the cheapest option as you are investing in standard software components.

The downside is that the software may not always do precisely what you want and you may have to trade off functionality for convenience and price. The key to success is to be flexible without compromising too much. Custom software For the ultimate in tailored CRM solutions, consultants and software engineers will customise or create a CRM system and integrate it with your existing software. However, this can be expensive and time consuming.

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If you choose this option, make sure you carefully specify exactly what you want. This will usually be the most expensive option and costs will vary depending on what your software designer quotes. Managed solutions A half-way house between custom and outsourced solutions, this involves renting a customised suite of CRM applications as a tailored package. This can be cost effective but it may mean that you have to compromise in terms of functionality.

How to implement CRM The implementation of a customer relationship management CRM solution is best treated as a six-stage process, moving from collecting information about your customers and processing it to using that information to improve your marketing and the customer experience.

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Stage 1 - Collecting information The priority should be to capture the information you need to identify your customers and categorise their behaviour. Those businesses with a website and online customer service have an advantage as customers can enter and maintain their own details when they buy.

Stage 2 - Storing information The most effective way to store and manage your customer information is in a relational database - a centralised customer database that will allow you to run all your systems from the same source, ensuring that everyone uses up-to-date information.

can relationship management contribute customer retention

Stage 3 - Accessing information With information collected and stored centrally, the next stage is to make this information available to staff in the most useful format. Stage 4 - Analysing customer behaviour Using data mining tools in spreadsheet programs, which analyse data to identify patterns or relationships, you can begin to profile customers and develop sales strategies.

Customer relationship management

Stage 5 - Marketing more effectively Many businesses find that a small percentage of their customers generate a high percentage of their profits. Using CRM to gain a better understanding of your customers' needs, desires and self-perception, you can reward and target your most valuable customers.

Stage 6 - Enhancing the customer experience Just as a small group of customers are the most profitable, a small number of complaining customers often take up a disproportionate amount of staff time. If their problems can be identified and resolved quickly, your staff will have more time for other customers. Potential drawbacks of CRM There are several reasons why implementing a customer relationship management CRM solution might not have the desired results.

can relationship management contribute customer retention

There could be a lack of commitment from people within the company to the implementation of a CRM solution. Adapting to a customer-focused approach may require a cultural change. There is a danger that relationships with customers will break down somewhere along the line, unless everyone in the business is committed to viewing their operations from the customers' perspective.

The result is customer dissatisfaction and eventual loss of revenue. Poor communication can prevent buy-in.

In order to make CRM work, all the relevant people in your business must know what information you need and how to use it. Some organizations have invested in the Web — often with the objective of using it as a way to maximize resources McMillan, Recent developments in Internet technology have given the Internet a new role: There is a little existing research that has empirically tested the impact of the Internet on CRM which leads to customer loyalty.

The degree to which the Internet is used by organizations and the considerable praise that it has received may be attributed to its enhanced informational and interactive communication capabilities. This article consists of two main parts. First, a conceptual model explaining the theoretical link between CRM and customer loyalty will be presented and explored. The impact of Web site characteristics on the link between CRM and customer loyalty will also be explained.

The second part of this article will explain the results of an empirical study conducted to test the impact of Web site characteristics on the link between business-to-business relationship management and customer loyalty in the IT sector. Business-to-business relationship management or CRM has been chosen because business-to-business electronic commerce is more profitable for companies than business-to-consumer electronic commerce Forrester Research, The impact of the Internet is well known in business-to-consumer transactions: However, a revolution is occurring in business-to-business relationships as companies restructure their operations with trading partners Venkatraman, The IT sector has been chosen because, according to Datamonitormore products hardware and software from this sector are sold online or through the Internet on a business-to-business basis than from any other sectors.

Towards the end of the article, the managerial implications of the study will be considered. CRM is organized as a series of events. These are clustered together according to types of action that constitute the extent of CRM in the context of this study. The extent of CRM comprises independent variables presented in the conceptual model. The seven major CRM components identified are: These components are discussed below. Many firms have developed databases that contain detailed interaction data on prospects as well as customers Thomas, In the process described by Paynethe concept of CRM is understood in terms of a loyalty scale leading from the customer prospect, through customer, client, and supporter, to partner.

According to Paynecustomer prospecting plays a key role at the beginning of the CRM process. Thomas has examined a methodology for linking customer acquisition to customer retention. He found that customer acquisition and retention are not independent processes. Using the model described in his study, Thomas shows the financial impacts of not accounting for the effect of acquisitions on customer retention.

The concept of relations with customers also relates, according to the literature, to customer loyalty. Chow and Holdenfor example, estimate that firms are oriented towards the benefits that can be reaped from the construction of customer loyalty. In addition, these authors specify that there has been a paradigmatic change so that the relationship with the customer is now seen as the unit of value. Reichheld reports that he has yet to encounter a company that has achieved extremely high customer loyalty without fostering similarly high loyalty among employees.

Payne puts partnering at the extreme end of his loyalty scale, regarding it as an important step that usually leads to the development of a close and durable relationship between supplier and customer. Wilson has developed an integrated model devoted to the explanation of CRM process phases. In this model, partner selection is considered to be the first step in the CRM process. Personalization Personalization refers to the extent to which a firm assigns one business representative to each customer and develops or prepares specific products for specific customers.

Personalization is about selecting or filtering information for a company by using information about the customer profile Schubert, A major component of personalization is the distribution of customized mail to a customer or customization of the relationship between firm and customer.