INTRODUCTION
Relationship
Marketing (RM), Customer Care and the all-important ‘people element’ of an
organisation has become the focus of a new approach for most organisations.
Customer
Service and Customer Care are in fact part of the broader concept of RM and are
included in systems of Customer Relationship Management (CRM).
Marketers
are attuned to the idea that delivery of extra ‘added value’ through service,
customer care and people dimensions is the critical competitive factor.
Increasingly,
customers are looking for good service delivery and quality and will respond
positively to high standards of customer care from the marketer.
High levels
of service and customer care should be seen as part of a broader programme of
Customer Relationship Management (CRM).
·
From
the marketer’s point of view, RM makes good business sense, primarily because
of the costs of recruiting new customers compared to the costs of keeping
existing ones and, related to this is the notion, the ‘life time value’ of
customers.
·
In
terms of costs, it is known it costs much more to gain a new customer than to
retain an old one.
CRM AND RELATIONSHIPS
The subject
of CRM is focused upon relationships so it is important to answer these two key
questions:
·
WHAT
ARE RELATIONSHIPS?
·
WHAT
MOTIVATES RELATIONSHIPS?
RELATIONSHIPS
Relationships
are complex opportunities to learn and through mutual exchange build
dependencies and trust.
This is the
essence of their significance, however, the importance of the relationship is
that it has to be felt.
Forming
relationships and sustaining relationships is different, each requires relevant
levels of energy and commitment.
Relationship
is an emotional concept which needs nourishment in order to remain a valued
relationship.
The
emotional attachment being much less in the case of Transactional Relationships
is a most substantial engagement in an involved relationship.
Moving from
independence to interdependence requires significant investment in time,
dedication and devotion and faith.
BUT THIS IS
THE ESSENCE OF RELATIONSHIP MARKETING.
WHAT MOTIVATES
RELATIONSHIPS
• The convenience of time and place
• Productivity and efficiency
• Psychological comfort
• Ease of connection
• The feeling of comfort
• Meeting unmet or unfulfilled needs
and the need to bond
• Support, stability and continuity
• The right platform
• Habit
• Attachment to an identity
• Consistency
• Poor, disappointing experiences
which create low switching costs to competitor products
All these
are people based, customers are people with feelings, many of which prefer a
relationship basis to business than an uninvolved transactional approach. This
is also important when the marketer is working across cultures and needs to
understand how relationship are the basis to business.
THE IMPORTANCE OF TRUST
The essence
of all relationships is trust, how it is perceived, determined, exchanged and
experienced.
Trust is
built over time, through rational and emotional factors based upon source
credibility, linked to an identity.
Trust is
reinforced by the delivery on promises and the development of customer intimacy
throughout the customer life cycle.
The life time
value of a customer, achieved through repeat purchase loyalty is based upon a
‘trust bond’ that has been formed between the marketing organisation and the
core customer groups.
CUSTOMER CARE AND MARKET
LEADERSHIP
It is well
acknowledged that the strategies for successful market leadership are simple in
definition but difficult to achieve and sustain. These are: -
1.
PRODUCT
LEADERSHIP: Having the ‘best product’, well-differentiated from the competition
2.
OPERATIONAL
EXCELLENCE: Sustaining consistent operations and controlling the overall cost
3.
SERVICE
LEADERSHIP: Having the best total service
4.
CUSTOMER
CARE: Having the best total solution for customers
All of this is embedded in the total delivery
to the customer which is manifest in the Brand identity. Therefore the marketer
cannot ignore the vital role played by customer care.
The future
of the business is with the customer, therefore systems to ‘hear the voice of
the customer’ are important for companies, so that they remain relevant to
customer needs.
CRM AND ITS EVOLUTION
Definitions
are various, in fact understanding CRM and perceptions of it are also
multi-dimensional.
At a
simplistic level, CRM is simply database management of customers; at a
strategic level it describes total customer experience management.
At a
rational level, the definition of CRM is to optimise customer satisfaction
within resource constraints with a view to maximise shareholder return.
At a
conceptual level, CRM is envisaged as a comprehensive integrated customer
strategy which involves customer identification, customer acquisition and
customer retention to drive profitable customer loyalty through value-based
customer processes and services.
CRM is
therefore intended to support customer relationships through well-conceived organisational
structures, business processes and customer-based policies which include
IT-based solutions and supporting software. Many organisations are still
starting out on this journey. Some are along the road, although reaching a
final destination is a real challenge because the market landscape is always
evolving.
CRM nevertheless is a defined strategy for
achieving business objectives which enable effective responses to customer
needs to help organisations acquire, grow, and retain profitable customer
relationships. It depends upon relevant, reliable, robust, viable information
about customers for company-based relationship management and in turn an
opportunity to achieve customer process improvements.
Defining
and redefining the boundaries of CRM remains a challenge and its adoption will
depend upon the evolution of the organisation, as mentioned it may be a journey
without a final destination.
In more
progressive organisations, CRM is process-driven, with a clear focus upon the
total customer service encounter whereby the ‘total customer experience’ is the
main route to sales and profitability. In this case where CRM has really been
adopted three approaches can be identified: -
·
Collaborative
CRM
·
Analytical
CRM
·
Operational
CRM
Collaborative CRM involves partnerships between the company and
its customers and also networks where interdependencies are built based upon
commonly held objectives (e.g. value chain interdependencies).
Analytical CRM uses customer data as an asset for shaping
future customer-based marketing and sales initiatives. This will cover
traditional areas for customer analysis such as segmentation, customer purchase
metrics for customer acquisition, customer retention, up-selling, customer
profiling, customer lifetime value and customer credit rating.
In
addition, research into the total customer experience, into customer value
creation and maintenance to achieve a 360 degree view of the customer is all
within the domain of Analytical CRM.
Operational CRM is a set of activities that work within a
corporate culture in the drive for customer centricity. Operational CRM
(excluding the IT component) uses profiled customers and named contacts to
build valued relationships over multiple purchase related transactions.
These
transactions have points of contact between the company and the customer called
‘touch points’ which need to be carefully managed. Collectively these become
the foundation for the ‘Total Customer Experience’.
In very
simple terms, Operational CRM is about
•
Finding
new customers
•
Getting
to know them
•
Staying
connected
•
Knowing
how you are valued for future business transactions with them
•
Ensuring
customer expectations are met
•
Checking
that promises have been kept and have been worthwhile in the eyes, heart and
mind of the customer
The
benefits are customer retention and customer loyalty through repeat business
and knowing the lifetime value of the customer to the business
CUSTOMER FOCUS AND
CUSTOMER CENTRICITY
Customer
Centricity is based on the original concept of marketing
“Profit through Customer Satisfaction”
The
rationale for adopting this company wide corporate culture is simply that new
solutions are needed to bridge the shareholder value gap. Shareholders expect
more return, the answer is in the market place! This can best be achieved by
growing customer value in terms of the customer base and the value of purchases
made. Top management has been awakened to the fact that customer centricity
actually works. Many organisations are placing the ambitions for customer
centricity as a high priority.
To define
Customer Centricity in more detail: -
WHAT IS
CUSTOMER CENTRICITY?
Total Organisational Commitment To The Adoption Of The
Marketing Concept As A Working Belief System For Business, Whereby Existing
& Future Customer Needs, Wants, Values and Expectations Are At The
Epicentre Of All Management Decisions Supported By A Relevant Operating Culture
For The Achievement Of Progressive Shareholder Value, Through Confirmed
Customer Satisfaction. Massingham 2008
This is a
huge undertaking for companies who have been product centred or sales oriented,
it requires a mind-set adjustment across the business or organisation as a
whole. It requires so much more effort than most managements are aware. There
may be a significant gap between the AMBITION for customer centricity and the
ABILITY to achieve it.
ACHIEVING CUSTOMER FOCUS
There are a
series of steps to be taken: -
•
Know
the Customer Base and have this captured in a data base system for analysis and
retrieval
•
Segment
Customers Into Meaningful Groups
•
Profiling
the Customers within each segment according to meaningful characteristics which
may influence purchase behaviour
•
Know
The Financial Performance Of Each Segment in terms of income and profit
•
Build
A Marketing Strategy For Growing Customers
•
Build
Systems For Customer Loyalty, Customer Connections and Relationships
•
Build
The Brand through sustained investment in Brand Identity because this is the
anchor the customer and the employees will attach themselves to
•
Energise
for Positive outlook at the Customer interface all the time.
You Must
Really Know:-
•
Who
Are Your Customers?
•
Where
They Are Located?
•
What
Motives Induced Purchase /
•
Why
They Return To You?
•
Why
They Return Again?
For many
companies, this is where the CRM journey begins
WHY THE CRM APPROACH MAY
BE DIFFICULT TO ACHIEVE
For more
traditional organisations, especially family owned small and medium sized
businesses there may be a lack of customer focus. Staff are motivated to
maintain existing systems and the customer is forced into patterns of behaviour
to suit those systems. Often customer needs therefore are not met and customers
are lost where staff try to help, the systems will experience problems and
staff become de-motivated. This is really quite common.
Company
management may not be willing to change because this ‘status quo’ formula for
business has always worked, so therefore management have entrenched attitudes
and they are not really concerned about customer feedback.
There is a
prevailing mind-set that ‘price is the only thing that matters’, in which case
employees believe that ‘the voice of senior management is more important than
the voice of the customer’.