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Strategic
Issues
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SEEKING
CUSTOMERS AND KEEPING CUSTOMERS: THE CONCEPT OF CRM
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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.
A manufacturer of trucks (like Ashok Leyland or Telco)
may be interested in initiating a CRM programme with
large fleet owners who own several vehicles of their
make. A maintenance package could be customised for
every customer, depending on the number of vehicles
and the usage of vehicles.
A pre-requisite to CRM, especially in consumer products,
is the availability of information with regard to demographics,
psychographics and spending patterns. The Indian context
may take a little longer to provide marketers such information,
as establishing a database would depend on the penetration
of credit cards and their usage at retail points. .
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may
like to be part of a CRM programme.
The following guidelines may enable a marketer to identify
specific customer groups which may be amenable to CRM
programmes:
Willingness to try innovative products: The criteria
may be especially useful to companies which operate
at a state-of-the-art technology level. These companies
operating at the leading end of technology may want
to establish a CRM programme with customers who are
willing to try out innovative products if it would benefit
their applications. Xeron worked with aircraft companies
(like Boeing) to introduce their DOCUTECH model of copier
which is ideally made to edit, copy and process several
pages of data — most suitable for the maintenance manual
of aircraft companies where a distinctive manual could
be used for every aircraft.
A manufacturer of trucks (like Ashok Leyland or Telco)
may be interested in initiating a CRM programme with
large fleet owners who own several vehicles of their
make. A maintenance package could be customised for
every customer, depending on the number of vehicles
and the usage of vehicles. The customer is likely to
be involved in such a CRM if the programme also includes
spares management. Loyalty is almost a logical sequence
in this context because the customer realises that there
is a link between the CRM programme and the cost savings
achieved by buying the same brand of truck especially
over a period of time. The customer is likely to have
the benefit of dealing with the same company with regard
to maintenance schedules, inter-personal relationships,
reduction in breakdown because of distinctive recurring
problems which could be anticipated and avoided and
the probable avoidance of switching cost for procuring
spares from different companies if trucks are bought
from different manufacturers. The company which has
a CRM with the customer is likely to give the customer
enhanced priority in terms of attention, apart from
cost savings, over a period of time.
The ‘one-to-one’ marketing progra-mmes which are generally
associated with consumer products could also be effectively
applied to business-to-business marketing. Proctor and
Gamble has a special team to service and develop its
business with Wal-Mart, the largest retailer chain in
the world. The Key |Account Management concept in which
customer teams are employed by companies (chemicals
and computers may be examples) is a kind of one-to-one
marketing, and when this concept is extended to a company
which has multiple locations (a company marketing machinery
to a consumer product company in several locations),
the concept becomes National Account Management programmes.
Such strategies involve extensive resource allocation
to teams and in-depth planning with customer on their
specific needs.
CRM and Consumer products
The loyalty programmes which are common in the airline
and credit card industries are continuity programmes.
The limitation of these programmes is the dominant presence
of ‘transaction orientation’. As indicted earlier in
the article, a typical relationship programme should
not be dependent on sheer transactional value (though
it may be one of the ways to keep consumers coming back).
Secondly, firms will have to have the most appropriate
segments based on ‘customer yield’ — which essentially
points out to profitability aspects. A structured and
planned effort with extensive research involving several
aspects of the buying process may be required to focus
on the right type of segments. The best form of such
programmes (loyalty programmes) should combine transactional
elements with information about the category and about
the specific customised needs of consumers. Hence, a
combination of transactional orientation and one-to-one
orientation (not only in terms of price but also in
terms of specialised and customised needs) is likely
to be very effective in seeking customers and keeping
customers. A brand like Pond’s offers customised advice
on skin care to individual consumers, and in the process
is able to create a database of consumers. This non-transactional
approach of drawing customers towards the brand could
be combined with specific strategies of offering certain
benefits to special customers who have purchased the
products of the brand beyond a specific value over a
period of time. Frequency marketing programmes and inter-active
programmes could be focused on specific segments depending
on the responses of consumers over a period of time.
A pre-requisite to CRM, especially in consumer products,
is the availability of information with regard to demographics,
psychographics and spending patterns. The Indian context
may take a little longer to provide marketers such information,
as establishing a database would depend on the penetration
of credit cards and their usage at retail points. Datamining
techniques enhance quality of one-to-one programmes.
The Net and CRM
In a country where computer penetration and Internet
penetration is dismally low, it may be too early to
discuss the impact of the Net on CRM. But it may be
worthwhile to study the e-loyalty pattern in developed
markets, as they offer certain interesting insights.
The following aspects provide e-marketers with certain
considerations that would be useful for their strategies:
* E-Commerce (in B-to-C) should necessarily have a focus
on value benefits. Value in this context could be the
additional price discount that is offered by the e-store.
The world over, retailing is banking on price aspects
(Wall-Mart, K-Mart and other large retailers). Amazon.com’s
prices are 30-40 per cent lower than those of brick-and-mortar
stores. Hence, there is a need to combine information-oriented
non-transactional programs with low-price strategies.
* Excitement in the form of exclusive launches may be
required to keep online customers coming back to the
store. Fabmart recently had an exclusive launch on the
Net.
* There are studies which show that if customer retention
is increased by five per cent, profits go up by 25-30
per cent. An allied finding in research studies is that
new customers cost about 20-40 per cent more than those
in traditional retail outlets but repeat consumers spend
twice as much in the second and third year than they
spend in the first six months (in certain categories).
This is probably the reason why e-stores expand their
product categories even at the cost of focus (Amazon.com
deals with categories like books, music, grocery and
gift items and has an infrastructure to deal with 16
million stock-keeping units.) Repeat consumers are also
known to spread the ‘word of mouse’ through referrals.
CRM in this context (as stated earlier) has to take
great care in segmenting customers and offerings which
are customised to these micro-niches. Micro-niches could
emerge as a result of diversity in preferences across
categories. Yet again, the lifetime value of customers
selected for relationships becomes critical apart from
the technological infrastructure required for tracking
the preferences of these customers after winning the
trust of these customers through inter-active ways.
CRM could be a very useful marketing tool if marketers
are able to bring together conceptual thinking and state-of-the-art
technologies. . |
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