Customer Relationship Management1

CUSTOMER
RELATIONSHIP
MANAGEMENT
STUDENT DETAILS
STUDENT DETAILS
[COMPANY NAME]
[Company address]

CUSTOMER LOYALTY 1
Customer relationship management (CRM) is an approach to manage the company's
interaction with its current and potential customers in an effective and efficient way.
Building CRM helps the customer in various streamline process such as it helps in increasing
sales, improve customer service, increase customer loyalty and faith towards the brand, etc.
The selected company for this essay is Eroski. The company was founded in 1969 in the
regions of Biscay and Gipuzkoa in Spain. As of 2016, the company had 442 generations shop
with 23 hypermarkets and 419 supermarkets. According to the statistics, sales of the company
grow by 7% on average. Eroski's turnover in the year 2016 is of €2,965million (Fis.com,
2020). The company deals in the business of supermarkets and hypermarkets in Spain. The
stores of Eroski includes a variety of food & beverages, household products, grocery items,
etc. For building effective customer relationship management, the company has to opt for
appropriate strategies that can help them in dealing with the barriers of effective CRM. In this
essay, there will be discussion challenges that management encounters while following the
parameters of customer loyalty and customer retention. With challenges, strategies for
customer retention will also discussed in this essay.
Challenges in providing an optimum customer experience
It is important to incorporate a brief discussion about the targeted audience of the company
before discussing the challenges that the company faces in increasing customer loyalty and
customer retention. The targeted audience of the company incorporates three classes of
people irrespective of their gender and age. While setting parameters for targeting audiences,
the marketing manager of the company focuses more on its audience's financial background
instead of their age and gender. Eroski's targeted audience incorporates three classes of
financial category groups that are middle-class income group, upper-middle-class income
group and higher-class income group. The fundamental aim of the company is to create a
place that includes all the items or products under one roof that satisfies the daily needs of an

CUSTOMER LOYALTY 2
individual. The company makes strategies to fulfill its objectives through its supermarket and
hypermarkets. However, the management faces emerging challenges when they fail to retain
their customers because of various external as well as internal factors (Ascarza, et. al., 2017).
The company faces various challenges in the process of customer retention. As scarcity of
resources states that customers have never-ending demand and their resources are scarce.
This same law also operates not only in the Eroski’s supermarket stores but this law operates
in the entire retail industry. However, because of the applications of the law of scare
resources, this creates hindrance in the process of customer retention. For example: it is noted
that while visiting the retail store or supermarket store customers showcases their attitude for
their huge demands but they have less spending capacity (resources). Customers visit
different supermarket stores or they even check regular online offers so that they can
fulfilling the majority of their demand with fewer resources (money). In this case, it creates
challenges for the management of the company because now in order to retain customers, it is
important that they offer the goods at low cheap without decreasing the quality of goods or
their customer's services. When Eroski fails to offer the goods at bare minimum prices then it
decreases their ratio in customer retention and it resultant in increasing customer attrition
ratio of the company (Elena, 2016).
Ignoring customer feedback or not able to work upon the feedback receives from various
customers is another challenge that the management of Eroski faces in retaining its
customers. As feedback is the advice that customers share with the company in order to
improve their functioning but the company has around 800,000 customers in Spain. So, by
looking from the perspective of the company, it can be analysed that it is next to impossible
for the management to incorporate the feedback of all the people. For example: among
800,000 customers it can be expected that atleast 3% of customers make efforts to give
feedback. 800,000 of 3% is equals to 24,000. Now, even after 24,000 received feedbacks, it

CUSTOMER LOYALTY 3
can be analysed that atleast 30% of feedbacks (7200) are genuine changes that should be
implemented effectively and efficiently. Thus, now it can be analysed that implementing
7200 new changes is next to impossible for the management. Out of 7200 changes, 200-300
changes get implemented in the or even this number fails. Here, it makes another customer
sad and they think that the working of the management of Eroski is slow and poor. This
creates major challenges for them for management in the process of customer retention
because every customer has different advice to share because of their different expectations
(Foltean, Trif and Tuleu, 2019).
Apart from the above challenge, Eroski also faces challenges in selecting appropriate
strategies so that they can increase their customer loyalty and customer retention ratio in an
effective and efficient way. The management has to figure out strategies that can help them in
increasing customer retention ratio but it is noticed that the management faces major
challenges in opting one or two specific customer retention strategies out of the pool of
strategies. The challenges of selecting an appropriate strategy are arisen because of the
changing taste and behaviour of the customers. As time passes the taste and preference of the
customers also change and it creates a major challenge for the management of the company
to specifically incorporate an effective strategy that they can increase their probability for
customer retention. However, while selecting the appropriate strategy for customer retention,
the management has to conduct an effective analysis of customer's current taste and ongoing
external market conditions. With this analysis, the management also has to consider their
break-even point and profitability analysis before implements any changes related to the
customer retention program (Navimipour and Soltani, 2016). As, it is noted that the majority
of the customer retention programs which are running by the company provides an extra
benefit to the customer in terms of getting items at cheaper prices. These customer retention