Customer Relationship Management and Customer Value

Introduction

A marketing manager is a crucial role in a company responsible for enhancing, promoting and influencing a brand’s products and services to both existing and potential customers. A marketing manager needs effective strategies to create and capture customer value while also gaining customer insights. Armstrong ET AL. (2016) indicates that “An important component of modern marketing is the customer relationship management (CRM)”. CRM developed in the 1970s as a new tool for controlling and optimizing sales-force automation within business information management, not only for sales but for more customer interaction, customer knowledge management and understanding organizational behaviours and patterns. At its core, CRM is very straightforward, it includes all the activities, strategies, systems, processes, tools and technologies that companies use in managing and engaging its customer interactions. CRM solutions can be applied in several ways including websites, social medias, phone calls, chat, mail and other numerous marketing materials. CRM can be used to target high-value customers effectively and efficiently, increase sales and also create offers tailored to specific customer requirements. In this essay, I will be focusing on explaining the importance of Customer relationship marketing (CRM), describing major trends affecting CRM, identify approaches to gain customer insights and develop strategies to create and capture customer value.

Customer relationship marketing (CRM)

A notable importance of CRM is to gain profitable customer relationship. Levitt, (1960) explains that putting focus on customer needs and satisfaction will help a firm stay in existence. An organization requires profitability to continue existing in the long run, since CRM strategies are customer-centred, it identifies customer requirements and needs, so as to increase customer satisfaction which will help build brand loyalty and promote customer retention. A business’ profitability can come in forms of cash and goodwill. Profitable customer relationship extends to the idea of peers influencing peers. A survey by Hub spot’s data-driven research report, (2020) shows that 93% of customer service teams agree that today’s customers have higher expectations than before, they have more options, they are more sceptical and are more likely to influence their peers. A customer will only influence another as a prospective customer when satisfied by a brand’s quality products and superior customer services. Using a case study approach, Ryals (2005) shows that one of the business units she studied gained an increase in profits by 270% passing its target after implementing straightforward CRM measures.

CRM is also important to produce high customer equity. Armstrong ET AL.(2016) indicates that “Customer equity is the total combined customer lifetime value of a company’s current and potential customers”. Customer equity is explained as retention of customers to get their future value. Examples of things a company does to produce customer equity are appreciating the customers, creation of promotion offers and discounts, offering the best value from their products and services, Offering better convenience than competitors and so on.

CRM implementation like any other has affecting trends and challenges that may cause failure. It may have the capacity to manage multiple parts of an organization including customer relations, sales, marketing and service management, however it may still fail, this will lead to resource wastage and may also have future negative impacts.

A major trend affecting a company’s CRM process is the lack of technology integration. Here, the company struggles to handle the diverse systems of CRM. Different CRM processes have their own software to handle the industrious efforts of CRM system, this further promotes a struggle for companies. The advancement of technology could also be a challenge to picking up the best and trending CRM software that’ll be suitable for both customers and employees.

Another affecting trend is the impact on cost, CRM requires resources to be used. It may require high cost but when used well may bring about greater output compared to the its input.

Lack of wide use within an organisation is also a huge challenge in CRM implementation. It is the duty of marketing managers to make CRM software a vital and day-to-day tool for employees to create and record sales interactions, it is also important for all employees to be aware of the purpose of CRM implementation. They should be encouraged to create the best customer experience with the CRM strategies put in place.

A lack of communication can make CRM implementation fail. Within an organization, it is important that managers convey the entire process of CRM to the employees. No proper communication will disorganise the purpose of CRM and will end up creating problems rather than solving.

A part of marketing management is to gain customer insights. Customer insights is understanding and interpreting various trends in customer data behaviours in order to ascertain the effectiveness of a brand’s products and services. This will open a room for the company’s improvement as well as increase sales for financial benefit.

The approaches to gain customer insights will provide feedback on how a company is doing so you can identify and address arising problems. Below are the approaches to gaining customer insights:

• Feedback questionnaires: This is a question and answer process used by companies to identify and measure their customers satisfaction and happiness.
• Reviews: A review is a written opinion and reflection from a customer after an experience with a brand’s products or services.
• Customer sentiment surveys: This is a list of questions presented to customers to indicate how they feel towards the company’s brand.
• Behavioural targeting: This entails tracking customers online data to target advertisements and show marketing offers.
• Social listening: This involves listening to and analysing trends happening in the brand’s industry so as to make better marketing decisions.
• Chat-bot data: Companies use a computer program known as chat-bot to process and simulate conversations with customers. The data gotten from the interactions can be used for marketing and management decisions.
• Sampling: This involves collecting a general data or observation from a selected group of people.

It is impossible to claim customer-centred without these approaches to gain customer insights.

Creating and capturing customer value is a key building block for developing and managing customer relationships. This becomes easier when feedback and survey data has been collected, it will help figure out what steps to take and strategies to be put in place to improve the brand’s consumer experience. The following are strategies used to create and capture customer value:

• Streamline the customer journey: It is necessary to get a better knowledge of what sends consumers away during the customer journey by evaluating customer data and collecting feedbacks. As a result, this will help streamline the purchasing process and user journey for a better customer experience. It will also help the brand’s efficiency to stay consistent and will bring about loyal customers.
• Enhance product functionality: Through customer insights, a company will be able to improve the functionality of their products. Gaining knowledge on how consumers use the products and also asking their opinions and ideas on how they can improve their brand’s products and services. With this, companies work out how to develop the products they sell and services they offer while the customers receive great value from the improvements.
• Optimizing product or service quality: Learning about the quality of your products and services is very important. This is only possible by engaging directly with customers and monitoring reviews.
• Improving customer service: Customers expect the highest quality service, lack of quality customer service will lead to bad feedbacks and reviews. A company should use its customer insights to improve customer service.
• Develop new products and services: By listening to and engaging with customers you get to know how to extend your products and services line. This will help customers and the brands get more value.
• Inform your marketing strategy: Through customer insights, a company can pick out the affecting trends within an industry, this will help pick out its marketing strategies.

Summary

In the modern world of marketing and management today, customer relationship management and customer value are very essential strategies to a profitable business. It is important that companies now deliver superior customer value which can be achieved through CRM tools and gaining customer insights. It is also beneficial to a company to get the full knowledge of CRM and customer value by understanding its customer’s needs and aiming to satisfy them, this will their competitive advantages within the industry.

An absorption of the concept of gaining customer insights and creating and capturing customer value is understanding that in order to get the best value of customers the company should aim to get the best service from within the organization by focusing, investing and empowering the service teams. CRM as an idea and strategy is very helpful for businesses when implemented and used properly, it brings both short-term and long-term benefits.

Gaining customer insights helps the organization understand what the target audience and customers feel towards the products or services they offer, it brings suggestions that helps in decision making, reduces resource wastage and offers the best customer experience.

This essay concludes that the end goal of CRM implementation, customer insights and customer value is business profitability, this is only achievable through superior relationship quality both within the organization among its employees and with its customers.

Works Cited

1. Armstrong, G., Kotler, P., Harker, M., & Brennan, R. (2016). Marketing: An introduction (13th ed.). Pearson.
2. HubSpot. (2020). The state of customer service in 2020. HubSpot Research.
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