CUSTOMER RELATIONSHIP MANAGEMENT

The true business of every company is to make and keep customers’.  Peter Drucker
(Management Consultant

Customer relationship management came as a process that dealt with relationships with
customers surpassing the whole business.

Customer Relationship Management: (https://www.managementstudyguide.com/what-is-

crm.htm)
Definition: Customer Relationship Management is an upright concept or strategy to solidify
relations with customers and at the same time reducing cost and enhancing productivity
and profitability in business.

 CRM system provides a well defined platform for all business units to interact with their
clients and fulfill all their needs and demands very effectively and to build long-term
relationship.

Customer Relationship Management strategies have given a new outlook to all the suppliers and
customers to keep the business going under an estimable relationship by fulfilling mutual needs of buying
and selling.

CRM originated in early 1970s when the business units had a manifestation that it would be
advisable to become ‘customer emphatic’ rather that ‘product emphatic’. Birth of CRM was
because of this heedful perceptiveness.

Customer relationship management came as a process that dealt with relationships with
customers surpassing the whole business.

Features of CRM:

1. Customers Needs- An organization can never assume what actually a customer needs. Hence it
is extremely important to interview a customer about all the likes and dislikes so that the actual
needs can be ascertained and prioritized. Without modulating the actual needs it is arduous to
serve the customer effectively and maintain a long-term deal.
2. Customers Response- Customer response is the reaction by the organization to the queries
and activities of the customer. Dealing with these queries intelligently is very important as small
misunderstandings could convey unalike perceptions. Success totally depends on the
understanding and interpreting these queries and then working out to provide the best solution.
During this situation if the supplier wins to satisfy the customer by properly answering to his
queries, he succeeds in explicating a professional and emotional relationship with him.
3. Customer Satisfaction- Customer satisfaction is the measure of how the needs and responses
are collaborated and delivered to excel customer expectation. In today’s competitive business
marketplace, customer satisfaction is an important performance exponent and basic
 differentiator of business strategies. Hence, the more is customer satisfaction; more is the
business and the bonding with customer.
4. Customer Loyalty- Customer loyalty is the tendency of the customer to remain in business with
a particular supplier and buy the products regularly. This is usually seen when a customer is very
much satisfied by the supplier and re-visits the organization for business deals, or when he is
tended towards re-buying a particular product or brand over times by that supplier. To continue
the customer loyalty the most important aspect an organization should focus on is customer
satisfaction. Hence, customer loyalty is an influencing aspect of CRM and is always crucial for
business success.
5. Customer Retention- Customer retention is a strategic process to keep or retain the existing
customers and not letting them to diverge or defect to other suppliers or organization for
business. Usually a loyal customer is tended towards sticking to a particular brand or product as
far as his basic needs continue to be properly fulfilled. He does not opt for taking a risk in going
for a new product. More is the possibility to retain customers the more is the probability of net
growth of business.
6. Customer Complaints- Always there exists a challenge for suppliers to deal with complaints
raised by customers. Normally raising a complaint indicates the act of dissatisfaction of the
customer. There can be several reasons for a customer to launch a complaint. A genuine reason
can also exist due to which the customer is dissatisfied but sometimes complaints are launched
due to some sort of misunderstanding in analyzing and interpreting the conditions of the deal
provided by the supplier regarding any product or service. Handling these complaints to ultimate
satisfaction of the customer is substantial for any organization and hence it is essential for them
to have predefined set of process in CRM to deal with these complaints and efficiently resolve it in
no time.
7. Customer Service- In an organization Customer Service is the process of delivering
information and services regarding all the products and brands. Customer satisfaction depends
on quality of service provided to him by the supplier. The organization has not only to elaborate
and clarify the details of the services to be provided to the customer but also to abide with the
conditions as well. If the quality and trend of service go beyond customer’s expectation, the
organization is supposed to have a good business with customers.

Importance: Looking at some broader perspectives given as below we can easily determine
why a CRM System is always important for an organization.

1. A CRM system consists of a historical view and analysis of all the acquired or to be acquired
customers. This helps in reduced searching and correlating customers and to foresee customer
needs effectively and increase business.
2. CRM contains each and every bit of details of a customer, hence it is very easy for track a
customer accordingly and can be used to determine which customer can be profitable and which
not.
3. In CRM system, customers are grouped according to different aspects according to the type of
business they do or according to physical location and are allocated to different customer
managers often called as account managers. This helps in focusing and concentrating on each and
every customer separately.
4. A CRM system is not only used to deal with the existing customers but is also useful in acquiring
new customers. The process first starts with identifying a customer and maintaining all the
corresponding details into the CRM system which is also called an ‘Opportunity of Business’. The
Sales and Field representatives then try getting business out of these customers by sophistically
following up with them and converting them into a winning deal. All this is very easily and
efficiently done by an integrated CRM system.
5. The strongest aspect of Customer Relationship Management is that it is very cost-effective. The
advantage of decently implemented CRM system is that there is very less need of paper and
manual work which requires lesser staff to manage and lesser resources to deal with. The
technologies used in implementing a CRM system are also very cheap and smooth as compared to
the traditional way of business.
 6. All the details in CRM system is kept centralized which is available anytime on fingertips. This
reduces the process time and increases productivity.
7. Efficiently dealing with all the customers and providing them what they actually need increases
the customer satisfaction. This increases the chance of getting more business which ultimately
enhances turnover and profit.
8. If the customer is satisfied they will always be loyal to you and will remain in business forever
resulting in increasing customer base and ultimately enhancing net growth of business.

CUSTOMER RELATIONSHIP
Relationship between any two parties is actually the interaction or transaction done between the two over-
times or consists of a continuous series of synergistic episode of interaction many a times. This
relationship only exists when the two parties diverge from a state of autonomy to mutual or
interdependent. Occasionally having a cup of tea from a café does not mean that there is a relationship. If
the customer returns to the café and orders the same tea again because he likes the environment and taste
or the method of making tea, more looks like a relationship.

Relationship with customers can change from time to time because it is evolved under distinguished
situations. Following are the stages from where the relationship with customers can evolve-

 Exploration- Exploration is the process when customer investigates or tests the supplier’s

capabilities and performance or cross verifies the product’s or brand’s usefulness. If the test
results fail to satisfy customer’s demands, the relationship can drastically come to an end.
 Awareness- Awareness is the process when the customer understands the motivational values of
supplier or the products he sells.
 Expansion- Expansion is the process when the supplier wins customer’s faith and customer falls
under huge interdependence of the supplier. This is time when there are more chances of business
with that particular customer and expand business.
 Commitment- Commitment is a powerful stage when suppliers learn to adapting business rules
and goal to excel.
 Dissolution- Dissolution is a stage when customer requirement suddenly changes and he looks
for better perspectives. This sudden change is the end of relationship.

Relationship can come to an end due to many reasons like - customer is not satisfied with the services of
supplier or customer diverges to other better brands and products. Suppliers can also prefer to break
relationships due to customer failing to be a part to increase sales volume or when the suppliers are
entangled with fraud cases.

Broadly there can be two distinguished attributes of a developed relationship between

supplier and customer:

1. Trust: Trust means confidence and security in any relationship and can be treated as the biggest
investment in building long term relationships. Trust is developed between the two parties when
they experience flawless and satisfied motives between each other. As a result of knowing more
about each other, all the doubts and risks are minimized and leads to inevitably smooth business.
Lack of trust on the other hand weakens the relationship foundation and chances of uncertainty
and conflicts increases.
2. Commitment: Commitment is yet another milestone that should be achieved to set a long term
mutual relationship. Commitment can only be attained when there is mutual trust and the two
parties share each other’s values. In a committed relationship both suppliers and customers strive
to uphold the relationship and never want to exit which in turn results in building the relationship
stronger and sharper. There is, in fact, huge cost which is incurred in switching from committed
relationships of one supplier and build new relationships with other suppliers from scratch.

Relationship is always mutual or reciprocal so it is important for both supplier and customers to stick to
common guideline to attain better relationship among each other. There is lot of involvement of cost,
efforts and time in striving developed relationships between the two parties but the outcome is always
inevitable.

Types of Customers:

1. Loyal Customers- These types of customers are less in numbers but promote more sales and
profit as compared to other customers as these are the ones which are completely satisfied. These
customers revisit the organization over times hence it is crucial to interact and keep in touch with
them on a regular basis and invest much time and effort with them. Loyal customers want
individual attention and that demands polite and respectful responses from supplier.
2. Discount Customers- Discount customers are also frequent visitors but they are only a part of
business when offered with discounts on regular products and brands or they buy only low cost
products. More is the discount the more they tend towards buying. These customers are mostly
related to small industries or the industries that focus on low or marginal investments on
products. Focus on these types of customers is also important as they also promote distinguished
part of profit into business.
3. Impulsive Customers- These customers are difficult to convince as they want to do the
business in urge or caprice. They don’t have any specific item into their product list but urge to
buy what they find good and productive at that point of time. Handling these customers is a
challenge as they are not particularly looking for a product and want the supplier to display all the
useful products they have in their tally in front of them so that they can buy what they like from
that display. If impulsive customers are treated accordingly then there is high probability that
these customers could be a responsible for high percentage of selling.
4. Need Based Customers- These customers are product specific and only tend to buy items only
to which they are habitual or have a specific need for them. These are frequent customers but do
not become a part of buying most of the times so it is difficult to satisfy them. These customers
should be handled positively by showing them ways and reasons to switch to other similar
products and brands and initiating them to buy these. These customers could possibly be lost if
not tackled efficiently with positive interaction.
5. Wandering Customers- These are the least profitable customers as sometimes they
themselves are not sure what to buy. These customers are normally new in industry and most of
the times visit suppliers only for confirming their needs on products. They investigate features of
most prominent products in the market but do not buy any of those or show least interest in
buying. To grab such customers they should be properly informed about the various positive
features of the products so that they develop a sense of interest.

Orientation of Customers
Orientation of customer means how the customer’s preferences are possessed or in what areas of business
the customers are conscious. A customer can be cost oriented, value oriented or technology oriented as
discussed below:

 Cost Oriented Customers- A cost-oriented customer focuses on least costs products and is
ready to compromise on efficacy, performance and quality. These types of customers are always
prone to loss as when they have sudden problems with the products they always blame the
supplier without judging that they themselves are responsible for this loss. Some of the related
type customers have a tendency to fix problems locally without taking supplier’s direct help as it is
anyway cheaper. For example, some customers try to repair costly machines by local vendors.
These vendors do the work with marginal profit, so accountably are very cheap, but whatever they
do is not quality work as they are not the actual manufacturer of that particular product and may
lack in many aspects while repairing the machine. In case the machine fails the second time, these
customers put the blame to the original supplier and he then has to pay for that. In some cases
these customers are also ready to buy second hand products and then challenging it to perform as
a new one. Hence the suppliers should always focus on strategies which are not only performance
 or quality driven but also self driven, otherwise they always find themselves arrested in payment
related problems and they again have to put a lot of effort and cost on running for payment from
these customers.
 Value Oriented Customers- Value oriented customers will always stick to efficient and high
performing products as they know that during a long run this would be a profitable deal. They are
interested in investing higher initial capital cost and then enjoy the cost free benefits in future.
According to these customers this type of deal is like a long term investment with higher future
profit. In some cases these types of customers are also ready to pay premium because they know
that this would make a better economic sense during a long run and there will always be lesser
maintenance efforts required. These customers are tended towards maintaining a healthy
relationship with suppliers as they are the satisfied customers.
 Technology Oriented Customers- These customers opt for best technology rather then less
cost or good quality and performance. These customers are technology conscious because they
feel that usage of best and newest technological products would help them to remain sustained in
the changing technological environment. For suppliers who are based on making or launching
trended technological products have a good chance in capturing these customers and finding
business out of them. These customers are innovative and have zeal towards technical aspects.
They also have a tendency for experimenting new things and do interact with people of same
nature or tendency, so the suppliers are helped by them in creating new referrals and increase the
business. These customers are also satisfied customers and ends by making worthy relationships
with suppliers.

Customer Service:
The way a business relates to its customers, clientele and patrons is known as customer
relations. Also called customer service, some companies hire people specifically to manage how
the company interacts and communicates with people. The goal is to retain existing customers
and to gain new ones by providing the best customer relations they can, and -- hopefully, to find
better customer services than those their competitors provide. There are several components
that go into superb customer relations.

Marketing
Strategically promoting services or resources that make a company stand out is a huge part of
customer relations. When a company has a powerful marketing push behind its customer
service, it reminds customers why people should choose their company in the first place. Often,
the promotional events are differentiated to attract different target groups, made up of both
existing customers, as well as new customers. Identifying the needs of customers and
anticipating those needs before customers even realize it, enables a company to pull ahead in
superlative customer service.
Consistency
Customers want to know that they can rely on a business to be the same, wherever they go
insofar as policies. If, for example, a hotel chain advertises complementary car side service, then
patrons will expect that to be a policy at all hotels under the same chain. Some people may even
choose to use that company, because they have come to rely on a particular aspect of it. Making
sure that a company is consistent not only in what they offer but in how it's offered, which
inspires loyalty in existing patrons and repeat business in new patrons. This includes employee
training. Cohesive customer service policies and features are important.
Responsiveness
A prompt, positive response works to build trust in customer relations. There are almost always
ways to help customers get what they need or want without sacrificing the bottom line. Most
people want to feel that they are listened to and taken seriously. That is especially true when
addressing a business' customers. It won’t always be possible to give customers exactly what
they are asking for, but if people that see you are trying, it can make all the difference. Often,
answers often cannot be rushed but customers should be kept in the loop as to how long it may
be, and then the business must stick to that time frame. Part of customer relations is finding
ways to make people feel that it's easy to do business with your company.
Technology
The latest and most-supported technology is the newest and no less important aspect of
customer relations. Make sure the website is updated and properly supported for the volume of
traffic it gets. Phones should be answered promptly and with the same greeting. Ideally, emails
should be answered on the same day they are sent, or if not, then by the end of the next business
day. Technology makes it easier for employees and customers to communicate quickly, and by
ensuring that a company has all the systems in place to do, that then the relationship thrives.
It often seems insurmountable to make all of a company’s clientele happy. That isn’t the goal,
however. The goal is to make each new customer in front of an employee feel happy. Take it one
at a time, with concentrated attention, and that's what takes a company from “just okay” to a
solid favorite.
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