Importance of CRM during recession

In today’s market scenario, it won’t be wrong to say that ‘customers are the king.’ Customers control the markets today and therefore the companies are focusing on enhancing customer satisfaction by every possible means. The complete marketing mix is customized according to the target customers. Instead of focusing on expanding the size of the target market, companies are investing resources in retaining the target market by developing long-lasting mutually beneficial relationships. Customer Relationship Management (CRM) had never been so popular as it is today. CRM is often misconceived as a business function but it is rather a corporate philosophy or strategy to keep customers at the top while making any business decision. CRM as a corporate strategy creates a win-win situation for both the customers as well as the business. Enhancement in customer satisfaction not only results in customer retention but also contributes to creating new customers through word-of-mouth publicity. The popularity of CRM for successful business results has however blinded many contemporary companies which do not find any need to conducting SWOT analysis before investing in CRM.

Should firms withdraw CRM during the recession?

Though CRM is today adopted by firms in almost every industry. What these firms need to learn is that mere adoption of CRM doesn’t guarantee success. CRM involves heavy investments in terms of time as well as money. As such, there is a lot of homework required from the companies before adopting any such strategy. CRM may or may not suit the business model and resources of the firm. Moreover, the companies also need to understand that CRM strategy must be aligned with the current economic situation of the country; whether boom or recession. A recession is times when all the economic activities of a country record a slowdown. A common mistake that companies often do is to putting CRM on the back foot during times of recession. The reason for doing this is simply cutting down costs. Though the companies have well realized the value of CRM for business success. But most of the companies are still not aware of the importance of CRM during the recession.

Why CRM is important during a recession?

During a recession, organizations focus shifts to cutting down costs rather than customer satisfaction. But in the efforts of cutting costs, the firms somehow forget that recession affects the buyers equally. There are reductions in their disposable incomes negatively impacting their spending powers. The firms need to notice that the consumers’ buying behaviour also changes during the recession. The consumers restrict impulsive buying and look for maximum value out of the prices they pay. Brand loyalty often weakens during the recession as the customers easily switch over the brands to earn maximum benefits. The recession is therefore perhaps the best time companies can differentiate themselves from competitors with the help of CRM. It will not only improve customer retention but also act as a strategic tool to win over new customers during the recession and that too without much investment in promotion. Organizations today operate in a hyper-competitive market scenario. It is therefore important for contemporary organizations to consider these arguments for CRM during the recession.

References:

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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