Importance of Understanding Customer Relationship Management

This essay discusses the importance of customer relationship management (CRM) for businesses. It highlights the significance of understanding customer relationships, the methods of application, and the benefits of effective CRM. The essay also emphasizes the need for businesses to devise a suitable CRM strategy to provide value-based services to customers and enhance customer satisfaction rates. The article cites relevant research studies and expert opinions to support its arguments.

CUSTOMER RELATIONSHIP MANAGEMENT

Introduction
Customer relationship can be defined as the combination of methods, people, and technology
companies' use identifies their potential prospects’ needs. In the statement of Khodakarami and
Chan (2014), it is more of an integrated technique used for organising relationships by
emphasising explicitly on the concept of customer relationship development and retention
considerably. The term customer relationship has relatively evolved with the advancements in
information technology and business processes transformation to handle customer-centric
queries. Organisations that productively apply effective customer relationship management
would definitely obtain the rewards with greater figures of customer loyalties and long-run
profitability.
However Lemon and Verhoef (2016) argued that effective application is indefinable to numerous
organisations, frequently since they fail to recognize the fact that CRM requires cross-functional,
company-wide and customer-centric business methods. The present essay aims to select the topic
Understanding Relationships and the evaluation would be made centred on the subject matter.
The importance of understanding customer relationship of companies would be analysed and its
methods of application as well. Based on the research, facts and arguments related to the chosen
topic an authentic conclusion would be derived.
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Customer Relationship Management (CRM)
As per records of recent researches connecting to customers’ handling, the outcome claims that
consumers never agitate as a result of sudden fluctuations in the price ranges, however, they
whip after getting ineffective and negative customer care service lines. It is necessary for
organisations to ensure that their clients receive adequate customer service and satisfaction they
are seeking to lower their probabilities of churning. Businesses readily require tracking and
gauge the contentment ration of its customers and place in situate latest measures for growing
customer service excellence. Hence, internal resources shall be eager to go beyond customers’
expectations and satisfy them with all of its available opportunities to create a better impact on
customers’ service experiences.
Understanding better customer relationships often serve as a differentiation point. As per Lemon
and Verhoef (2016), in the recent marketplace where the degree of competition is at its peak, the
relationship businesses having with their most potent and loyal clients would enact as its key
differentiator to compete against rivals. Businesses that prosper in these uncertain surroundings
are the ones making its customer relationship as its chief business policy. In this context, it may
also be noted that a properly designed and efficiently structured customer relationship
management strategy significantly contribute towards gaining the competitive advantage in the
industry for the firm. For example, the Coffee Makers operating in the area of its competitors as
well offering a substitute product, customers prefer opting the service of the product of that
brand that manages to offer enormous customer experience and includes vicinity that guarantee
that contentment is high. Customer and company relationships shall work as a full circle since
this positive relationship would not only support business to track its current customer’s status
but also encourage in bringing new ones.
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According to Nyadzayo and Khajehzadeh (2016), effective relationship with customers
definitely indicates its loyalty functions and repurchases. When customers are satisfied with the
offered service by a company or brand, they tend to enhance their frequency of visits and
purchase on regular basis. This also helps brands to gain new customers through word of mouth
referrals. Customers who already experienced the services of any particular brands and are
satisfied with it definitely recommend other customers to prevail the service or purchase product
from the particular brand. Hence, understanding customers’ relationships definitely help every
organization to address their exact needs and offer the service by identifying their latent
demands. This definitely supports organizations to leave a better customers service experience
and enhance their engagement with their own brands and set it amongst their priority.
Kumar and Reinartz (2018) claimed that it is more affordable and cost-effective to retain existing
customers than to create a new base. This statistics is definitely holding more control in the
current rapidly changing dynamics of the market. A brand needs to certainly incur eight times
more costly to get hold of fresh customers than upholding the present ones. Once organisations
comprehend this particular statistic, then it would be eager to make sure that the specific
organisation is offering pleasing customer service lines to retain the potential clients of
competitors. Customer relationship management holds immense importance in both retaining the
existing customers as well as obtaining new customers as the second one is relatively an
expensive action which may be smoothly and cost effectively executed through a planned and
strategic CRM.
Moreover, the CRM (Customer Relationship Management) team would be required to invest a
lump sum amount in seeking customers’ attention and also converting to potential leads to
persuade with the purchasing decisions. It would be fundamental to make certain that a brand to
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develop this association with customers by understanding their desires and making it count for
the longer durations. Business will definitely enable to decrease its acquisition expenditure if it
becomes successful in keeping sound customer relationships. In this context, it may be worthy to
note that the customer acquisition expenditure as incurred by the business houses primarily vary
almost in inverse proportion to the customer satisfaction index. A business with satisfied
customer base generally tends to incur lesser amount of acquisition expenditure than that of the
business having customer dissatisfactions issues.
It has been assessed that discontented and displeased customers would circulate the message of
their horrible experience in a brand. According to Hill and Alexander (2017), the maximum per
cent of customers have the tendency of typically approaching other people about their both
positive and negative experiences. In terms of the negative spread of message, it can definitely
impact negatively on the business. It can be stated that customer-business affiliation in a straight
line connects to repetitive purchases and revenue. Unless a brand does not become careful with
its customers’ relationship status, it would never enable to recognize the impact it subjects on the
business operations. Continuous tracking of customers desires, demands and their review against
given service are the efforts organizations are making in order to understand the needs and
demands of its potential customer and the future efforts it can make to retain them for a longer
duration.
A satisfied customer would lead to contribute or help brands to generate two times more revenue
as contrasted to an unhappy customer. Contentment with service offering certainly tends to
develop a strong relationship that would lead to generate additional profits from a single satisfied
customer for a business. Organisations those are successful in identifying the long time value of
prospective customers who have the potential to make a visit again as it leads to enhance
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companies’ returns. The lifespan value of a potential and the loyal customer can serve a brand
with several benefits that arise from developing important relationships and strong customer
satisfaction rate with its service excellence.
Conclusion
Based on the discussion and analysis performed in the preceding sections of the essay, the
researcher has arrived at a concluding statement, which underscores the fact that it is the most
significant task for every organisation to understand its customer relationships. A proper
assessment of its CSR actions can help every business to recognise the areas that create values on
customers or leave a negative impression on them. Based on which suitable actions can be taken
by the companies to improve its service qualities to enhance customers’ satisfaction rates and
thereby retention. Happy and satisfied customers for a brand turn up to be its strength to fight
market fluctuations and uncertainties. Therefore, it may be concluded that the management of the
businesses should make genuine attempt to devise a suitable CRM strategy in order to provide
value based services to the customers so that the customer satisfaction reaches its peak in line
with the corporate goals and objectives in the long run. The initiative will surely contribute to the
success of the business in terms of sustainability in the market.
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References:
Hill, N. and Alexander, J., (2017) The handbook of customer satisfaction and loyalty
measurement. Routledge.
Khodakarami, F. and Chan, Y.E., (2014) Exploring the role of customer relationship
management (CRM) systems in customer knowledge creation. Information &
Management, 51(1), pp.27-42.
Kumar, V. and Reinartz, W., (2018) Customer relationship management: Concept, strategy, and
tools. Springer.
Lemon, K.N. and Verhoef, P.C., (2016) Understanding customer experience throughout the
customer journey. Journal of Marketing, 80(6), pp.69-96.
Nyadzayo, M.W. and Khajehzadeh, S., (2016) The antecedents of customer loyalty: A moderated
mediation model of customer relationship management quality and brand image. Journal of
Retailing and Consumer Services, 30, pp.262-270.
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