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Strategic
Issues
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SEEKING
CUSTOMERS AND KEEPING CUSTOMERS: THE CONCEPT OF CRM
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CRM
as a concept is as old as marketing itself. Firms in
both consumer and business-to-business marketing have
always (either by accident or design) made attempts
to encourage repeat buying from regular and frequent
consumers. |
that
different customer segments/groups would be interested
in different dimensions of the offerings made by the
marketer. The implication of this aspect will be reflected
in the manner in which loyalty programmes are planned
and satisfaction parameters are monitored, apart from
the fact that the selection of target segment or specific
companies in a business-to-business context is of utmost
importance. This is because profitability of a CRM programme
will vary across segments (or companies).
There is research to show that only around twenty per
cent of consumers under the frequent flier programmes
in the airline industry contribute to around eighty
per cent of profitability. Given the fact that these
types of programmes cannot be stopped abruptly (should
the need be because of profitability reasons), especially
when competitive airline companies are following suit,
a company has to be very careful in selecting specific
segments of customers even for a commonplace strategy
like the frequent flier programme (commonplace in the
international airline circuit).
CRM and its linkages
A company like TISCO which has invested heavily on its
cold rolled mill infrastructure would like to select
a segment like the automobile segment and specific companies
in the segment which are conscious of the advantages
of having a relationship with TISCO — fine tolerances
of the special material required for making the end
product and the pre-sale service which would emerge
from the core competence of the company with regard
to raw material usage. These companies are also likely
to pay a premium for the relationship as the relationship
is likely to produce the differentiation which consumers
of the end product are likely to appreciate (consumers
buying cars). While there is substantial growth of SOHO
(Small Office Home Office) and SME (Small and Medium
Enterprise), a company like Dell Computers may decide
to concentrate on large companies for its CRM programmes
from the viewpoint of loyalty and profitability. It
may also be essential for a company to make an assessment
of the lifetime value of a customer before formulating
a CRM programme.
While loyalty and satisfaction are strongly linked to
CRM programmes, the specific objective of a CRM programme
for a customer may have to be decided by a company before
planning the appropriate programme. For example, reducing
the cost of distribution may be the objective of a CRM
programme at a given point of time. This may involve
working out and restructuring ordering patterns, taking
into consideration the consumption patterns and inventory
levels at the customer’s end and the production systems
at the manufacturing end. The co-operative and collaborative
aspects mentioned earlier can be noted here. Similarly
in consumer marketing, the objective of a CRM programme
for a fast food company may be to increase the frequency
of purchase of a food item. A promotional programme
for the brand could be roped in as a part of the CRM
programme. This would result in rebuy at least from
a cross-section of consumers and they may also be satisfied
with the manner in which the company has gone about
it (for example, providing a variety of recipes with
the food item for a segment which the company believes
could exhibit loyalty). Loyalty in categories like fast
foods, soaps and confectionery could be driven through
innovative CRM programmes.
Apart from loyalty and satisfaction linkages, communication
is a vital aspect of any CRM programme. Communication
with regard to state-of-the-art offerings concerning
the product category, the efforts of the company/brand
to keep itself updated in terms of the benefits offered,
satisfied customers of a CRM programme and specific
benefits of a CRM programme may help a marketer to keep
in touch with a prospective target segment of consumers
who . |
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