Effects of Customer Relationship Management on Customer Loyalty
Abstract
The report examines the effects of customer relationship management about the loyalty customer. The report highlights various advantages of the CRM and how they impact on customers of the organizations. Also, this paper analysis the disadvantages of CRM and how they affect both the organization and the clients.
Effects of Customer Relationship Management on Customer Loyalty
“Customer is the king” is a favorite phrase in the marketing industry that insinuates that customer determines if the company will sell its products or not. In that regard, the organization should focus on the customer needs to ensure they improve sales revenue. Consequently, the Corporation should ensure they have better customer relation management (CRM) techniques. Customer management relationship enables the organization to collect, analyze, and interpret information regarding the consumer to improve the organization profit through the use of technology. In that account, the organization will be able to gather sufficient information: what the customer prefers, when they like to buy and where they prefer to buy. When the organization can make a loyal customer, the company will have a significant impact on its sales. This information helps the organization to strategize and to improve its services. The primary elements that this report will address will entail the effects of the CRM on customer loyalty.
The Positive Effects of CRM to Customers
Customization and personalization of customers
The organization can improve the customer’s loyalty through the customization and personalization of customer information. Through the use of CRM software’s the organization can create a platform and email subscription whereby they can contact customers directly through their emails or the chats on their website. For example, KLM brand uses personalization to attract a lot of customers through the use of its popular ifly-50 program that runs every year in its magazine. The company asks its customers to enter their email contact and to subscribe to their newsletter. In that account, the KLM can follow the customers who abandon the online carts and send them personalized information regarding specific image through the email. The KLM can accomplish such a personalized and customized communication to customers because of the CRM software that enables the organization to know what the consumers want, what products or services they are searching from the company website. In summary, through a collection of contact and emails by the corporations enables the business to send a personalized message, which creates a long-lasting customer relationship. One of the reason is that the organization will keep its client update customers frequently on what is new and the business branches through personal emails and chats on their website.
Creation of emotional connections
The CRM enables the organization to create an n emotional connection with its customers. The CRM applications allow customers to express themselves through chats or social media platforms. Through the customer’s expression on the company social platforms, they can analyze the information and give the customers information regarding what they are inquiring. In that account, the customer will feel appreciated, and as a result, he or she will develop a secure attachment with the organization. An example is the coca cola company that changed its tagline from open happiness to taste the feeling. The clients across the globe can resonate with the coca cola heartfelt message because from its website and all the advert the organization depicts people coming together and sharing (De Man, Roijakkers& Graauw, 2014). Through such emotional connectivity, the company can increase its customer loyalty base and as a result, increase its sales. In that account, the organization, through the use of CRM techniques like the coca cola company, can be able to create loyalty to its customers through emotional connectivity.
The customer loyalty program
CRM software helps the organization to identify the product which is experiencing a lot of competition in the market. The CRM software through its database can predict the consumer’s behavior. As a result, the company can craft rewarding programs that ensure the customer’s retention. For example, Designer Shoe Warehouse Company offer a loyalty program that entails reward of $10 travel certificate for every shopping made. Naoui, Irani, and Dwivedi (2014) asserted the 84% tend to stick with the brands that offer loyalty rewards while 64% change their mind from buying other products to buy the commodity with the loyalty program. In that account, CRM plays a critical role in analyzing and interpreting information to identify customer rewards. The customers remain loyal to the company’s products mainly because they want to earn points they can use to purchase items. The customers remain faithful to the enterprise product and may also inform his or her friends to participate in the loyalty program. As a result, the organization will have a more loyal customer; consequently, its profit margin will increase significantly.
Marketing automation
The CRM via its marketing tools enables the organization to automate the repetitive tasks. The CRM tools send many business prospect materials via email or social media to the relevant customers and as a result, increase the sales turnover of enterprise. For example, the apple company uses marketing automation to improve its sales leads and to inform the buyers regarding realizing certain products. In that account, the company has been able to reduce the workforce the organization could have used to reply to all the potential client and the current customer (De Man, Roijakkers& Graauw, 2014, 170). Because of the marketing automation, the companies can respond promptly to its customers hence encouraging them to remain loyal to its customers.
Creating confidence to customers
The organization must change people mind to buy its product and to continue being loyal to the company throughout. The corporations can achieve that through the use of CRM. The organization CRM database to establish why people do not have trust with them and improve on the areas which the customers are not satisfied. A good illustration is the Apple Inc.; its customers trust the apple products regardless of the price they charge people still purchases the products because they have confidence that the merchandise is nor fake and are durable (Apple& Krek 2018, 170). In that case, the enterprises can use CRM tools to enhance the sales revenue of its products.
Creating customer consistency experiences
The organization should ensure that all its process is consistency so that customers can have an easy time in following up the process from the beginning to the end. In that amount, every function or activity on the website should have a consistent process. Also, the company should ensure that all the processes that they carry out they are in a position to track them and provide immediate feedback. The CRM tools have assisted the organization to carry all the procedures and to facilitate the tracking of the messages which the organization has not yet answered. A good illustration is the Dropbox cloud company that deals with online file sharing, all its process are consistency, and they ensure all its activities: emails, messages have their logos (Kotler, 2015). In that account, the customer can identify the company product, and as a result, there can trust the credibility of such a company. Consequently, the organization without consistency is doomed to fail. However, CRM ensures that the organization can remain consistent throughout its business cycle.
Remembering positive memories of the organization
The organization can keep a record of all the information through the use of CRM tools. In that account, the organization can be able to tell its success story to its loyal customers. Zaman Slapnič and Stumberge (2015, 700) concluded that many customers tend to remember the negative thing rather than the positive one. In that case, the organization can utilize the information on its records to inform its customers about the milestone they have gone and how they have been able to achieve specific goals. For example, a company such as Apple Inc. often tells its story to its customer regarding its high-quality products such as iPod, phone, PC, and tablets (Kargaran, Jami & Moeini, 2017). People can recall the progressive and significant information regarding Apple, and as a result, they retain customers.in that account, CRM affects customers positively through storage and retrieval of critical information that assists the organization to remain relevant to its customers.
CRM facilitates the efficiency and quality of service delivery.
The organization can utilize the CRM tools to be able to serve its customers efficiently. The quality of services that the clients offer makes the client recall more about the seller. The more the customer remember the business, the more he or she will remain loyal to the organization. For instance, Amazon is one of the most efficient online company in the world because of its quality services and the efficiency in delivery (Zaman, Slapnic &Tumberger, 2015, 700). A client can purchase the product in Amazon with a click of a button, and get the product instantly. In that account, the CRM can effectively assist the organization to be able to retain its customer by facilitating efficiency and quality services.
Increase in sales turnover
The CRM assists the employee to reduce the workloads .when the work is less the employees can be able to sell products to the consumers. As a result, sales will increase steadily. For example, most of the globally successful company such as Microsoft, they use technology to carry out most of its activities. For an instant, they have 365 cloud services that ensure Microsoft users can send and receive information across the world (Stockmeyer 2015, 88). As a result, one employee of Microsoft can serve as many people as possible because of the advanced technology that the organization applies. In that case, the CRM tools play an essential role in increasing efficiency and quality services to its customers.
Create customer satisfaction
The CRM tools help the organization to serve the customer better and as a result, ensure excellent customer satisfaction. When the business satisfies the customer, he or she will keep coming buying from the same seller, and eventually he or she will remain loyal to the organization. For example, the Apple Inc. company produce a high-quality product that gives customers great satisfaction. For instance, the Apple Inc. iPod and tablets have great features such as music application and educational application that attracts more customers to purchase the product. When the customers are satisfied, they will always remain loyal to that particular brand the way apple company has been able to keep its customers loyal to its brand(Apple& Krek 2018, 170). In summary, through the use of CRM, the organization can give its customers satisfaction through the provision of quality and satisfactory products.
Superb client- seller relationship
The organization can create good customer relationship by utilizing the CRM tools. These CRM tools facilitate the business owner and the client to increase interactions; as a result, the client and the seller will get along superbly. In that account, the relation may increase, and the customer brings many more other as well as remaining loyal to his seller. For example, Walmart retailers can increase their revenue because of the interactions with its customers through social platforms and their website (Osborne 2016, 651). Such engagement ensures that the buyer remains royal since he or she can be able to interact with his or her buyer either virtually or face to face. The CRM therefore, play a significant role to enhance the customer and seller relationship through, social CRM.
The Adverse Effects of CRM to Customers
The high cost of initial capital
The CRM requires a lot of capital to purchase the organizational CRM software that can manage the database for customers and the seller. For example, a small organization that does cannot have financial stability cannot be able to implement the CRM policies. Although the CRM has an advantage in the long run, the small organizations cannot be able to manage the CRM due to its high cost of living. As a result, the small enterprises may not be able to increase its sales all improve its services to retain their customers.
The already engaged clients
The CRM marketing automated tool sometimes send messages to clients who engage with another company. The company may end up sending a lot of emails which the clients tore down. In that account, the organization may spend a lot of money to get a client through such a method. As a result, the company needs to find ways in which they can engage the customers, such as face to face. In that account, the CRM face a lot of threat from already engaged customers.
The tracking
CRM affects the psychological conditions of the employees because the CRM software continually monitors them. Also, some client does not want any individual to watch them. As such you may find that an individual will never subscribe or give his or her information to a specific organization because they fear that the organization or a third party can access their data and track their activities (Kim, Jeong& Kim, 2014, 160). In such a scenario, customer loyalty may dwindle, and hence, the organization may end up getting little revenue.
Resistant to change
The CRM faces challenges, especially when implementing from manual to CRM system. Furthermore, the employee also tends to resist change because they have not familiarized with the system. Also, the resistant to change may emanate from the management who refuses changes because they fear they will lose their jobs. In that account, the implementation process of the CRM system is long and requires a lot of training. During the transition period, the employee may not be able to serve the customers better; hence, this may cause undesirable reputation for the organization leading to a poor relationship of the business and the client. In summary, the resistant to change is inevitable and may cause a bad reputation for the organization, and hence, the customer loyalty to the firm will diminish.
Conclusion
The CRM has both positive and negative implications to both the organization and the clients. The CRM enables the organization to create emotional connections, the firm to be able to do Marketing automation and ensuring firm consistency. Also, the CRM facilitates the efficiency and quality service delivery, Increase of sales turnover, customer satisfaction, and cordial client- seller relationship. However, the CRM has a limitation which hinders its full implementation such as high cost of initial capital required to implement the whole process and the resistant to accept the change especially when the organization is transiting from manual system to CRM system which is advanced and sophisticated. In spite of the challenges, the CRM faces the benefits are more than the demerits, and therefore, the CRM has a long-lasting impact on an organization: the organization can generate profits and retain customers.
Refrences
Apple, M. W., & Krek, J. (2018). Interview with Michael W. Apple. CEPS Journal. 8, 165-204.
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De Man, A.-P., Roijakkers, N., & De Graauw, H. (2014). Managing dynamics through robust alliance governance structures: The case of KLM and Northwest Airlines. European Management Journal. 28, 171-181.
Kargaran, S., Jami Pour, M., & Moeini, H. (2017). Successful customer knowledge management implementation through social media capabilities. Vine Journal of Information and Knowledge Management Systems.
Kim, W., Jeong, O.-R., & Kim, C. (2014). A Holistic View of Big Data. International Journal of Data Warehousing and Mining (IJDWM). 10, 59-69.
Kotler, P., (2015). Customer Value Management. Journal of Creating Value.
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Appendix
The report uses the examples of the following institutions
The KLM Company limited
Walmart retailers
Apple Inc.
Microsoft Company
Design shoe warehouses limited