Page 79 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Customer Relationship Management

Notes Medical science teaches us the “life is in the blood”. When blood stops flowing, life stops very
quickly. It is the same with our businesses; customers are the life blood of our business. When
we stop having a “flow” of customers, our business will die very soon. So it is very important to
acquire and keep customers. Our business is not about ourselves, it is about our customers. The
focus of your business shouldn’t be on yourself; rather it should focus on your customers. They
are not really interested in how long you have been in business or how much education you
have. Customers are interested in what your business can do or provide for them. We call these
“customer benefits”.
The dynamics of the business ecosystem have changed the way in which companies do business
both in relationship management and the streamlining of their operations. Relationship
marketing is emerging as the core marketing activity for businesses operating in fiercely
competitive environments. On an average, businesses spend six times more to acquire new
customers than to keep them. Therefore, many firms are now paying more attention to their
relationships with existing customers to retain them and increase their share of customer’s
purchases. The practice of relationship marketing also has the potential to improve marketing
productivity through improved marketing efficiencies and effectiveness.
Customer retention is the key to any organization’s effectiveness. Customer centric approach to
marketing programme helps retain customers and win back lost customers. An organisation
needs to study the needs of the various market segments and design the marketing programmes
tailor made to suit the segments. Customer anticipates several things from the company in
addition to the product; which the firm has to study well to bridge the gaps between customer
expectations and firm’s delivery.

4.1 Customer Retention

The dynamics of the business ecosystem have changed the way in which companies do business
both in relationship management and the streamlining of their operations. Relationship
marketing is emerging as the core marketing activity for businesses operating in fiercely
competitive environments. On an average, businesses spend six times more to acquire new
customers than to keep them. Therefore, many firms are now paying more attention to their
relationships with existing customers to retain them and increase their share of customer’s
purchases. The practice of relationship marketing also has the potential to improve marketing
productivity through improved marketing efficiencies and effectiveness.
Customer retention is the activity that a selling organization undertakes in order to reduce
customer defections. Successful customer retention starts with the first contact an organization
has with a customer and continues throughout the entire lifetime of a relationship. A company’s
ability to attract and retain new customers is not only related to its product or services, but
strongly related to the way it services its existing customers and the reputation it creates within
and across the marketplace.

Customer retention is more than giving the customer what they expect; it’s about exceeding
their expectations so that they become loyal advocates for your brand. Creating customer loyalty
puts ‘customer value rather than maximizing profits and shareholder value at the centre of
business strategy’. The key differentiator in a competitive environment is more often than not
the delivery of a consistently high standard of customer service.
An important distinction can be made between strategies that lock the customer in by penalizing
their exit from a relationship, and strategies that reward a customer from remaining in a
relationship. The former are generally considered negative, and the latter positive customer
retention strategies.

74 LOVELY PROFESSIONAL UNIVERSITY