Customer Relationship Management and Customer Life Cycle

1. Introduction
Implementing Customer Relationship Management (CRM) techniques and its
software implementation in the organization meets the need of modern organisation to
understand the purchasing behavior of different customers and meet their needs. Actually,
every customer behaves differently while they are purchasing and even their pre and post-
purchasing behaviour is also different from other customers of the same product. Therefore, it
is essential for every business organisation to track their customers and their needs during
their buying process at diferent stages. These behavior and purchasing process of customers
can be defined as Customer Life Cycle (CLC). It is important for every business organisation
to identify every stage of the customer lifecycle. Every customer has three key phases in
CLC, such as Customer acquisition, customer retention, and customer development or
renewal. The role of CRM in every stage is essential to analyse the purchasing behaviour of
customers (Santouridis & Tsachtani, 2015). It helps business originations to make loyal
customers and establish a good relationship with them. Thus, they remain loyal to a single
brand and never move to other competitive brands that are existing in the market. In simple
words, CRM helps in attracting potential customers’ attention, deliver relevant information
about the product that a business organisation offers to them, turning them in a loyal
customer, and then keeping them as a loyal customer whose satisfaction attracts and
motivates other customers to join the cycle (Irvine, Park, & Yıldızhan, 2015).
2. Literature Review
The ideology of modern business organisations has been changed and now it is
connected with customer satisfactions with earning profit in the business. According to Buttle
(2009), the CLC model is often portray by an ellipse representing the fact that retaining
customers is a part of CRM and CLC and the goal of effective CRM is to get the customer to
move through the cycle again-and-again. This motive forces the business organizations to
bring innovative change in the business process and strategies. Moreover, it further led to the
implementation and formulation of new strategies and technology that helps to improve the
CRM. At the start of the second decade of the 21st century, when the large numbers of
organisations were facing problems of losing customers on a frequent basis, now due to the
rapid change in technologies and innovation, customer relationship management is the need
of every business organisation, whether it is a small or large business (Buttle, 2009).

2.1 Customer Relationship Management (CRM)
According to Abdul, Basri, & Shaharuddin (2013), CRM can be defined as an
integration of analysis of customer needs, organizational strategy, information systems, and
technology with the main objective of maintaining a good relationship with customers and
making them loyal to the business organisation. Khosravifar, Bentahar, Gomrokchi, & Alam
(2012) said that developing a successful and effective CRM strategy needs a deep analysis
and understanding of customer purchasing behaviours. The customer behaviours vary at
different stages of CLC and it is necessary to understand the behaviour of a customer at each
phase to establish a good relationship with them.
2.2 Customer Lifetime Value (CLV)
A firm should maintain its relationship activities with customers in consideration of
the value of customers. A business organisation should focus on boosting customers’ value
by including specific dimensions. Ayoubi (2016) said that there are two types of value
created by CRM in the organisation: value that the customer receives from the organisation
and second value that organisations receive back after providing service to a customer. The
first value is called customer value, it is the basis of CRM value creation and the second is
called organisation value. Santos, & Castelo (2018) include in their research that CLV is an
economic driver in the business organisation that often determines the net present value of
customer offerings to a business organisation. Usually, the CLV can be determined using the
value of the customer and its place within the customer life cycle.
2.3 Need for CRM
CRM mainly targets enhancing the customer satisfaction, increase the number of
satisfied customers, and increase the profit as well. The second objective behind
implementing CRM is to retain existing customers as a loyal customer. According to
Williams, Ashill, & Naumann, (2017) CRM ensures that every customer goes back home
with a smile after purchasing the product. Thus, customer satisfaction is the prime motive of
every organisation because customer satisfaction leads other objectives of CRM such as
customer retention and loyalty. It also helps in increasing the number of the customers after
increasing the volume of sales and profit (Cambra-Fierro, Melero-Polo, & Sese, 2018).
However, CRM strategy and its implementation in the organisations help to improve the
relationship between the customer and organisation. A large number of CRM strategies and
software solutions are available in the market that help the business organisation to collect

customer data, connect with them and establish a relationship. According to Paul, Peretti, &
Datta (2017), the CRM strategy helps the organisation to provide better customer service,
help the sales team for cross-sale and up-sells more effectively, and close the deals with the
purpose of retaining current customers as a loyal customer of the organisation.
2.4 Customer Life Cycle stage
It has been considered by many business experts that CRM and CLC describes about
the various phases of the purchasing process of a customer when customer go through before,
during, and after purchasing a product. Normally, customer life cycle has three stages.
Fig: Customer Life Cycle Stage
Source: (Marketingimage.com, 2018)
1. Customer Acquisition: Customer acquisition is the important phase of customer
lifecycle stage. Reaching potential customers is not well enough to sell the product to
the customer rather how well a business organisation interacts with their customers
about their products with relevant information is more important. Direct contact or
communication with the customer is the essential key in establishing a strong
relationship with customers in future. The acquisition stage includes lead generation,
lead management, and first closed sale according to the above diagram (Kumar &
Reinartz, 2018).
2. Customer Retention: If a business organisation is able to successfully communicates
with customers and send them relevant messages about their needs and interests, the

chances of their return to purchase another product is a little higher. Retention begins
with completion of customer need satisfaction and providing care for their interest by
cultivating the relationship with continuous communication with them. Customer
feedback is also an essential key to retaining them in the business. If business
organisations make changes after consideration of customer feedback then they feel
that they are the part of the process (Abbas, Chachar, & Bilal, 2017). Therefore,
effective customer analysis feedback is also essential for customer relationship
management. Thus, sharing information with the customer, product infiltration, and
account infiltration are they key thing in retaining customers. There should be a
specific plan to retain customers in the organisations such as which group of customer
will be primary target and how they retained in the business by providing them the
value of their money.
3. Customer Renewal/Development: Normally, a business organisation adapted
strategies to renewal and development of existing customer such as cross-selling and
up-selling to the existing customer (Sigala, 2018). Generally, raising prices and
unbundle the offer to the customer are the main causes of terminating or reducing
existing customers. Reactivation of customer after purchase depends on the type of
service you provided after selling the product.
2.5 Development of Customer Life-Cycle
According to Dwyer, Schurr, & Oh, the relationship between buyer and seller evolve
through five phases: (1) Awareness (2) Exploration (3) Expansion (4) Commitment (5)
Dissolution. Dwyer, Schurr, and Oh (1987) have considered the social psychologist work but
also consider the social exchange approach to relationship development. According to the
Dwyer, Schurr, & Oh model, the customer and businessperson relationship evolve through
the five-phase model and each phase represents a major transition in how parties regard one
another (Onlaor & Rotchanakitumnuai, 2010). Each phase explains how both treat one
another and how it affects the relationship between customer and businessperson.
Phase I. Awareness: Awareness refers to that one party knows that another party is a
feasible exchange partner.
Phase II. Exploration: Exploration relates to search and trial phase in relational
exchange. In this phase, both parties (exchange parties) consider their profit and loss in a