Importance of CRM for customer satisfaction

Customer Relationship Management (CRM) is a concept that was introduced in the field of marketing during the mid-1980s. The term ‘Customer Relationship Management’ was introduced by Berry in 1983. The primary reason behind the emergence of CRM was the losing relevance of other marketing strategies. All the marketers were somehow offering the same marketing mix and copying each other’s strategies. Thus, in order to gain sustainable competitive advantage, the marketers needed something different and then came up with the idea of developing relationships with the customers. The researchers also concluded that retaining the firm’s existing customers is more profitable rather than attracting new ones. This led to the introduction of ‘relationship marketing’ which later resulted in a more comprehensive system termed as ‘customer relationship management’.

Customer relationship management (CRM)

CRM is a comprehensive system which integrates technology to develop long-term mutually beneficial relationships with the customers. The definition of CRM proposed by Goldenberg seems to be feasible in today’s scenario. He provides, “CRM integrates people, process, and technology to maximize relationships with all customers. CRM is a comprehensive approach that provides seamless coordination between all customer-facing functions. CRM increasingly leverages the Internet.” CRM assists the business organization in identifying, selecting, acquiring, developing and retaining current and potential customers that are profitable to the organization. The basic objective of all CRM activities is to enhance customer satisfaction so as to secure customer loyalty and improve customer retention.

Role of CRM in driving customer satisfaction

CRM plays an important role in driving customer satisfaction. Satisfied customers are profitable to a firm not only because they are likely to make repeat purchases but also because they promote the firm through words of mouth. Thus, CRM improves the firm’s market share by bringing in more customers. However, proper implementation of CRM is a must for customer satisfaction. CRM prescribes that in order to satisfy the customers, first of all it is important to understand the customers. Customers should be very well understood for their tastes, attitudes, preferences and decision-making factors. This helps the firms in identifying their target customers. No firm can ever cater to all the customers satisfactorily so identification of target market is a pre-requisite.

Next, the marketing mix should be aligned to the target market’s demands to maximize their satisfaction. CRM provides for effective company-customer communication so that the firm’s marketing mix can be tailored to suit the target market. This also helps the firm to trace customers’ changing preferences and anticipate future demand so as to design future offerings according to it.  However, no matter how superior marketing mix a firm offers, there is always a scope for customer grievances. Therefore CRM also requires that if there are any customers’ complaints and grievances, these should be handled properly. This helps in securing the customers’ trust in the firm and also develops a bond between the firm and customers. CRM is a continuous process and requires regular efforts. The marketplace is highly competitive today and customer satisfaction is the only key to survive. The customers, therefore, should be treated as assets and must be valued forever.

References

  • Goldenberg, B. (2003). CRM Automation. USA: Pearson Education, Inc.
  • Longenecker, Donlevy, Calvert, Moore, Petty & Palich. 4th Canadian Edition. (2010). Small Business Management: Launching and Growing New Ventures. Nelson Education Ltd.
  • Pourasghar, D. (2007). CRM in the Convergence of Telephony, TV and Broadband Internet Access (Triple Play): Analysis and Evaluation of the Impact of Triple Play on Customer Relationships. Germany: Auflage.
  • Sahay, B., Stough, R., Sohal, A. & Goyal, S. (n.d.). Green Business. Allied Publishers Pvt. Ltd.

Ankita Agarwal

Analyst at Project Guru
Ankita is working with the editorial board of Project Guru as a Research Analyst and Writer. With Masters in Commerce and Business Studies, Ankita learned much of what she knows about management through experience. She has previously worked in various financial institutions like Birla Global, HDFC Ltd. and Citi Financial. She is self-motivated and writes for the Knowledge Tank section of Project Guru. She has authored more than 80 articles so far in Human Resources Management, Strategic Management, Finance and Marketing. She likes to pen her thoughts about the latest issues gripping these areas across the world.

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