Loyal customer comes from his/her satisfaction in doing business with the company. However it is also important to consider the relationship to the customer instead of only considering the quality of products or services. In today’s world, the competitors can duplicate the best products or services easily. Therefore, how the company manages its relationship with its customers is important and its result becomes a major competitive advantage now (Newell 2000, p. 1; Kalakota et.al 2001, p.171).
Kotler et.al (1994, p.561) suggested:
Relationship marketing involves creating, maintaining, and enhancing strong relationships with customer and other stakeholders. The goal is to deliver long- term value to customers and the measure of success is long-term customer satisfaction.
Furthermore, they also developed a model to describe the level of relationship that can be formed between the company and its customers that is shown below:
• Basic: just sell.
• Reactive: encourage customer to call for help / support.
• Accountable: the salesperson phones the customer a short time after the sale to check whether the product is meeting the customer’s expectation. The salesperson also solicits from the customer any product improvement suggestions and any specific disappointments. This information helps the company to continuously improve its offering.
• Proactive: The salesperson or others in the company phone the customer from time to time with suggestions about improved product use or helpful new products.
• Partnership: The company works continuously with the customer and with other customer to discover ways to deliver better value.
The goals of CRM business are (Kalakota et.al, 2001, p.173):
• Using existing relationship to grow revenue. This means preparing a comprehensive view of the customer to maximize his/her relationship with the company through up selling and cross selling and, at the same time, enhancing profitability by identifying, attracting, and retaining the best customers.
• Using integrating information for excellent service. By using a customer’s information to better serve his/her needs, the company save the customer time and ease any frustration. For example, customers shouldn’t have to repeat information to various departments again and again. Customers should be surprised by how well the company knows them.
• Introducing consistent, replicable channel process and procedures. With the proliferation of customer contact channels, many more employees are involved in sales transactions. Regardless of size or complexity, companies must improve process and procedural consistency in account management and selling.
Newell (2000, p.11) enriched the discussion with his thought:
The main purpose of CRM is to maximize the value of the relationship to the customer for the customer’s benefit and the company’s profit.
Then he concluded that the key CRM tasks are the following:
• Identifying those consumer values that are pertinent to a particular business.
• Understanding the relative importance of those values to each customer segment.
• Determining if delivery of those values will affect the bottom line in a positive manner.
• Communicating and delivering the appropriate values to each customer segment in ways the customer wants to receive the information.
• Measuring results and proving return on investment.
Regarding the CRM return on investment, there is a most important aspect in CRM. Usually, marketing practitioners look the success of any marketing strategy by monitoring the sales amount increment or the increment return customers transactions. CRM success cannot happen immediately; instead it is an incremental process. Newell (2000, p.22) added this discussion:
An accurate return on investment (ROI) for the CRM program is difficult to calculate due to the variety of intangible variables that can affect the results. Some of the costs and many of the benefits will not be known until the program has run a significant course.”
Although it is hard to calculate the ROI, people can simplify it by measuring the increment of the return customers transactions.
As stated before, the real purpose of CRM is to manage, to change, or to reinforce customer behavior. It means that CRM is the application of one-to-one marketing where virtually the company always dealing with each of its customer personally. One-to-one marketing is becoming more important today, because today’s customers do not want to be treated equally, they want to be treated individually.
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