The Term Customer within the Context Of a Customer Life-cycle - Essay Example

Is the term ‘Customer’ within the context of Customer Life-cycle(s) a true meaning? [Name] [Student ID] [Date] [2652 words] Abstract Relationships have increased in their importance in the marketing and business field over the years. This can be mainly attributed to the technological advancements and also to the changing nature of competitors as more competitors are involved due to globalisation. Companies are more and more concerned with the management of customer relationships.CRM clearly recognizes the benefits of both the current and potential customers and therefore always seek to increase their profits, revenues and the value of the shareholder by using targeted marketing activities that are directed towards maintaining, developing and enhancing successful relationship between the customers and the company. Companies also need to constantly develop the customers through the customer lifecycle to enhance their existence in future and to enhance their competitive position. Table of Contents Table of Contents 3 Literature review 5 What is a Customer within the context of Customer Relationship Management? 8 Customers and how they are developed through Customer Life-cycles 10 Conclusion 12 Introduction Relationships have increased in their importance in the marketing and business field over the years. This can be mainly attributed to the technological advancements and also to the changing nature of competitors as more competitors are involved due to globalisation. Companies are more and more concerned with the management of customer relationships.CRM clearly recognizes the benefits of both the current and potential customers and therefore always seek to increase their profits, revenues and the value of the shareholder by using targeted marketing activities that are directed towards maintaining, developing and enhancing successful relationship between the customers and the company (Morgan, 2000). In regard to customer relationship management (CRM), the customer life cycle is termed as the progression of steps which a customer encounters when considering, using, purchasing as well as maintaining their loyalty to certain products and services. This aim and objectives of this essay is to; carry out a literature review on CRM, discuss what is a Customer within the context of CRM and How customers are developed through the customer lifecycles. Literature review Relationship management and customer relationship management have attracted a lot of attention in practise and also in literature, with a number of researches being carried out to discuss the benefits and uses of CRM in the organisation (Xu & Walton, 2005). On the other hand, even though the terms CRM” and relationship management are comparatively new, the observable fact is not (Gummesson, 2002). Marketers in all ages have been thoughtful with defensive strategies that are aimed at augmenting customer retention levels, in that way increasing the revenues and profitability of the company (Fornell and Wernerfelt, 1987). For instance, Grant and Schlesinger 1995, wrote in the Harvard Business Review and made undisputable arguments that the gap flanked by organization’s current and full-potential productivity is massive, and suggest that a great number of managers ask themselves: questions such as how long on an average basis do a customer’s stay in the company? And what would happen if the customer becomes a life time customer? At the same time numerous literature have also focused on the service profit chain thus linking the aspect of employee satisfaction, loyalty and customer satisfaction to the high level of profitability that is experienced in some companies (Liljander, 2000). The main idea behind the concept of CRM is the building of lasting relationship that affects the customer acquisition, their retention, loyalty as well as profitability (Ngai, 2005) and this mainly results on a one on one relationship with the customers. At times CRM may also involve the termination of such kind of relationships if the customers are unprofitable to an organisation (Du Plessis, Jooste & Strydom, 2001) Technology has also played an essential role in CRM since through its use there is the development of relationship and loyalty among the already existing customer. When CRM is used effectively in the organisation it creates benefits since it plays an essential role in relationship building while at the same time contributing and enhancing the profitability of an organisation (Gronroos, 2004). There also exists a technologically related perspective of CRM and based on it CRM is termed as the process of analysing and storing data in large amounts so as to offer insight in regard to the behaviours of the customers (Law, Lau & Long 2003). The success of CRM can be assessed based on the specific goals that need to be attained such as the retaining of the already existing customers, improvement of the lifetime value of customers as well as the improvement of customer satisfaction, their share and loyalty (Luck & Lancaster, 2003). The satisfaction of the customers is termed as the attitude that a customer have towards the products and services of an organisation and it is greatly influenced by specific service or product features as well as the perception of the customer of the quality of the service. Satisfaction is therefore seen as an essential component in relation to customer loyalty and commitment and this leads to the profitability of the organisation. So as to maintain its success and viability in a market, companies need to be better than their competitors and thus they need to focus on them and also create value for them. A great number of companies are making use of CRM to identify, satisfy, attract and maintain close and lasting bonds with their customers. In relation to these concepts CRM makes use of any of the three types of CRM namely, operational or transactional, analytical and collaborative or interactive (CRM Software, 2015). Analytical CRMs entails the successful applications which are used to analyse customer data for managing the performance of the business. The data gathered is analysed so as to classify the customers and identify instances of up-selling and cross-selling (Law, Lau & Wong, 2003). Through analytical CRM companies are able to identify those customers and that wish to cut their ties and at the same time it classifies customers and enhances sales through the customization of their selling approaches. Through the use of analytical CRM there is the identification of weakness and these are subsequently turned into opportunities and strengths. The application of operational CRM considers the personnel role and their workplaces. Operational CRM offers the customers with a high level of gratification since the contacts is improved and it is also see as an approach that is cost effective due to the consolidation of processes and procedures. Operational CRM deliver personalised, customised and efficient marketing, service and sales through the use of a multi-channel collaboration. The last one is collaborative interaction and they facilitate interactions between business and customers. These kinds of interactions are mainly used to institute the lifetime value of customers by the transaction and this is done by the creation of partnering relationship. This type of CRM facilitates the interaction with the customers through the use of all channels and thus offers support to the coordination of channels and employee teams (Liljander, 2000). An important aspect of this type of CRM is that customers have the ability to seek for any kind of assistance through the use of online platforms, virtual sales team and also from sales representatives through phones (Krasnikov, Jayachandran & Kumar, 2009).. Additionally, the CRM systems that are in place are used in compiling data and information derived from the different channels of contact between the company and customer such as from websites, live chat, marketing materials, direct mails as well as from social media (Milliken, 2002). The diagram below shows the various components of the various types of CRM Figure 1: Components in the different types of CRM Adopted from; https://www.google.com/search?q=stages+of+customer+lifecycle&biw=1366&bih=645&tbm=isch&tbo=u&source=univ&sa=X&ved=0ahUKEwjf173nxM_JAhVr6oMKHecwB5oQsAQIGw#tbm=isch&q=Components+in+the+different+types+of+CRM&imgrc=fBtiNSv0tEOAmM%3A, on 9th December, 2015. What is a Customer within the context of Customer Relationship Management? Within the context of customer relationship management, a customer a major building block and an essential aspect. This is mainly based on the fact that all that happens with the customer relationship management revolves around the customer. This is clearly depicted from the start by the description of the term CRM which is termed as an approach used in managing the interactions between a company with the already existing and future groups of customers. Through the approach data about a customer is analysed with the aim of improving the relationships with the customers and more precisely in relation to retaining them so as to drive the growth of their sales figures (Stein & Smith, 2009). The term customer is of great importance since the relationship oriented companies are more likely to make use of retention oriented policy and consider customer relationship as being at the centre of the strategic analysis to ensure that already existing customers do not departure from the company and also to tap those with a high potential. Thus in CRM there is an urgent need of establishment of privileged and lasting relationships aimed at enhancing the customer capital. The term customer is of great importance since they are essential for the success or failure of a business. Companies all over the globe have adopted CRM so as to exploit and manage the knowledge of their customers. Based on the concept of customers being an essential component of CRM it should be noted that the CRM system does not stop when the deal between the customer and the company has been made or closed. Companies therefore need to engage in continuous customer view with the CRM service module for the technical and support teams as well as in regard to customer service. So as to treat customers as the important components they are in CRM companies need to empower their employees with tools that simplify case management, streamline the escalations, improve the sharing of knowledge and ensure that there is an effective and efficient management of account. The results that will be obtained from the above mentioned processes and tools will be essential in that they will assist the organisation in containing service costs and at the same time not sacrificing on their service and product quality. In reality, the customers will be more delighted with the company service representative since they are well armed with the customer history as well as knowledge that are necessary on resolving issues effectively and efficiently (Xu & Walton, 2005). With the advancement in technology the customer seems to be essential to CRM and all kind of business. Based on these, organisations therefore need to ensure that they manage customer relationships and retaining the customers. When a product or service fails the customers are more likely to be aggrieved and they should react. The manner in which the customers are treated after the complaint is also crucial since it determines if the customer will stay or shift (Krasnikov, Jayachandran, & Kumar, 2009). By handling the situation well customers may opt to use the service or product again and if handled wrongly they may cease from suing the products. In some instances, the same customers may work against the company products and services by urging others to refrain from using them and through these the company may also loss other customers and this will have a huge impact on their sales figures and thus their profits will also be affected in a great way (Smith & Higgins, 2000). Customers and how they are developed through Customer Life-cycles Customer life cycle management relates to the aspect of cultivating, creating and persistently improving the company’s relationship with the customers. It is very crucial for organisations to take up customer life cycle management in the diverse marketplace since the competition seems to be fierce as never before. Customer are crucial to every business since with lack of customers a business is more likely to fail and thus they should be treated well at all times to ensure that they are happy and that there needs are fulfilled adequately (Morgan, 2000). Customers are developed through the customer life cycle by following the stages of the customer life cycle management. The stages are as shown in the diagram below Figure 2: stages of customer lifecycle Adopted from; https://www.google.com/search?q=stages+of+customer+lifecycle&biw=1366&bih=645&tbm=isch&tbo=u&source=univ&sa=X&ved=0ahUKEwjf173nxM_JAhVr6oMKHecwB5oQsAQIGw#imgrc=kGGhxILNRUT3LM%3A, on 9th December, 2015. One major way of developing the customers is through reach. Through this step organisations need to ensure that all their content is properly marketed in adequate place easing the access to information by people and businesses (Grant and Leonard, 1995). Through this people will be aware of the existence of the company and their products and if they have the opportunity they will be more than willing to try them out. The second step relates to acquisition. This entails a clear and concise understanding of all the potential customers needs and wants to offer them with services and products to meet their various needs and wants most appropriately. The other step relates to development where after the first purchase, companies need to keep in touch and constantly build on the relationships with the customers to ensure that they are satisfied with the product or service. The other step of developing the customer in the customer life cycle relates to retaining the customers (Stein & Smith, 2009). It is a common knowledge that as long as a company is satisfying and meeting the needs of the customer they are likely to have repeat customers and if they do not satisfy the customer needs they are likely to lose them to their competitors in the market. This shows that a major way of developing the customers is by caring for them always and continuing to cultivate a lasting relationship. This can be better addressed by making use of the feedback from the customers and they will be happy that as a company you are concerned about their opinions and make use of their feedback to make any adjustments and improve the company services and products. Customers will be developed since they will feel that they are part of the process and they will also know that the company values their opinions and are ready to make any necessary changes to their services and products. The last way in which customer is developed is when they act as advocates for the company. In instances when the company customers are fully satisfied with the products and services they are more likely to become advocates for the products and services from the company. This is essential since it spreads the awareness of the products and services in their social circles and also among their family members. Through this a company is able to reach other potential customers due to the praise and advocacy done by the already existing customers (Krasnikov, Jayachandran, & Kumar, 2009). Conclusion Based on the above discussion, it is clearly evident that relationships have increased in their importance in the marketing and business field over the years. This is mainly attributed to the technological advancements and also to the changing nature of competitors as more competitors are involved due to globalisation. Companies are therefore becoming more and more concerned with the management of customer relationships. Relationship management and customer relationship management have attracted a lot of attention in practise and also in literature, with a number of researches being carried out to discuss the benefits and uses of CRM in organisations. Even though the terms CRM” and relationship management are comparatively new, the observable fact is not. Marketers in all ages have been thoughtful with defensive strategies that are aimed at augmenting customer retention levels, in that way increasing the revenues and profitability of the company. The essay also depicts that within the context of customer relationship management a customer a major building block and essential aspect. This is mainly based on the fact that all that happens with the customer relationship management revolves around the customer. This is clearly depicted from the start by the description of the term CRM which is termed as an approach used in managing the interactions between a company with the already existing and future groups of customers. The discursion also shows how customers are developed through the use of the customer lifecycle. Customer life cycle management relates to the aspect of cultivating, creating and persistently improving the company’s relationship with the customers. It is very crucial for organisations to take up customer life cycle management in the diverse marketplace since the competition seems to be fierce as never before. Customer are crucial to every business since with lack of customers a business is more likely to fail and thus they should be treated well at all times to ensure that they are happy and that there needs are fulfilled adequately. Customers are developed through the customer life cycle by following the stages of the customer life cycle management which includes awareness, interest, purchase, retention and advocacy. Therefore, firms irrespective of their industries need to embrace the concept of CRM and constantly develop customers. Through this they will remain relevant in the market and they are likely to retain more customers and attract new ones which will lead to greater sales and profits for their companies. References Cornell, C. & Birger, W. 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