Customer Relationship Management: Related Theories, Challenges and Application in Banking Sector. Babin Pokharel. CEO, VS Niketan College, VS Niketan. Over the years, we've worked with literally thousands of companies considering a CRM system. Big companies, small companies, in-between. Customer Relationship Management Theory and managerial implications on customer profitability and value creation Andrés Martínez Morán [amm40].
It is very common for great brands to have online forums where users can interact between themselves and new services rewards, customer support… can be provided. Thus, we can take advantage from that existent customer base to offer complementary products and services that add more value to their purchases. Extending the fields of our relationships can grew our income without having to incur in customer acquisition costs. E-commerce usually uses algorithms in order to recommend you what to buy based in your purchase record, and even, like Amazon does, shows products that are frequently bought together.
Its practical consequences are not so different from the supply of added customer services: It is visible that CRM aspects related with customer profitability are not isolated, but interdependent: At this point, we have discussed the implications of adopting a CRM perspective in organizations, but CRM is a two-sided coin founded on a quid pro quo proposition.
As deduced from the previous section, customer profitability would not be possible without the delivery of superior value Jensen, that turns the relationship into a win-win situation. The same existence of an economic exchange implicates that both seller and buyer believe that they receive value from it, because if not, there would not be reasons to do it Bagozzi, CMR acknowledges those basic principles and tries to exploit them in its favour.
As it tries to eliminate non-profitable customers from the equation, the value exchange can be optimized since the efforts of the firm can be allocated correctly. Thus, the company will get its revenues increased while the key customers concentrates the value proposition.
Here we have to find a balance between giving the profitable customer a superior value, with the aim to retain him, in exchange for a price that is perceived as fair but that would not undermine the ability of the firm to generate revenues.
Here, giving a major role to customers through collaborative interactions can be chance to achieve differentiation, and CRM-based technologies make this task easier. The Internet and the rise of social medias have facilitated the massive use of one-to-one communications between the firm and its target towards a better understanding and the collection of really relevant data. Consequently, customers are participants in a process that has the ultimate objective to maximize their satisfaction: The proliferation of mass customization could serve as a good example for this: Accordingly, the core idea of S-D Logic consist in focusing the on the service meaning the application of competences to provide benefits rather than the product a.
Therefore, the point about S-D Logic would consist in understanding the true relational nature of value creation in a broader and more comprehensive perspective that recognizes and commits to the necessary collaborative effort of customers and partners, in order to improve our position, so a customer-centric philosophy such as CRM requires it to realise its full potential.
Nevertheless, profit is not the only value that a firm can get from co-creation: This appears to be more obvious in relationships between businesses, whereas value co-creation may encourage the development of jointed investigation projects, shared technologies, financial agreements towards stability Therefore, CRM provides a framework where there is a dependency between both sellers and buyers, as well as their interests can somewhat converge.
Once that we have done this review on the subject, we are able to summarize the core points of the research work. Even known that Customer relationship management is still a concept under academic evolution, researchers have started to agree in understanding it under a wider, multidimensional, and holistic point of view built around a customer-centric thought.
Thus, benefits from its application will only come with an all-level and consistent implementation.
Customer Relationship Management theory, practice, implementation, and results.
That is why CRM opts to put emphasis on those key customers with higher potential profitability, to develop relationships with them. Here elements like customer retention, loyalty, trust, added services, cross selling… can determinate the firm success.
CRM has also its own philosophy regarding with the generation of value: Rather than a passive subject, the customer is a necessary actor; a co-creator that we must take into account in order to gain sustainable competitive advantages. Being stated the managerial consequences of CRM implementation and its theoretical background, now we are able to issue some advices, with special focus on B2B companies.
Theories of Customer Relationship Management (CRM)
If not, it is possible that we will get some rigidities and adaptation difficulties, instead of generating synergies. In addition, very optimistic predictions of expected length of the relationship in order to obtain the CLV should be avoided: Investing in maintaining the relationship renewing contracts, exclusivity clauses… can help to retain partners, as it has a safeguard effect.Introduction to Customer Relationship Management (CRM) Dr. Nancy Rauseo
Marketing as an Organized Behavioral System of Exchange. Journal of Marketing, A Customer Relationship Management Roadmap: Business Process Management Journal, Marketing's Contribution to the Strategy Dialogue.
Journal of the Academy of Marketing Science, Industrial Marketing Management, CRM at the speed of light. Return on relationships ROR: Obtenido de Gartner Group: Antecedents and consequences of consumer value assessments: Implications for marketing strategy and future research.
Journal of Retailing and Consumer Services, Assessing the Service Profit Chain. Harvard Business Review, Insights from service-dominant logic. Journal of Retailing, Relationship marketing and distribution channels: Emerging practice, process and discipline. Techniques for analyzing Industries and Competitors. The Future of Competition: Co-creating Unique Value with Customers.
Harvard Business School Press. The Customer Relationship Management Process: Its Measurement and Impact on Performance. Journal of Marketing Research, Cross-functional issues in the implementation of relationship marketing through customer relationship management. European Management Journal, Europan Journal of Marketing, Managing the change from marketing planning to customer relationship management.
Long Range Planning, Getting the most out of all your customers. Since customers have a direct relationship to the actions of an organization, therefore they are valuable source of opportunities and threats operational questions related to the industry.
Today's, to grow and survive in competitive economy, companies and organizations should pay attention to customer orientation and increase their relationship with the buyers of goods more than ever. Theoretical models of customer relationship management include three dimensions of thought, social and technological information.
This paper presented an introduction of the principles and concepts of management, communication with customers and benefits of applying this and examined trends in customer relationship, challenges facing of CRM systems, the implementation model and also the applicable solutions of implementation process of the system in organization. Introduction After the industrial revolution, the world has undergone fundamental change in all aspects. Trade or business in various human societies has not been exempt from this general rule and noticeably was in the changes cycle.
Managers of business and production of organization in order to stay ahead and success in competitive market have created various strategies and techniques. Business and marketing was converted from the simple and traditional to the highly professional activity, requiring extensive knowledge in the areas of social, political, cultural, economic and information technology Abbasi and Torkamani, Today, marketing is not only development, supply and sales, but the continuous development, services after sales with a long-term relationship with the customer is also added.
According to these issues, customer relationship management in organizations is a business strategy Abbasi and Torkamani, This paper, after reviewing the literature related to customer relationship management, its principles and concepts, aims to examine the effect of the CRM strategy selection in the organization and providing theoretical model of its implementation to establish the proper implementation of this system and gain competitive advantage in the world.
Principles and concepts of customer relationship management CRM with its current meaning was emerged from s as a business strategy and developed to select and manage the most valuable customer relationships.
CRM requires a customer-oriented philosophy and culture to support effective marketing process, sales and after-sales service organization. Customer relationship management is comprised of 3 parts: Concept of customer is the ultimate consumer who has a 63 International Journal of Business and Behavioral Sciences Vol.
Concept of relationship is to build loyal and profitable customer relationships through the learning relationships.
Management is creativity and guiding of a customer-oriented business processes and placing the customer at the center of procedures and experiences of the organization.
Theoretical Models of Customer Relationship Management in
Experts and theorists have different definitions for customer relationship management that can be classified in four general groups containing strategies, technologies, processes and information systems Thompson, Some of the definitions for customer relationship management from the view of different theorists are as follows: In addition, in line with the customer relationship management, it helps the company in order to maximize the value of every customer Turban et al. From the above definitions, it can be concluded that CRM strategy is a business to optimize profitability, revenue and customer satisfaction by the organizing services based on customer needs, and also improving customer satisfaction is designed accordance with the principles and implementation process customer oriented.
CRM objectives can also be expressed as follows: Types of CRM Systems: These systems can be divided into three general categories: Purpose of participating in a CRM is to improve quality and levels of customer service and result in increased customer satisfaction and customer loyalty as the ultimate goal in a customer relationship management system Zia khosoosi, CRM implementation process Customer relationship management has processes for achieving its goals which is considered from different perspectives.
One of these theories is CRM life cycle model of Kalakota which consists of three phases of attraction, promoting and maintenance, and every phase supports knowledge and comprehending of relationship between the firm and its customer.
This theory states that every phase has different effect on communication with customers, therefore strategy used by organization from each phase to another phase would be varied which is shown in the table below Sarafrazi and Memarzadeh, Table 1 CRM processes and organizational attention and strategies associated with them Processes Actions Focus Center of Organization Strategies Attraction Promoting the goods and services leadership Distinguish Innovation Promotion Improving the profitability of existing customers Separation Reducing costs service to customer Maintaining Customer retention for their life focus on providing services based on customer desire Adaptation According to customer — supplying new product Another theory about the processes of the CRM is Swift's model.
According to this model, the process cycle includes the following steps: Analysis of customer characteristics and investment strategies which is done by process of identifying, classification and predicting customer of organization.
Implementation and customer relationship management through relevant information at the right time and providing products using a range of interaction channels.