RELATIONSHIPMARKETING IN RETAILING What is Relationship Marketing? Understanding How Customer Relationships Develop Relationship s' Economic Relationship marketing strategies in retailing Relationship marketing strategies Courteous & High Quality Ambience 4. unorganized retail sector Organized: 1. Retailers market products differently based on which customers are likely to buy them. A fast food chain might determine based on retail CRM. Strategies of Customer Relationship Marketing in Retailing Industry The relationship marketing philosophy suggests that, at a macro level, retail.
Pulling from the social psychology literature and marriage and family, they suggested that the relationship development process evolved through five stages: The appropriateness of relationship development is further supported by Morgan and Hunt who categorized relationship with reference to focal firm and its relational exchanges in four categories: From the discussion above, it appears that strengthening relationship involves interactions among several functional areas and the emergence of strong personal relationship between individuals, mutual problems solving and informal adaptations, which occur between the two companies.
Now-a-days during this 21st century era, more and more retailers are realizing that the key to building a brand loyalty will be to: Develop interdependent and mutually satisfying relationships with their customers: In addition to that, both parties need to take part in the exchange process voluntarily, as mutual enthusiasm and participation will strengthen their relationship with each other. Make sure that their walk-in customers return: The ultimate goal of relationship marketing is to gain loyalty from the customers.
So, retailers need to make sure that their marketing efforts will result in repeat purchases by their walk-in customers. Shift away from simple transactional marketing to relationship marketing: Therefore, the retailers evolve their traditional marketing practices from transactional centered towards relationship centered.
By this approach, they will have mechanisms and processes to build and enhance their relationships with their walk-in customers. This means to keep customers returning, we need to help them remain loyal to our stores. Satisfy the customer The easiest, and possibly the most affordable, way to build customer loyalty is to satisfy the customer. Sometimes this is easier in theory than in practice. Customers come in all personalities and with different objectives.
Some people are even impossible to please. So how does a retailer appease a large segment of the population? Begin by implementing the most basic customer service rule: In order to satisfy most customers and keep them happy, retailers can institute the following customer service practices in their store policy manual.
Just be sure all employees are working towards satisfying the customer. Not only do they want retailers to greet them when they enter the store, but they feel special if that retailer knows them by name.कैसे खिंचा चला आता है Customer! - 7 Marketing Strategies - Dr Vivek Bindra
Introduce yourself to the customer. Customers provide their name when writing a check, paying by credit or filling out forms. Creating a dialog, and ultimately a relationship, with the customer can reinforce loyalty.
Importance of building customer relationship in retail industry
Of course, this depends on the amount of choice available in the marketplace in respect to the services or goods that are being offered by the producer. Where there is any form of monopoly, the producers often ignore any consumer requests for exclusion from further relationship.
Customer satisfaction is an outcome that is realized when one experiences a company performance that has fulfilled their expectation. Satisfied customers tend to be more loyal to the company, returning to purchase and offering fewer demands. They also act as an ideal marketing form for producers, by the power of word-of-mouth.
Hence, for a producer to have recognition, customer satisfaction must be measured at regular intervals Kotler et. In the past, many companies could take their customers for granted as there was a lack of alternative suppliers, or the choices available were as poor in quality and service.
There was also the possibility of strong growths which allowed companies to forego on satisfaction levels. A company losing 50 customers in a given week will be satisfied if it gains new ones anyway. This is why customer retention programs offer a powerful tool in the CRM arsenal. An important feature for most companies, customer retention helps the organization understand that the cost of acquiring a new customer is far greater than the cost of maintaining a productive relationship with the current one.
In addition to this, retention programs also allow companies to perform data collection activities about their customers. This data is used to gain a better understanding of the customers, and to customize future interactions.
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Retention programs offer a relatively inexpensive means of making customers feel special. He is not depending on us. We are depending on him. He is not an interruption on our work. He is the purpose of it. He is not an outsider on our business. He is a part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so.
Customer retention is particularly important to SMEs because of the limited resources they have available to them Hubert, Another aspect of CRM is that knowledge of the customer and their traits allows for the easier acquisition of new customers.
The essence of the information technology IT revolution, in particular the online presence on the internet, is the opportunity for businesses to build better relationships with customers. Companies have developed a greater ability today to establish, nurture, and sustain long-term customer relationships, by combining the abilities to respond directly to requests and to provide customers with an interactive and customized experience.
According to Romanodeveloping sustainable long-term relationships with valuable customers is economically sound for businesses in order to avoid invaluable ones. The need for gaining a better understanding of customer behaviour allows the organization to focus on those customers who can deliver long-term profits. This change in ideology has effected a change in how marketers view the world. The traditional approach by marketers has been to acquire customers; either new ones who have not entered the respective product category yet or those who are currently linked with competitors.
In order to do so, mass advertising and price-oriented promotions have been undertaken targeting customers in the hope of positive returns. Today however, the core of the conversation has evolved from acquisition to retention.
This reflects the change in mindset and the adoption of a new set of tools that help businesses grow, including CRM. CRM helps businesses manage customer relationships in an organized manner by combining methodologies, software, applications and internet capabilities. In order to build long-term customer relationships, the existence of effective communication, trust, and commitment between the participants is important Wells et al. Every point of interaction and communication between the participants of a relationship leads to a trail of transaction and non-transaction data.
It is the integration of this data that is essential to making the future interactions with customers powerful. In the present world, most organisations are availing the benefits of the process by implementing CRM Bose, Companies who accumulate large amounts of customer data and support a niche market avail most of the benefits of CRM.
In contrast, those companies who have limited interaction with customers are less likely to be at advantage by using CRM, as they remain prone to customer turnover. Customer Orientation Customer orientation is basically a business philosophy that defines the ultimate goal of an organisation to be the fulfilment of customer needs for the purpose of maximising business profits. In the current age of competition, maintaining business advantage is becoming increasing difficult.
The change in the outlook of management on the placement of customers has been propelled by accelerating technological developments, which have shortened the product life cycle and made it necessary to innovate in order to sustain a level of superior performance. Customer orientation has often been associated with market orientation. Upon close analysis, the goal of putting customer at the centre of all marketing activities remains the primary goal for both.
Focus on Customer Retention With the evolution of technologies and the customer, it has become more difficult for businesses to get new customers. There is a realisation that in order to be more profitable, businesses must maintain relationships with the existing customer rather than constantly seek new ones Hildebrand, Reichheld, proposed four reasons to outline the greater profitability gained from retention of customers, as compared to seeking new ones: According to Newellthere are three types of customer relationships: Middle group customers make up a large majority of the consumer-base, and are the ones who deliver good profits hold the potential for future growth and loyalty.
Using CRM to target the middle group customers effectively will ensure in acquiring a good source of potential growth. Lower group customers are only marginally profitable.
The expense and effort involved in targeting these customers hinders the effectiveness of servicing existing customers in the top and middle groups. Provision of Customer Value Customer value is an important component of a successful business- customer relationship and the ability of a business to provide superior value to its customers is regarded as successful competitive strategy. Customer value is a strategic tool in attracting and retaining customers, and has become one of the most significant factors in the success of both manufacturing businesses and service providers.
By adding more value, companies try to improve customer satisfaction so that the bonds between the two entities are strengthened and customer loyalty is gained. Business are continuously searching and exploring different ways to provide customer value Wang et al. A CRM strategy can provide a high level of satisfaction by optimizing the business processes and making every interaction more customer-centric.
Utilising the existing customers as the primary marketing tool, companies can save on promotional activities. The number of customers required in maintaining sales and profitability is lower because of the loyalty of the retained customers. By implementing CRM, businesses are in a position to assess which of its customers are profitable and which are not. This is essential in understanding which group of customers the business should focus on in order to generate more profit.
CRM improves the customer retention rate by incorporating a real time monitoring of customer service. It also helps the organisation in incorporating exemplary customer service. Companies can assign each query to the appropriate expert, who can then resolve the issue at the earliest. CRM provides up-to-date information on consumer trends so that the most effective marketing campaigns can be achieved. CRM applications effectively manage customer information, allowing for a singular view of each customer which contains all contact information and sales history.
Utilising a knowledge-base, the organization can nominate the correct technician or personnel to a customer, based on their location.
Customer Relationship Management (CRM) in Retail Industry | Imran Hossain Rony - balamut.info
Furthermore, service instructions can be accessed for a better quality of customer service. In order for CRM to be successful, the seamless integration of every aspect of business needs to be established. Implementing applications like CRM requires a change to the organisational structure and culture. The people component is the most difficult component to manage as users are often reluctant to change.
CRM initiatives require vision that must be understood by each member in order for the system to work. The process component of CRM is delicate in nature because inappropriate automation of the CRM system will only speed up the errant process.
To realize effective process change, a company first needs to examine how well existing customer-facing business processes are working and then, either redesign or replace or incorporate new processes which will be more effective. Technology remains the key enabler to the redesign of business processes. When applied in CRM, it facilitates the collection and analysis of customer data as well as interprets customer behaviour and proposes models for predictive strategies.
Findings Enterprise resource planning ERP is used for the achievement of back- office automation of commercial strategy and is used in conjunction to the principles of CRM.
In the past, CRM normally was referred to as the software used to help enterprises with customer relations. More recently, the focus has moved from the customer contact management aspect to more the sales force automation software SFAas well as the integration of knowledge management solutions.
With time, CRM has been used to define strategy in an organization. In order for CRM to be successful, it is essential that all components of an organization process be covered. This begins with the commercial strategy adopted by the organization, and moves into the improvement of the enterprise and its work design by adopting technical means.
Customer Satisfaction Organizations are required to be more radical with their strategies, as the market becomes ever more aggressive and competitive. This is emphasized by the fact that such strategies help the organization retain quality customers and bring more long-term value to the establishment. When considered against the backdrop of an economic downturn, this becomes ever more vital to the organization since the loyal customers are more likely to continue their relationship with the business, than new ones.
The equal treatment of customers by companies has needed a change of sorts. Compromising on the quality of service can lead to defection by customers, and hence, enterprises need to be able to understand what standard is required by each level of customer.
Best Customers First Unless an organization is able to differentiate between the values of customers, it is unlikely that customer retention activities will hold no positive result. Businesses should treat their best customers with as much loyalty as they exhibit on the establishment. Single View of the Customer In a balanced service situation, the customer with lower expectations will likely end up being happier than those who are more demanding.
This relates to the fact that more valuable customers can be enticing to competitors and thus prove harder to retain. Tactics for Improvement The most common cause of annoyance in customers is the time experienced in waiting for service. The correct targeting of promotions is also another way of ensuring customer satisfaction, since expectations can be managed to effectively identify the right time and channel. Customer Loyalty Loyalty is used in business to describe the faith that a customer exhibits to a company and its products, meaning that the customer repeatedly returns to do business with the company, without the need to re-consider price or delivery service.
An organization needs to recognize the unique situation of a customer at any particular time. Motivating Loyalty To achieve customer loyalty, a business needs to address the following areas: It is important for a business to show commitment to the customer, by creating an environment that provides a valuable service and embodies a sense of accountability. It is important for the customer to feel like a part of the organization, and this can only be achieved if a positive perception is implemented by the business.
The steps taken by any business to achieve customer loyalty can vary depending on the industry it is involved in. Selection and Positioning According to Peelen The aim of CRM is to help organizations to manage their marketing and build up a better relationship with the customer. Some of the purposes that a successful CRM program includes are: According to Kumar and Reinartz Additionally, they are also used to collect information about the customers and analyse the data for improvements in processes, services or products.
Focus on CRM technology and business application is important in the overall success of established processes for an organization. The collection and analysis of customer activity holds vital data that could result in the market strategy success for the organization.
Additionally, CRM can help in the promotion of sales, and provide valuable insight for new product development and improvement, which could be used to retain and attract customers.
Impact on Retailer The implementation of a CRM system can help a retailer in understanding the customer, enhance the relationship as well as predict potential behaviour and sales; all forming an effective way of managing the client-retailer relationship McKenzie, The example of Wal-Mart is highlighted below: It was theorized that the reason for this was that fathers were stopping off at Wal-Mart to buy nappies for their babies, and since they could no longer go down to the pub as often, would buy beer as well.
As a result of this finding, the supermarket chain is alleged to have the nappies next to the beer, resulting in increased sales of both. The model adopted by Wal-Mart model amalgamated the enterprise resource planning ERP and with a strong communication medium to create a hybrid system that could allow it effectively understand the trends being adopted by the consumer. From the above case study, Wal-Mart was able to quickly reflect on the consumer demand, linking it to production and following up with the development of a customized product according to customer needs.
While the general perception may be that the organizations are focused on price, the actual benefit of employing IT systems in collaboration with CRM systems is to systematically understand the customer, and market according to the developing trend, growing the consumer-base steadily. The implementation of CRM helps an organization to compete both in service and quality. According to Freeland Non-achievements of CRM CRM applications can be used to enhance productivity, improve decision- making, and streamline call centre operations Iyer and Bejou, However, it is illogical for any organization to think that it can achieve the completion of all tasks using this system.
CRM relies on the sales staff to perform tasks like following up with clients and closing sales, while it remains a component of the market structure. The success or failure of the transaction depends on the skills of the staff. Also, since CRM applications are based on historical data, they cannot predict the future. Rather, they offer projections based on the collected data to highlight areas that could become possible changes in trajectory.
Lastly, CRM systems are not complete solutions to every any crisis that an organization may face. CRM is not a fool-proof method of establishing business sustainability if innovation and change is not implemented.
Analysis and Conclusions The purpose of Customer Relationship Management CRM is to give organizations the ability to manage their customers in an efficient and effective manner Wikipedia, This is achieved through the introduction of systems and procedures that are reliable, especially when it comes to any form of interaction with customers.
The hi-tech world that we live in requires organizations to modify their business processes along with installing software that will make the CRM system more effective. However, assuming that a CRM system on its own will be the key to success is wrong.
Importance of building customer relationship in retail industry
Organizations need to understand that technology is merely the starting point, with the importance lying in embedding customer focus into the culture and procedures of the company, especially in order to gain competitive advantage in the industry and market.
From the initial point of creating viable relationships with customers, to the retention and growth activities, CRM plays a dynamic role for any business. It is ever more important in time of downturn, as it offers avenues for a business to utilise to in order to gain further attention from the consumer- base, while relying on the loyalty of the established customers to see it through. Technology and Process The success of CRM is not solely on technology, but reliant on the integration of various processes.
While technology should be strategic and cost-effective, it should provide the flexibility and growth options for long- term opportunities of the business. An important factor that must always be considered for any form of network linkup is security, as that is adamant in respect to protecting the core functionality and the resources of CRM.