Customer Relationship Management

This article provides an overview of customer relationship management (CRM) and its strategies for customer acquisition, retention, and development. It discusses the importance of CRM in improving customer service relations, satisfaction, and retention. The article also explores various methods for customer acquisition, such as giveaways, listening to existing customers, word of mouth marketing, keeping fresh content, and expanding the network. Additionally, it examines customer retention strategies, including loyalty programs, and the concept of customer portfolio management. Finally, it discusses how to deliver customer-experienced value through transaction cost economics and privileged relationships. Study material and solved assignments on CRM are available on Desklib.

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CUSTOMER RELATIONSHIP MANAGEMENT
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Introduction
Customer relationship management is an approach used by a company to manage the
relationship with its current and potential customers. It combines a number of strategies,
technologies as well as practices that are used by companies to analyze and manage customer
relations throughout the lifecycle of a customer. The main goal of customer relationship
management is improvement of customers service relations, customer satisfaction hence
customer retention and also ensuring continuous customer acquisition. It is an important aspect
since it helps the company to remain connected to its customers, ensure efficient processes as
well as raising its profits. In our paper, we shall expound more about the customer relationship
management and some processes involved in the same.
Customer acquisition
Customer acquisition can be understood in simple terms as a company gaining new customers
(Nguyen et.al 2018, p21). It involves convincing new customers to purchase a company’s
products or services (Akbar and Tracogna 2018, p.87). Regardless of it being an expensive
process, customer acquisition is an important aspect in running a company. This is because, for a
company to continue running well, there has to be continuous customer acquisition (Stettina et al
2018, p.66). It also helps in growing a company. There exists various way of acquiring
customers as discussed in the context below.
1. Giving out free giveaways. Giveaways are a great way of attracting new customer’s
attention. While offering these giveaways, explain to the potential customers the value of
the product you are offering and ensure they understand that you are offering an ideal
product or service (Stettina et al 2018, p.69). This will help turning them to your paying

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customers. Also, a company should provide free services. This applies for a service-based
business where they offer their services for free. In return, the customers give an
explanation of the advantages of the service provided (Bylund 2019, p.50). This is the
most preferred method since it is the nature of humans to get attracted to free things.
Hence, with continuous receiving of free gifts as well as free services, new customer keep
on buying the company’s products.
2. Listen to your existing customers. Existing customers can give you an insight of what
you are doing right in the business (Akbar and Tracogna 2018, p.100). They let you know
what your strengths are hence turning them into possibilities. Additionally, by ensuring a
continuous conversation with your customers, you can solve issues that could lead to lose
of a customer. Also, depending on the quality of the products or services offered, existing
customers act as the best referrals where they refer their family and friends to try out your
company’s product.
3. Word of mouth marketing. This is the oldest form of marketing. It involves approaching
potential customers and offering an over view to your product. It turns out to be the most
cost effective (Garnefeld et.al 2015, p.29). It is also highly preferred since it offers the
best environment for customers to interact with company personnel at a personal level.
Hence these customers get a chance to ask every question they have concerning the
products the company sells.
4. Keep fresh content. This is simply updating social media accounts and website whenever
you have new products. This shows the customers that you are on your toes on informing
them about your products or services hence attracting new customers (Nguyen and
Calantone 2018, p.70). Additionally, these new products should those mostly needed by

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the customers where every time they visit a company they give an idea of the product
they would purchase if it were to be sold there. The same case applies to a new service, it
should be that frequently asked by a customer.
5. Continuous expansion of network. It refers to expanding the customer base which leads
to acquisition of new customers (Raina et al 2015, p.30). This is made possible by
forming partnerships, attending networking events as well as joining organizations. With
these backgrounds, the company will be in a position to convince the customers in
attendance to try their products (Bylund 2019, p.69). Continuous network expansion will
definitely capture a customer due to persistence portrayed.
It is not until one takes a research that you find out how customers are acquired by different
companies. Hence, the above order chosen is influenced by a thorough research where giving of
free giveaways attracted most customers in companies followed by influence from existing
customers (Raina et al 2015, p.37) and the other methods followed.
Customer retention and development
Customer retention is the ability of a product or company to keep possession of their customers
over a period of time (Bylund 2019, p.40). Customer development on the other hand is a
framework developed by a professor Steve Blank for coming up with and confirming the best
market for one’s business idea (Ascarza et.al 2018, p. 69). Companies use various strategies to
retain their customers. Such include developing loyalty programs which is adopted by various
firms. A loyalty program is an incentive program to build customer loyalty by rewarding
participating customers due to the purchases made (Gibbons 2018, p.70). A loyalty program
helps retain customers in that every time they make purchases they are rewarded (Garnefeld et.al

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2015, p.29). Customer loyalty ideas are often presented as loyalty cards but also can be presented
as stickers or keychain fobs. Loyalty programs may give customers coupons, rewards or even
free merchandise (Akbar and Tracogna 2018, p.100).
From the context above, loyalty programs are simply gift to buying customers in order to retain
them (Meire et.al 2017, p.29). Every business that is fully willing to retain its customers can as
well implements the program. It’s also clear that the only thing that makes customers remain
loyal is the mentioned gifts hence if another company comes up with better loyalty programs the
customers run off to their products. Additionally, companies may use loyalty programs to retain
customers yet they are charging too much for their products hence when their competitors offer
the same products a cheaper price, the customers definitely shift to the cheap products (Meire
et.al 2017, p.37). Also, not all customers appreciate loyalty programs, some prefer direct reduced
prices and hence these programs are not a guarantee that customers will remain loyal to the
company’s products. Therefore, in my opinion, loyalty programs are not effective customer
retention strategies.
Customer portfolio management
Customer portfolio is an instrument used by a company to come up with sustainable and
profitable relationships with customers (Bylund 2019, p.59). This process begins at identification
of a firm’s customers and then evaluating them using the best criteria (Stettina et al 2018, p.64).
Customer portfolio helps researchers and managers to understand the value a customer
contributes to a company’s portfolio other than analyzing the customers’ value contribution to a
company in isolation. Activity-based costing on the other hand is an accounting method used to
determine the total costs of producing a product (Akbar and Tracogna 2018, p.113). It is an

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important method since it takes into consideration both direct and indirect costs of producing a
product. Even though it takes a lot of time to construct an activity based costing and is expensive
to maintain, activity based costing is very important to a business. It provides important
information to the management that is used to ensure efficiency in processes as well as increase
the profits (Akbar and Tracogna 2018, p.97). These profits are only met when customers are
satisfied with the products or services offered (Schwieterman et.al 2018, p.129). Additionally,
the costs to serve customers differ from one customer to another. Some tend to be costly than
others hence the need for activity based costing. Activity based costing has allowed companies to
allocate cost overheads to particular customers (Nguyen et.al 2018, p11).
How to deliver customer-experienced value
Transaction costs economics is method that helps minimize the costs of transaction (Williamson
2017, p.43) Transaction costs are costs involved in an economic exchange. Privileged
relationship is a pricing method where manufacturers do not consider market factor while
determining the cost of a product (Bylund 2019, p.49). Buying and selling is done in the firm
rather than in the market place. Most suppliers and manufacturers prefer having a privileged
relationship rather than rely on the marketplace for a number of reasons. One of these reasons is
that parties undertaking the transactions become opportunistic and try taking advantage of their
equivalent (Gibbons 2018, p.36). They tend to ensure that the pricing favours them at the
expense of the other party. The other reason according to Williamson, there exist some
transaction features such as uncertainty which causes failure of market. The market changes with
every changing day. Some factors that are out of our control change hence changing the market
Due to above mentioned reasons both manufacturers and suppliers prefer transactions within the

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firm other than in markets (Akbar and Tracogna 2018, p.93)

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