Customer Relationship Management (crm)

Chapter 11

1. What is customer relationship management?

Customer relationship management (CRM) is a business philosophy and set of strategies, programs and systems that focuses on identifying and building loyalty with a retailer’s most valued customers. Based on the philosophy that retailers can increase their profitability by building relationships increase their profitability by building relationships with their better customers, the goal of CRM is to develop a base of loyal customers who patronize the retailer frequently.

1. What is customer loyalty?

Many definitions about customer loyalty among which are (1) committed to purchasing merchandise and services from a retailer. (2) The result of consistently positive experience emotional, physical attribute-based satisfaction and perceived value of an experience, which includes the product or service. (3) Other definition, customer loyalty is both an attitudinal and behavioural tendency to favor one brand over all other, whether due to satisfaction with the product or service, its convenience or performance, or simply familiarity and comfort with the brand. In our understanding, customer loyalty is a combination of attitude and behavior of consumers or buyers who stick with one brand (product or service).

1. How is customer loyalty related to customer relationship management?

Customer loyalty, the objective of customer relationship management, is more than having customers make repeat visits to a retailer and being satisfied with their experiences. Customer loyalty to retailer means that customers are committed to purchasing merchandise and services from the retailer and will resist the activities of competitors attempting to attract their patronage.

Loyal customers have an emotional connection with the retailer.Their reasons for continuing to patronize a retailer go beyond the convenience of the of the retailer’s store or the low prices and specific brands offered by retailer. They feel such goodwill toward the retailer that they will encourage their friends and family to buy for it.

Programs that encourage repeat buying by simply offering price discounts can be easily copied by competitors. In addition, these types of price-promotion programs encourage customers to always look for the best deal rather than develop a relationship with one customer, However , when a retailer develops an emotional connection with a customer , it is difficult for a competitor to attract that customer.

         Emotional connections develop when customers receive personal attention. For example many small, independent restaurants build loyalty by functioning as neighbourhood cafes, where waiters and waitresses recognize customer by name and know their preferences. Dorothy Lane Market in Dayton, Ohio, for example, uses a sophisticated customer database management system to lavish attention on its customers. Loyalty club members who spent the most over the previous year receive a handwritten note from the CEO. When a major roadway slowed business from customers living in a particular area, Dorothy Lane mailed out maps to affected residents detailing a detour to help encourage customers to return.