Customer Relationship Management
Customer Relationship Management
Customer Relationship Management
Relationship
Prof.K.Prabhakar
Director,
KSR College of Technology,
Tiruchengodu-637209
Abstract
Introduction
Organizations have realized that retaining customers is more profitable than
crating a new customer. It is estimated that a customer for coke for a lifetime will bring
an estimated cash flow of Rs 50,000. Therefore, if we loose a customer we not only loose
him for present but also future. We have not calculated the cost of satisfied customers
references. Though customer relationship is being emphasized by Theodore Levitt in his
article on “Marketing Myopia”, organizations are yet to understand and implement
various customer related initiatives. However, technology as an enabler with very low
cost has come to the rescue of organizations to meet ever-changing need of customers.
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Consider the following findings from a study
About 50 percent of the time, customers who have a problem with a product or
service are not likely to tell the company about it.
1) Nine out of ten of these "silent critics" will probably take their future business to a
competitor.
2) Even when a customer does complain, one out of every two will not be thoroughly
satisfied with the company's efforts to solve the problem.
3) Dissatisfied customers typically tell between seven to nine other people when they
had an unsatisfactory experience with a company.
4) Negative information has twice the impact of positive information on purchasing
decisions.
5) Word-of-mouth is one of the most important factors influencing a customer's decision
to buy from a company.
This study clearly reveals that complaints are one of the most important forms of
communication between a business and its customers, and constructive responses to
complaints can help retain customers who would otherwise be lost.
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6) Incompetent or discourteous employees
Accounting Causes:
1) Billing errors
2) Failure to provide timely refunds and adjustments, as promised
Underlying Causes:
1) A wide range of product choices coupled with a lack of information on which to base
purchase decisions
2) Advanced technology --- complicated product design
3) Inadequate, or complicated product instructions
One person within the company should have ultimate authority and responsibility
for customer relations. In a small firm, it may be the owner, while in a large organization
it may be a customer affairs executive. It is important that the person designated be
readily available, and authorized to act on behalf of the company in all customer relations
matters. The organization may want to consider incorporating a commitment to a third
party dispute resolution mechanism into customer relations policy. Even if organization
follows and carries out a sound customer relations policy, there still will be some
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complaints that are difficult to settle, and a few customers whom the company cannot
seem to satisfy.
Alternatively, we may consider offering resolution through a third party
mechanism on a case-by-case basis. An independent and neutral third party will act as a
mediator, helping organization and customers communicate to reach an understanding. In
the event that an agreement is not reached, organization should be prepared to offer
arbitration. Arbitration is a process where a neutral person listens to both sides and makes
a final decision based on fairness and equity.
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• Acknowledging -- When organization cannot resolve an issue immediately, it is
important to let customer know that the matter is receiving attention. Prompt
acknowledgment will set customer at ease, demonstrate that organization care,
and begin the process of preserving goodwill. Whenever possible, tell customer
how long it will take to complete action on the complaint. If there is further delay,
be sure to advise customer why, and when organization expect to have an answer.
• Responding -- The response should be clear and appropriate. The customer must
understand the response, and the response must address the issues raised in the
customer's original complaint.
We should avoid "stock" language and form letters when an individual response is
needed, and refrains from using excessive technical jargon. An explanation of decision
may preserve the goodwill of customer, even if the decision itself is adverse.
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If customer is unhappy with response, organization should refer the matter to a third party
dispute resolution mechanism for assistance.
If we intend to seek the assistance of a third party, be sure to give the customer a name
and telephone number of the person, or office to be contacted.
The follow-up step is critical to ensure the effectiveness of system. While organization
may never satisfy everyone, this contact will provide direct feedback, and can be
extremely valuable in making customer relations the best possible.
Learn how to make a strong, positive impact on customers, especially when there is a
problem. Analyze the factors that affect the customer’s relationship with organization and
their perceptions of how organization handle their business. Learn how to build customer
satisfaction through a service communication process that focuses on not only solving the
problem but also reinforcing a positive long-term relationship. Following are some of the
steps
• Seeing problems from the customer’s perspective
• Managing customers' "moments of truth"
• Communicating effectively through better listening
• Analyzing how customer perceptions are formed
• Managing anger and other service behaviors
• Dealing with long-term consequences of service breakdowns
• Negotiating solutions
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• Generating an action plan for improved on-the-job effectiveness
Customer Relation-Profile
When mapping the quality of a customer relationship, we use the following model where
the head symbolize the competencies we exchange. The Heart symbolizes our
communication and co-operation, and the Legs concern the responsibility and
professionalism with which we implement or deliver the competencies we have agreed
upon.
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The essence of this process is mutually to discover weak, strong and wanted sides
of the organizations, in order to improve future relations. Using the Customer Relation
Profile, organization should be able to identify the terms of relationship with others and
the profile will indicate what to focus on if organization want to develop it further. If
organization want an "easy to use tool" to realize how organization can maximize
business relations, this is the tool for organization and organization.
CRM applications are also useful in gathering information from various business
departments and merging them into one file, so that the company representative who
takes a customer's call can answer most questions that the customer may have. This
avoids the problem of having to transfer customers to other departments. Of course, CRM
is a "two-way street," in that it enables companies to use information on a customer's
previous purchases to focus their marketing on items of special interest to a particular
customer. For instance, a bookseller may send information on new travel books to a travel
enthusiast.
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multifaceted domain which ranges from business policies, practices and strategy at the
management level, to enthusiasm, eagerness to achieve customer satisfaction,
resourcefulness, flexibility, and a positive attitude towards customers on the part of
employees and company representatives who are in direct contact with customers or
clients.
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Furthermore, customers who encounter this type of treatment are likely to tell
others about their experience, who in turn, will not be very interested in dealing with that
particular company, thereby magnifying the extent of customer loss (actual and
potential).
In this era of fierce competition, both on a local and a global level, it becomes
increasingly important to ensure that a business is "customer-centered." There is an
abundance of merchandise available, and there is no shortage of businesses that offer the
same type of goods. It is therefore necessary for companies to try to set themselves apart
from their competitors by offering superb customer service. This can be achieved by
listening to customers' comments and suggestions; by upper management spending time
at the reception desk, at the service counter, or in the store, observing customers'
comments and reactions. Anyone associated with a company needs to see him/herself as a
company representative who contributes to the company's image. Of course, everyone
working for a company needs to receive recognition for special efforts, ingenuity, and
problem solving, geared towards achieving customer satisfaction.
No doubt, excellent plans are made at the management level of many companies, but
inadvertently, the message communicated to customers or potential customers often is
more akin to saying, "We do not really care whether the organization become or remain
our customer or not!" How else could one interpret the message that "Our computer
department is too busy to take order," or "We will let organization know when the item
you wish to purchase is in stock," and never getting back to the customer. Alternatively,
turning away a group of patrons in a restaurant, just because the kitchen will close in ten
minutes?
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dismiss customer complaints and consider them immaterial (if one goes by the reactions
of the company representative receiving the complaint).
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