Customer Relationship Management Strategy

1)Introduction

Customer Relationship Management (CRM) has become a main focus for businesses with today’s markets becoming more saturated and competitive.

‘Customer Relationship Management is the ultimate challenge for marketing experts in any business. A successful company will use customer information wisely to build relationships with their customers, on the level that together they will work together towards a long-term relationship.’ (Xu et al. 2002)

High customer Intimacy can be produced from these processes and strategy. ‘Customer intimacy is an essential factor in the Customer Relationship Management value chain’ (Buttle, 2004).

This marketing strategy consists of a business using ways to get close to clients with benefits for a business including improved highly tailored problem solving capabilities and greater adaptation of products to customer needs, as well as higher customer loyalty levels. This customer intimacy has a major impact on the success on a company and we can see this in modern organisations.

We see that customer satisfaction alone is not enough,’Oglivy Loyalty Centre found that, although 85% of customers reported being satisfied, only 40% repurchased’ (McKenzie,1995) and therefore customer must use CRM to help improve their customer intimacy.

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However, to what extent does the strategy and processes involved with CRM help achieve this customer intimacy and in what was are these processes seen as beneficial for both the customer and the company. The focus of this paper is to look at the ways in which organisation use various forms of CRM strategy and processes in order create better, and lasting relationships with their customers.

2)Membership Cards

One way in which many companies, especially retail, aim to increase their customer intimacy is through membership card schemes. These can come in many different forms from and offer a variety of advantages for the customer to use. The main feature of all of these themes is that the customer is rewarded in some way, and in effect, keeps the customer happy and encourages repeat trade. However many card schemes go a step further and are used for the advantage of both the customer and the company.

‘Around 80% of UK households participate in at least one customer loyalty card scheme’ (Stone et al. 2008) and they come in different forms such as the Tesco’ Clubcard, Boots’ Advantage Card and Sainsburys’ Nectar Card. The common feature these cards have is that not only do they provide offers for the customer, but they allow companies to collect valuable data which, in turn improves customer intimacy between the business and the customer. ‘Using customer data and targeting those customers helped make the retailer’s transition much more efficient’ (Shaw, 2012).

2.1)Membership Card - Achieving Customer Intimacy

This data is extremely valuable to a company. They spend millions of pounds each year conducting market research to try and find out their customers’ requirements, expectations and preferences. With the use of this card, the technology builds up this information and stores it all to databases. This provides a company with useful information which will allow them to target their customers in such a way that they can build up an everlasting relationship. ‘Customer Relationship Management is grounded on high quality customer-related data and enabled by information technology, (Buttle, 2009). With this card, a business, such as the market leaders of Tescos and Boots can see everything they wish to know about their buyer. This can vary from the information upon registering their card such as age, geographical location, contact details. Along with this, the card will collect data such as what the customer buys, how much they spend and how often.

A company can see trends in a particular region, a need for a particular age group and they can segment their products to a more specialised market. ‘Companies get a clear view as to how their business affects individual customers; associated segmentation and other benefits’ (Stone et al, 2008). In addition, to further improve customer intimacy, a company can target a customer and send offers for the products they buy most through email or by post all of which strengthens this bond between customer and company. Here we see a table which shows us the ladder of customer loyalty. With an increase in customer intimacy, a business can take prospecting purchaser and convey them into a loyal customer (Christopher at al, 1998).

2.2)The Cooperative Membership Card

The company to demonstrate is The Co-operative Food. Retail chains are at the fore-front for advances in technology and are competing for ways in which to understand their customers and use the strategies to improve customer intimacy. The purchasing behavior in food retail is the most repetitive of all (Manas, 2011), so to get this customer intimacy correct has never been more important. The Co-operative Food (Co-op) uses their loyalty strategy by having membership scheme available to all colleagues and customers. This card acts as most retail cards do in that they collect a customer’s information which is then fed to the company’s data base. There is a number of ways in which this card creates an improvement in customer intimacy.

First of all, unlike all of the other schemes available, twice a year the Co-op gives a share of its profits through the post to all of the members of the scheme. ‘You can enjoy your share of the profits along with exclusive member discounts and offers’ (www.co-operative.coop/membership). Along with this, each customer is sent a seasonal brochure from the company. Inside, it gives a customer details of how the company is operating, information of how the company is helping the community, recipes for things to make with the coop products along with vouchers to spend in store. Another scheme used by the coop is membership coupons which are printed at the till terminal which allow money off the next spend. These strategies allow a mutual benefit; the company is updated with a customer’s information, along with the customer receiving healthy benefits from the company encouraging customer intimacy.

3)Customer Interaction

Another strategy that many organisations use to create a high level of customer intimacy is through customer interaction. Many companies use schemes which allow employers to either speak face to face with a customer or give them a platform to have their voice heard. ‘By giving your customers a platform for reaching prospects, your marketing efforts become more objective and inclusive’ (Rast, 2012). This customer interaction can be seen in many different forms, varying form feedback surveys, forums or mystery shopper visits. This can be seen in many different organisations which are customer focused. Examples of these include online survey/feedback forms which can be found for most organisations, customer