Customer Relationship Management (Essay Sample)

CUSTOMER RELATIONSHIP MANAGEMENT
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Table of contents  PAGEREF _Toc399917258 \h
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Abstract  PAGEREF _Toc399917259 \h
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Introduction  PAGEREF _Toc399917260 \h
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Theoretical Foundation of the CRM Implementation  PAGEREF _Toc399917261 \h
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Hypothesis Development  PAGEREF _Toc399917262 \h
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Conclusion  PAGEREF _Toc399917263 \h
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Abstract
The understanding of how to manage customer relationship effectively has become an important topic for both academics and practitioners in recent years. However, the existing academic literature on customer relationship management (CRM) strategies of some busineses does not provide a comprehensive outline of what specifically constitutes CRM phases.The purpose of this study is to find out the effectiveness, shortages and prospects for small businesses in customer relationship management. This study has three purposes: to conceptualize and operationalize the CRM implementation in all small businesses; to determine whether the CRM implementation is positively associated with customer satisfaction; and to determine key moderators between CRM implementation and customer satisfaction.
Introduction
In recent years many small businesses intend to develop and manage stronger interaction with their customers with the aim to maximize customer equity. This involves building and managing successful customer relationships to raise customer Satisfaction. Due to the dramatic changes in the global business environment and the shift of power from businesses to customers, the paradigm of Business-to-Customer has been replaced by that of CRM. Inevitably, many small businesses have begun to rethink on how to build valuable relationships with their customers.
The expected contribution of this article is to conceptualize and operationalize a measure to which CRM is implemented in small businesses. This study has the purpose of understanding the effectiveness, shortages and prospects for small businesses in relation to customer relationship management.
Due to the dramatic changes in the global business environment and the shift of power from businesses to customers, the paradigm of Business-to-Customer has been replaced by that of CRM. Inevitably, many small businesses have begun to rethink on how to build valuable relationships with their customers.
The expected contribution of this article is to conceptualize and operationalize a measure to which CRM is implemented in small businesses. This study has the purpose of understanding the effectiveness, shortages and prospects for small businesses in relation to customer relationship management.
Theoretical Foundation of the CRM Implementation
The literature on CRM suggests that small businesses should consider the customer relationship life cycle. This life cycle describes ideal phases that occur regularly in a customer relationship. In general, there are three core phases:
Customer Acquisition, Customer Enhancement, and Customer Recovery CRM implementation is a long term longitudinal phenomena.
First, the acquisition phase describes the initiation of a customer-business relationship. A business faces the following marketing tasks: customer persuasion and customer stimulation. According to Villanueva et al. (2008), customers who come because of word of mouth add a lot more value to the business compared to customers acquired through traditional marketing processes
A stimulation methodology is a consumers’ incentive that forms a relationship with the business. Short lived stimulation is frequently used for solitary transactions such as special sales. On the other hand, long lived stimulation is in most cases is used for compound transactions and is intended at developing an enduring consumer relationship. The subsequent customer enhancement stage includes three essential CRM tasks: customary evaluation management, contact rate management, and increasing selling management.
In CRM initiatives, customer care representatives assist customers get acquainted with the services and products, hence improving customer product information. The representatives also gather customer information for flourishing controls of individual customer relationships (Mudie and Cottam, 1993).Therefore many business service systems play the role of touch points. One of the characteristics of successful CRM implementation is the capability of the business to develop better or more suitable products and services via these “touch points. In addition, deploying IT support functions fosters one-to-one relationships with each individual customer at any time (Shoemaker, 2001).
There is a common finding that businesses overspend on marginal customers and the most profitable customers do not receive their fair share of attention (Reinartz et al., 2004). Businesses systematically attempt to mature relationships by cross-selling products with high purchase likelihood (Kamakura et al., 2002). For example, in the mature phase when the customer potential has been maximized, a business aim is to maintain the level of sales by providing up-selling and customized offerings. Therefore, small business reinforces the switching barriers. The switching barriers will ensure that a customer is dependent on the business and that the related turnover and profits are secured.
Third, customer relationship termination generally takes place when a customer feels that the value of the service is not of the expected standard, In the case of a paradigm that is customer-centered; consumer asset management (CAM), quality return, customer equity (CE), and overhaul profit chain are similar to CRM where customer-centered point of view is based on management concepts.
Hypothesis Development
In CRM, satisfaction is a customer’s cumulative evaluation of the purchase and consumption experience (Anderson et al., 1994). Long-term customers are less sensitive to losses generated from a given transaction because they tend to weigh prior satisfaction levels highly (Bolton, 1998). One of the emphases of CRM is to provide individual customers with customized products and services. Customized offerings are very likely to meet customers&...