How Customer Relationship Management Affects an Organization

How Customer Relationship Management Affects an Organization Abstract It is extremely important for any organization to treat their consumers well and satisfactorily since it is them who decide whether the business will succeed or fail (Windham, 2001, p.14). Consumers are complicated individuals and are all led by a different set of motives that later define a pattern of their consumer behavior.Advertising We will write a custom research paper sample on How Customer Relationship Management Affects an Organization specifically for you for only $16.05 $11/page Learn More Commercial Organizations are usually driven by the need to succeed, survive and gain market share in the market and as a result develop appropriate strategies that can assist them to gain dominance within the market. Customer relationship management is a strategy is used by commercial enterprises to manage the interactions between a corporate entity and its customers (Solomon Askegaard 2002, p.56-58). Market evidence suggests that the most successful o rganizations in the world usually apply more effort towards ensuring that customers are satisfied, by continuously collecting and storing relevant data that can be later analyzed to ensure that all relevant consumer behavior patterns can be identified and used to the benefit of both the organization and customers ( Payne Peck 2003, p.90-93). It is therefore accurate to imply that the benefits that arise out of CRM activities outweigh and burdens and this is why organizations like Apple, IBM, HP, Google and Nike can boast of having very successful business models as compared to other businesses who find themselves performing poorer. It hence becomes the duty of business executives that they put in place a mechanism that can be used to manage the interaction of the organization and its customers (Baker 2003, p.165-167). Purpose Customer relationship management is an integral part of today’s business. The nature of relationships and company’s interactions are vital to bo th the long-term and short-term survival (Paul, 2006, p.154-157).Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Today’s business environment dictates that it is mandatory that organizations take care of their consumers or else they will go looking for business somewhere where they do feel appreciated. The customer is the pivot and center of all activities of a marketing company and thus has a lot of bargaining power because it is their behavior that most of the time defines how successful an organization will become ( Bennet, 2006, p.67-68). Marketers need to acknowledge the importance of keeping close relationships using strategic techniques and approaches to ensure that commercial organization regularly interact and respond to the queries of their customers. The purpose of this paper is to shed light to those individuals who operate commercial organizations/bus iness enterprises and how Customer Relationship Management affects on the organization. The question is, does it make a difference if an organization dedicates the necessary resources and even sets up departments that are dedicated towards maintaining the relationship of the organization and its clientele? Why do some organizations dedicate millions of dollars which could otherwise been paid as dividends back to the shareholders just to ensure that the organization sets up a proper interface which will make sure that the needs, desires, wants, expectations and queries of consumers are well catered for. Methodology Gathering data is a very important part of any research; this research being a scientific research that has a well defined problem, it is vital that the data gathered is highly accurate and lacks bias. The research will thus be conducted by using secondary data from well known trusted publishers and websites.Advertising We will write a custom research paper sample on How Customer Relationship Management Affects an Organization specifically for you for only $16.05 $11/page Learn More The research above is an exploratory type of research whereby the researcher conducts research with the aim of shedding light on a problem/issue which has not yet been well defined. When a researcher embarks on this type of research, the researcher can therefore make accurate and more justified conclusions (Hoffman Novak, 2000, p. 77-79). This type of research is well known to use secondary sources of data and qualitative approaches to describe data. The advantage of using qualitative analysis techniques is that the data can give an indication as to why, how and when certain phenomenon occurs. Findings The world’s top organizations, especially companies listed on the fortune 500, have revealed that the secret to their success is in treating their entire consumers with the best experience. Top managers, boards and business executives have realized that the worlds most respected companies like Google, Nike, Apple Inc., Toyota, Dell, HP, Yahoo and Microsoft have put in place the necessary mechanisms to maintain relationships between their organization and consumers ( Parker, 2000, p.199-201). The Role of CRM cannot be ignored by any business either a small business or a big business, this is because the need to manage relationships between the organization and the consumers is very important. According to the Gartner group (2009), the practice of CRM is rapidly growing throughout the global business community since business managers have discovered that the key to business success is by understanding the behavior patterns of existing and prospective customers and using it to the advantage of the organization. Many organizations have realized that companies which are recognized as industry leaders are doing something different that keeps bringing their consumers back (MacHulbert Piercy, 2003, 212-215).Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Consequently, other companies have decided to study and replicate strategies of market leaders as far as CRM is concerned with the aim of understanding their customers better in order to maximize on business opportunities. Many upcoming companies have thought that it will be easy for them to snatch consumers from market leaders but their efforts have ended up being futile because established companies have discovered that for them to maintain their business models and continue growing even when they are at a stagnant place in the product life cycle, it is important for the company to take good care of its existing customers and encourage repeated purchase. Companies like PwC (PricewaterhouseCoopers), KPMG and Deloite are famous companies which are known to consult for the largest world corporations, their services have assisted many companies develop the best CRM departments. A good example is IBM’s superior Customer relationship management process is what it is because the c ompanies worked together with PwC to ensure that their CRM needs were properly addressed when the department was being set up. Companies which have embraced CRM practices are more likely to understand their consumers. Many organizations like Apple have acquired the appropriate software from vendors that allows them to gather data from their consumers and store them for analysis (Trott 2008, p.160-162). As a result the company has created a large data mine which the company can withdraw useful data that assist the company in improving the customer experience. Consumer behavior theorists have always insisted that it is important for marketers to understand the tastes, preferences, perception and attitudes of your target market. This is thus why a company like Apple Inc. is able to narrow down on numerous volumes of data and make useful information that gives them a more precise picture of what their consumers ideally want. The same cannot be said for companies who pay little attention to customers relationship management practices simply because decision making in this companies is more of gambling/trial and error making it quite hard for the company to narrow down consumer behavior variables and parameters with much more accuracy ( Hoffman Novak 2000 p. 179-183). Once a company fails to accurately define and understand the needs and desires of consumers it becomes more difficult to operate at a competitive advantage. A commercial company’s desire is to enjoy a large market share. An organization with large market share is more likely to end up as industry leader. Customer relationship management helps companies be able to retain and also attract new customers. The process of attracting new customers is not cheap because it involves spending a lot of money in promotion activities which basically reducing the profit margins of a company. Promotion activities such as advertisements are very expensive especially when they run on popular media such as the TV and radio, business executives thus try to minimize the number of consumer defection and increase the number of consumer retentions in order have a large market share (MacHulbert Piercy 2003, p. 54). Apple inc. for example has used CRM practices to retain a high number of consumers and attract new ones by offering complete solutions for their customers, opening dedicated stores that sell only apple products, ensuring that education sales activities assist customers to gain technical and operation knowledge on the products that they sell, the company also understands the need to be technologically alert and thus it is aggressive as far as innovation is concerned. The availability of technical expertise to repair or answer any technical questions from consumers is also part of Apples superior CRM strategy that has enabled the company over the years to win customers who were earlier loyal to other brands ( Hoffman Novak, 2000, p.99-101). In contrast there is a clear difference when smaller companies are put to task on their CRM strategy this is why Apple has been able too gain massive market share by appealing to many consumers to purchase the iPhone as soon as it was developed. Apple also went a step further to surpass expectation of consumers by manufacturing far much superior models of the iPhone to succeed each preceding model and this is the reason that consumers line up for hours sometimes even overnight to acquire new models of the iPhone as soon as they are launched thus this is therefore why other companies which are known to have good smartphones such as Asus and HTC and Toshiba have not been able to match up with Apple’s iPhone. CRM activities usually enable a company achieve a high level of quality and efficiency during it’s operation. Companies which have understood the needs and desires together with expectations of their target market are able to plan in advance the service delivery process and therefore surpass the expectations of their consumers. Consumers always want the best and therefore usually expect to get value that is either directly related to the value of their money or even expect that the quality surpasses the price which they paid for the good (Kitchen, 2003, p.23). If a company markets its products as the best then the consumer approaches the company knowing in mind that the service provider or the product provider will deliver. Consumer relation management software act as a platform under which the company can obtain relevant information which will assist the company to accurately predict the expectation of their customers and as a result put in place mechanisms that will enable their staff cater to the expectations of the consumers with more certainty. (Gartner 2008 123) Without a good CRM program or department, it then becomes more difficult for business executives and especially customer care representatives to maintain a consistent level of quality and efficiency while serving consumers ( Gummesson, 2002, p. 201-203). A company like HP has put in place a good CRM strategy that enables the company accurately offer technical support that matches the specifications of each consumer. The company uses a heterogeneous approach while dealing with their consumers and therefore there are no assumptions that are made especially when dealing with I.T needs of their cherished customers. The advantage of using such an approach has also enabled cultivate some loyalty especially among their consumers due to high levels of satisfaction that arises out of the high quality of service delivery that the company has put in place as a result of a superior CRM strategy (Kitchen, 2003, p.133-142). A good Customer Relationship Management strategy is highly advantageous to an organization because it is most likely to increase the levels of profitability and reduce unnecessary costs. A healthy customer base is necessary for excellent commercial performance and CRM usually plays a big role in b oth financial and non financial performance. Contrary to common belief whereby businessmen believe that by spending more on satisfying customers a business looses money, CRM activities can be costly on the short run but the cumulative advantage and benefits experienced in the long run are quite advantageous according to Gartner, Inc (2008) businesses that operate using a vigorous CRM strategy are more likely to save on costs and increase their profits over the years. Companies which do not prioritize their CRM activities are more likely to spend more money to please and attract customers using other avenues that may end up being futile. (Jones 2010 124) Organizations with CRM programs are most likely to have good reputation and public image. Happy consumers talk and therefore spread positive information about the organization and this is therefore good for business. When consumers spread positive information about an organization to their friends, then their friends are more likely to trust them and elicit positive behavior towards the company by purchasing products from the company. Especially with the emergence of viral marketing and numerous social sites, commercial enterprises are more likely to take their CRM activities to another whole new level. Nike is the leading athletic shoe manufacturing company, the company decided to open its own social site Joga.com so that the process of gathering information and interacting with consumers can become easier (Maselli, 2001). The website has assisted the largest athletic shoe manufacturer to continue manufacturing innovative shoe brands for the sporting elite community. The site has contributed a lot to Nike’s overall CRM strategy and activities and continued to improve the image of Nike as a company which cares for its consumers. Conversely other companies within the Athletic shoe industry do not exhibit the same and therefore this has affected the way their performance and image as brands in that market. (Hyatt 2010 63) Research Limitation Many commercial organizations are quite secretive and protect data that is associated with CRM activities and release more generalized information making it quite hard to understand the nature of systems and specified activities that commercial enterprises in the process of managing interaction between the organization and its consumers. This move has been put in place in order to protect the various strategies that companies put in place so that competitors cannot replicate them and use them. The timeframe of carrying out the research was quite short considering that CRM is a very large topic that can be investigated even for months. This fact therefore reduced the quality of research because carrying out particular individualized case studies can take up to months. Nevertheless the researcher used the time allocated to him/her to ensure that all the relevant secondary data was used to bring about relevant conclusive findings on this topic. (Her sey, Blanchard Johnson, 2007 45) The availability of resources such as money also was one of the limitations of this research. A good research can be successfully carried out by a researcher in order to get access to the necessary tools and information that is required to the process of carrying out research. With limited funds the researcher was unable to access premium websites that charge researchers in order to access them. (Hogan Kaiser, 2005 78) Practical implications The findings of this research will therefore be very important to the entire global business community, this includes both multinational companies and local companies or even small scale businesses (Newell, 2003, p.43; Molineux, 2001, p.12-14). Since it is clear that CRM practices clearly affect the profitability, costs, customer loyalty, switching rates, delivery of quality and efficiency, it thus becomes necessary that business executives and entrepreneurs formulate, implement and continuously evaluate CRM str ategies that will ensure that their organizations are able to accurately identify and narrow down on the needs, wants, desires, motives, tastes and preferences, attitudes and perceptions of the customers who interact with the business (Frazer, 2003, p.87-91). When businessmen succeed in understanding their consumers, they will be more likely to ensure that their products are customized so that they are able to meet the expectations of their customers. Since it is clear that organizational success also largely depend on how good their CRM function is integrated in day to day business, it is important that managers acknowledge the fact that CRM plays a big role in deciding the competitive advantage that an organization has in an industry when it is compared with its competitors (Egan, 2004,p.111-114). With this in mind managers should accept the fact that they are preparing for failure if their organizations decide not to integrate Customer Relationship Management into their business models. (Blyth, 2009 45) Social implications It is the duty of a business to ensure that it has a positive social impact on the various environments that the business operate in (East 1997, p. 19-21). If CRM practices are picked up by every organization within the environment, it will ensure that most consumers within this area will be happy due to the high level of satisfaction that they usually experience as a result of good business. A satisfied consumer is a happy consumer;. The happy customers translate to a happier community and a happier society (O’Malley Tynan, 2001, p.17-23) Originality This research is original and unique in the sense that it has taken a more social and one on one approach by looking at various industry practices of the world’s most respected companies to bring an insight into the importance of CRM in today’s business environment. Conclusion From the study, Customer Relationship Management activities do affect the performance of organ izations either positively and negatively. Organizations which take CRM activities more seriously are able to enjoy better financial and non-financial performance as compared to those organizations which ignore the importance of CRM in their business operations. 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