CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
In addition to working with partners called partner relationship management (PRM) many countries are intent on developing stronger bonds with their customers called customer relationship management (CRM). This is the process of managing detailed information about individual customers and carefully managing all customer â€œtouch pointsâ€? to maximize customer loyalty. A customer touch point is any occasion on which a customer encounters the brand and productâ€”from actual experience to personal or mass communication to casual observation. For a hotel, the touch points include reservations, check-in and check-out, frequent-stay programs, room service, business services, exercise facilities, laundry service, restaurants, and bars. For instance the Four Seasons relies on personal touches, such as a staff that always addresses guests by name, high-powered employees who understand the needs of sophisticated business travelers, and at least one best-in-region facility, such as a premier restaurant or spa.
Customer relationship management enables companies to provide excellent real-time customer service through the effective use of individual account information. Based on what they know about each valued customer, companies can customize market offerings, services, programs, messages, and media. CRM is important because a major driver of company profitability is the aggregate value of the companyâ€™s customer base. A pioneer in the application of CRM techniques is Harrahâ€™s Entertainment.
* Identify your prospects and customers. Do not go after everyone. Build, maintain, and mine a rich customer database with information derived from all the channels and customer touch points
* Differentiate customers in terms of (1) their needs and (2) their value to your company. Spend proportionately more effort on the most valuable customers (MVC). Apply Activity Based Costing and calculate customer lifetime value. Estimating net present value of all future profits coming from purchases, margin levels, and referrals, less customer-specific servicing costs.
* Interact with individual customers to improve your knowledge about their individual needs and to build stronger relationships. Formulate customized offerings that are communicated in a personalized way.
* Customize products, services, and messages to each customer. Facilitate customer/company interaction through the company contact center ad Wed site.
A key driver of shareholder value is the aggregate value of the customer base. Winning companies improve the value of their customer base by excelling at strategies such as the following:
(A) Reducing the rate of customer defection.
Whole Foods, the worldâ€™s largest retailer of natural and organic foods, woos customers with a commitment to marketing the best foods, and a team concept for employees. Selecting and training employees to be knowledgeable and friendly increases the likelihood that the inevitable shopping questions from customers will be answered satisfactorily.
(B) Increasing the longevity of the customer relationship.
The more involved a customer is with the company, the more likely he or she is to stick around. Some companies treat their customers as partners especially in business â€“to-business markets soliciting their help in design of new products or improving their customer service. Instant Web Companies (IWCO), a Chanhassen, Minnesota, direct mail printer, launched a monthly Customer Spotlight programs where guest companies provide an overview of their business and direct-mail programs and comment on IWCO practices, product, and services. IWCO staff not only gains exposure to customers, but also develops a broader perspective on customersâ€™ business and marketing objectives and how to add value and identify options that help meet their customersâ€™ goals.
(C) Enhancing the growth potential of each customer through â€˜shareâ€“of-walletâ€™, cross-selling, and up-selling.
Harley â€“Davidson sells more than motorcycles riding supplements such as gloves, leather jackets, helmets, and sunglasses. Harley dealerships sell more than 3,000 items of clothing some even have their own fitting rooms. Licensed goods sold by others range from the predictable (shot glasses, cue balls, and Zippo cigarette lighters) to the more surprising items (cologne, dolls, and cell phones). Harley-branded merchandise amounted to more than $211 million in company sales in 2003.
(D) Making low-profit customers more profitable or terminating them.
To avoid the direct need for termination, unprofitable customers can be made to buy more or in larger quantities, forgo certain feature or services, or pay higher amounts or fees. Banks, phone companies, and travel agencies are all now charging for once-free services to ensure minimum customer revenue levels.
(E) Focusing disproportionate effort on high-value customers.
The most valuable customers can be treated in a special way. Thoughtful gestures such as birthday greetings, small gifts, or invitations to special sports or arts events can send a strong signal to the customer.
To conclude all the above mentioned practices are already in vogue even in the Asian countries considered as Global Economic powers. Huge malls are coming up in the metros of these countries with very attractive discounted prices of products, transparency in pricing as compared to normal market prices and other gifts, bonus points accumulation for future free purchases and many other incentives.