Report Impact of CRM

8/12/2019 Report Impact of CRM

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CHAPTER:1 INTRODUCTION

1.1Over ViewMarketting is one of the main deciplines of successful management today.It impacts

organizations what customer needs and wants and helping people find the products

what they need creating communication that makes customers life more easy.

Obviously marketing is important in all areas of organization and customers are the

reason why business exits .In fact , marketing efforts including promotion and

distribution is count more than the half price.

Therefore in todays competitive environment it is very important to understand your

customer needs and how best to retain your customers. This understanding can be

achieved through Cutomer Relationship Management (CRM).

CRM is short for Customer Relationship Management , the industry term for set of

methodologies and tools that help enterprise manage customer relationships in an

organized way.(Strategic Management Website)

The term CRM is first introduced in 1990s.Now a days it becomes necessary part of

every organization and business.In less than century this topic gained an imprassive

importance.CRM is the software the provides data to organizations about their

customers , when organizations use this data to communicate the customers such as

giving knowledge about new products or offering them loyalty products , customers

feel special towards organization .

While customer retention program helps organizations and businesses retain their

customers .Because it is more costly to target or to acquire new customer than to

retain old one. In the past when there were no or few competitors it is not a big loss of

loosing one customer because there was a possibility to get new customers easily .

But now as business environment becoming competitive day by day the importance

of customer retention is also gaining the importance.

Due to this importance me and my group members want to do research on the impact

of CRM on customer retention.


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Dependent Variable:

Customer Retention

Independent Variables:

Loyalty Programs , Direct mail , Quality customer service

1.2Problem Statement :To study the impact of customer relationship management (CRM) on customer

retention .

1.3Hypothesis:

H1 : There is a positive relationship between loyalty programs and customer

retention.

H2: There is a positive relationship between direct mailing and customer retention.

H3 : There is a positive relationship beween quality customer service and customer

retention.

1.4 Research Equation


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1.5 Outline Of The Study

This study examines the impact of customer relationship management on customer

retention.

In this research we want to study the impact different CRM methodologies

on customer retention and satisfaction. Now a days as environment becoming

dynamic and innovative day by day it is necessary to implement these CRM

methodologies to retain a customer because customers are the valuable assets of any

organizations especially old customers . By using these technologies there is a

definite positive impact on customer retention.


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CHAPTER TWO : LITRATURE REVIEW

Understanding The Effect Of Customer Relationship Management

Efforts On Customer Retention And Customer Share DevelopmentAuthor(s) : Peter C.Veroehf

Source : Journal Of Marketing Vol .67 (October 2003) ,30-45

Published by : EBSCO

Source : www.rug.nl/staff/p.c.verhoef/jrn_of_mark_2003.pdfCustomer relationships have been increasingly studied in the academic marketing

literature (Berry 1995;Dwyer, Schurr, and Oh 1987; Morgan and Hunt 1994; Sheth

and Parvatiyar 1995). An intense interest in customer relationships is also apparent inmarketing practice and is most evident in firms significant investments in customer

relationship management (CRM) systems (Kerstetter 2001; Reinartz and Kumar

2002; Winer 2001). Customer retention rates and customer share are important

metrics in CRM (Hoekstra, Leeflang, and Wittink 1999; Reichheld 1996).

Customer share is defined as the ratio of a customers purchases of a particular

category of products or services from supplier X to the customers total purchases of

that category of products or services from all suppliers (Peppers and Rogers 1999 ).

To maximize these metrics, firms use relationship marketing instruments (RMIs),

such as loyalty programs and direct mailings (Hart et al. 1999; Roberts and Berger

1999).Firms also aim to build close relationships with customers to enhance

customers relationship perceptions (CRPs).Although the impact of these tactics on

customer retention has been reported (e.g., Bolton 1998; Bolton, Kannan, and

Bramlett 2000), there is skepticism about whether such tactics can succeed in

developing customer share in consumer markets (Dowling 2002; Dowling and Uncles

1997).

I have the following research objectives: First, I aim to understand the effect of CRPs

and RMIs on customer retention and customer share development over time. Second,

I examine whether the effect of CRPs and RMIs on customer retention and customer


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share development is different. My study analyzes questionnaire data on CRPs,

operational data on the applied RMIs, and longitudinal data on customer retention and

customer share of a (multiservice) financial service provider.

Commitment is usually defined as the extent to which an exchange partner desires tocontinue a valued relationship (Moorman, Zaltman, and Desphand 1992). I focus on

the affective component of commitment, that is, the psychological attachment, based

on loyalty and affiliation, of one exchange partner to the other (Bhattacharya, Rao,

and Glynn 1995; Gundlach, Achrol, and Mentzer 1995).

Effect on customer retention. Given the previous definition of affective commitment,

it might be expected that this type of commitment affects customer retention

positively. In line with this, researchers who relate commitment to selfreported

behavior, such as purchase intentions, usually find that commitment positively affects

customer loyalty (e.g.,Garbarino and Johnson 1999; Morgan and Hunt 1994).

I definesatisfaction in this study as the emotional state that occurs as a result of a

customers interactions with the firm over time (Anderson, Fornell, and Lehmann

1994; Crosby,Evans, and Cowles 1990). Szymanski and Henards (2001) meta-

analysis shows that satisfaction has a positive impact on self-reported customer

loyalty.

Effect on customer retention. Despite the apparent absence of an empirical link

between satisfaction and behavioralcustomer loyalty, several studies show that

satisfaction affects customer retention (Bolton 1998; Bolton, Kannan, and Bramlett

2000).

Payment equity is defined as a customers perceived fairness of the price paid for the

firms products or services (Boltonand Lemon 1999, p. 173) and is closely related to

the customersprice perceptions


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Effect on customer retention. Higher payment equity (i.e., price perceptions) leads to

greater perceived utility of the purchased products or services (Bolton and Lemon

1999). As a result of this greater perceived utility, customers should be more likely to

remain with the firm. Consequently, payment equity should have a positive effect on

customer retention .

Direct mailings have some unique characteristics: enablement of personalized offers,

no direct competition for the attention of the customer from other advertisements, and

a capacity to involve the respondent (Roberts and Berger 1999). Because direct

mailings focus on creating additiona l sales, I do not expect them to influence

customer retention .

Effect on customer retention and customer share development.There are several

theoretical reasons the reward based loyalty program being studied should positively

affect both customer retention and customer share development.

The Impact Of CRM Factors On Customer Satisfaction And Loyalty

Authors : Choi Sang Long , Raha Khalafinezahad ,Wan Khairuzzaman Wan Ismail &

Siti Zaleha Abd Rasid

Source : Asian Social Science ,Vol.9, No.10 , 2013

Published by : Canadian Center of Science and Education

Stable URL :http://dx.doi.org/10.5539/ass.v9n10p247

This article emphasize the impact of CRM factors on customer satisfaction and

loyalty. As now a days everything is changing very rapidly and innovation is

emerging so with this changing customers needs and wants also changing.Customertastes also changing .It very important to retain a valuable customer rather to make

new one. Actually an old customer is like an advertisement. Organizations must have

to know the customer changing tastes and innovate there own CRM technologies and

meyhodologies to not only satisfy but to make them loyal.this article studied four
http://dx.doi.org/10.5539/ass.v9n10p247http://dx.doi.org/10.5539/ass.v9n10p247http://dx.doi.org/10.5539/ass.v9n10p247http://dx.doi.org/10.5539/ass.v9n10p247


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CRM tactics : behavior of the employees , quality of customer service , relationship

development and interaction management .

Interaction Management :

According to the Brown and Gulycz (2002), if an organization willing to make a stable

relationship with its customers, there are different ways to have an interaction with them

including interaction along touch points and distribution channels. The main purpose is to find

out how and when the customers would like to interact with the organization (Prahalad and

Ramaswamy, 2001). The interaction activities should be well customized and organized through

the available touch points. The touch points provide in relation to the customers profiles

developed by data gathered from the former records of the customers. According to the works of

Lindgreen et al. (2006) and Peppers et al. (1999), interaction management is implemented by a

few methods such as getting customers feedback and increase the interaction with customers by

attractive ways such as using social network.

Relationship Development :

The most important activity to achieve relationship development is known as monitoring of the

relationship management process such as service or complaint management (Brown and Gulycz,

2002). This relationship processes include procedures, mechanisms, schedules, and activities in

which the products and services have been delivered to customers (Christopher et al., 1991). The

key performance indicators such as rate of retention, life time value of the customers, and

customer satisfaction should be set by the organization (Brown and Gulycz, 2002).

According to the works of Hanley (2008) and Lindgreen et al. (2006), relationship development

can be made through commitment to convince customers that their feedback are taken seriously .

Quality Of Services :

According tof service quality is increasingly common in the literature. Studies show that service

quality has a positive effect on consumer satisfaction and also has a significant relationship with

customer loyalty, and the profitability of the firms. According to the works of Hanley (2008), the

quality of services could be implemented by a few methods such as:

1) Meeting customer expectation of good service level and having many varieties of products.

2) Provide good quality products with reasonable price.

3) To handle the customer complains about the products and services tactfully.


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Behavior Of Employees :

An employee that conforms with organization behavior and value is likely to strengthen the

connection between the consumer and the firm. A reverse pattern of effects is to be expected

when the employee act through his/her own behavior. In these cases, a consumer may think that

the organization actually does not deliver the symbolic benefits that s/he had expected for and

may evaluate the organization in a negative way

The behavior of the employees and relationship development found to contribute most to

customer satisfaction. This result confirms the findings of previous studies (Coulter, 2002;

Brown & Gulycz, 2002; Hanley, 2008). The outcome of the findings implicate that store

employee who has good relation with customer will increase customer satisfaction. Behavior of

the employees is also play significant role in increasing customer loyalty. This findings are also

supported by severalprevious studies (Hanley, 2008; Szczepaska & Gawron,2011) .

CUSTOMER RELATIONSHIP MANAGEMENT : ITS DIMENTIONS AND

EFFECTS ON CUSTOMERSAuthors : Frederick Hong-kit Yim, Rolph E. Anderson, and Srinivasan Swaminathan

Source : Journal of Personal Selling & Sales Management, vol. XXIV, no. 4 (fall 2004), pp.

265280.

Published by : National Educational Foundation

URL :https://www.google.com

In this article after mentioning different definations from different people the

researcher research on customer relationship management (CRM) dimentions and its effects on

customers. The paper give knowledge about four dimensions of CRM namely :

1)Focus on key customers.

2)Incorporating CRM based technology

3)Managing knowledge
https://www.google.com/https://www.google.com/https://www.google.com/https://www.google.com/


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4)Organizing around CRM

After explaining these four dimensions then it explains its effects on customers in the

Form of :

1)Customer satisfaction

2)Customer retention

3)Sales growth

The Four Dimensions of CRM Implementations

1)Focussing on key customers :

A customer-focused policy and reward system should be shaped by any organization that

strives to implement CRM successfully (Ryals and Knox 2001; Sheth, Sisodia, and Sharma

2000). The ultimate goal is to achieve deep customer relationships through which the seller

organization becomes more focused to its most profitable customers (Vandermerwe 2004).

Equipped with company-wide understanding and internal support for key customer relationships,

the sales force generally is better enabled and motivated to make long-term customer

relationships by offering more personalized products and services (Armstrong and Kotler 2003,

p. 514; Srinivasan, Anderson, and Ponnavolu 2002).rganization becomes more focused to its

most profitable customers (Vandermerwe 2004).

2)Organizing Around CRM :With a strong focus on key customers deeply embedded throughout its CRM system, the entire

company should be organized around producing these valuable relationships. The organizational

structure needs to be flexible and, if necessary,reconstructed to generate customer oriented

values (Homburg, Workman, and Jensen 2000) and improve coordination of customer-focused,

cross-functional teams (Brown 2000; Homburg, Workman, and Jensen 2000; Sheth and Sisodia

2002)

3)Managing Knowledge :

Strongly related to knowledge management, successful CRM is based on effectively

transforming customer information to customer knowledge (Freeland 2003; Peppard 2000;

Plessis and Boon 2004; Stefanou, Sarmaniotis, and Stafyla 2003; Stringfellow, Nie, and Bowen

2004). Specifically, to enhance customer profitability, information about customers should be


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gathered through interactions or touch points across all functions or areas of the firm (Brohman

et al. 2003).

4)Incorporating CRM-Based Technology :

Many CRM-oriented activities, such as knowledge management,cannot be optimized without

the latest technology.Indeed, most CRM applications take great advantage of technology

innovations with their ability to collect and analyze data on customer patterns, develop prediction

models,respond with timely and effective customized communications,and efficiently deliver

personalized value offerings to individual customers (Peppard 2000; Vrechopoulos 2004). With

the development of sophisticated information management tools, such as database marketing,

data warehousing,data mining, and push technology, companies are striving to incorporate the

latest technology into their CRM systems. In particular, salespeople frequently depend on

continually updated software programs to better respond to their customers and build enduring

customer relationships (Kotler 2004, p. 141).

CRM Effects On Customers In The Form Of :

1)Customer Satisfaction :

Customer satisfaction can be defined as the extent to which a products perceived performance

in delivering value matches a buyers expectations(Armstrong and Kotler 2003, p. 10).In

implementing CRM, a firm seeks to establish and maintain a long-term relationship with

customers based on full customer satisfaction as opposed to transaction-specific customer

satisfaction (Garbarino and Johnson 1999; Reinartz and Kumar 2002). More specifically,

successful CRM implementation requires a dedicated company-wide focus on key customers in

one-to-one marketing efforts to fully understand and satisfy their needs and wants on an ongoing

basis (Sheth,Sisodia, and Sharma 2000). The sellers entire organizational structure should be

centered around customers, often with customer-focused teams (Sheth and Sisodia 2002)

designed to create fully satisfying customer experiences (Ahmed and Rafiq 2003).

2)Customer Retention :

One of the primary goals of CRM is customer retention or customer loyalty (Anderson and

Srinivasan 2003; Aspinall,Nancarrow, and Stone 2001; Verhoef 2003). Continuous

advancesadvances in IT are enabling organizations to more efficiently and effectively direct their

CRM efforts at retaining customers (Butler 2000). Making skillful use of customer knowledge


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gathered over a series of interactions or touch points and applying CRM-based technology,

companies can more effectively respond to the changing needs of customers with customized

offerings. This personalization of products and services serves to further lock customers into

long-term relationships.

3)Sales Growth :

According to Reichheld and Sasser (1990, p. 110), reducing customer defections by 5 percent

can boost profits by 25 percent to 85 percent. This impressive finding has been advocated as a

strong justification for increased investments in CRM systems (Pfeifer and Farris 2004).

Recently, Gupta and Lehmann (2003) estimate a less dramatic increase of 22 percent to 37

percent in customer lifetime value or revenue, for a 5 percent increase in customer retention.

Although the precise numbers may vary, empirical findings consistently show a substantial jump

in revenue and profits with a small gain in customer retention (Oliver 1999; Pfeifer and Farris

2004).

THE IMPACT OF A CUSTOMER PROFILE AND CUSTOMER

PARTICIPATION ON CUSTOMER RELATIONSHIP

MANAGEMENT PERFORMANCE

Author(s): Ji-Tsung Ben, I-Ju Lin and Ming-Hsien Yang

Source: International Journal of Electronic Business Management, Vol. 7, No. 1, pp.

Published by: Fu-Jen Catholic UniversityTaipei Hsien (24205), Taiwan.

Email:[email protected]

This arltcle studied effects of customer profile and customer participation on customer

relationship management.As every one know the importance of customer relationship

management (CRM) now a days there is a need to know how to make CRM more profitable.In

this regard we studied customer profile and customer participation.

1)Customer Profile:
mailto:[email protected]:[email protected]:[email protected]:[email protected]


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An insufficient knowledge base of customers limits the value which a company can offer to

those customers [37][40]. Knowing customers better, a corporation can invest in valuable

customers and reduce the cost spent on poorly performing customers [16][35]. The basic

component of customer knowledge comes from a customer profile that is obtained by the use of

a database technologies used in organizations [1]. Building customer profiles is one of the most

popular strategies for knowing more about customers.using a customer profile is the technique

which converts raw information about customers into the strategic-support knowledge that

reinforces the value of goods which companies offer customers.

2)Customer Participation:

The customer profile is a more structured part of customer knowledge; whereas a more non-

structured part could come from customer participation. In the service research area, customers

who contribute information or efforts in the service complete the process with the service

provider. They fulfill the process together while the service is produced and consumed at the

same time [8][13] [14] [26] [36]. For example, patients describe their own symptoms to doctors.

It makes the process of diagnosis go more smoothly. These service performances are heavily

influenced by customer efforts and the information they themselves provide [4][13][19].

There are different dimensions of participation,including personal interaction, information

sharing,and responsible behavior. This suggests that participation has a positive impact on

customer's perceived product/service quality, customer satisfaction, and a mixed impact on

retention.

A customer profile is a base form of customer knowledge. By obtaining and analyzing customer

profiles, corporations can develop products and services to fit the customers needs. Showing

customers that the company is using their profiles to provide customized goods will also lead

users to raise their perception of quality.

Results show that use of customer profile could not affect the customer perception about the

product.

Based on preceding discussion on customer participation, it is possible for corporations to

interact with customers and get insights of customer needs through customer participation.

Getting customers to participate in value delivery processes helps customers to know corporation


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ability better and raises the customers' perception on goods. The customer participation also has

positive effects on customer satisfaction, customer loyalty, and customer retention [11][13][19].

Results show that customer participation could not affect the customer perception of the product

about its quality.

The Impact Of Customer Relationship Management (CRM) On Customer

Retention

Author(s): Arezu Ghavami and Alireza Olyaei

Source: Lulea University of Technology

Published by:Department of Business Administration and Social Sciences.

URL:http://www.fineprint.com

In this thesis the research is done on the impact of CRM on customer retention. The author states

the goals of CRM which are : lower cost of recruiting customers ,no need to recruit too many

customers to preserve the steady volume of business,reduced cost of sales , higher customer

profitability , increased customer retention and loyalty ,evaluation of customer profitability.

The CRM process involved four steps :

1)Segment and profile the market

2)Communication strategy is designed

3)Implement the strategy

4)Evaluation of strategy

The CRM strategy can be implemented on three levels of organizations:

1)Functional

2)Customer facing

3)Company wide

In this thesis the customer facing is main point.this include information handling at all

customer contact channels .This view coordinating information across time and contact channels

to manage entire customer relationship systematically .

Cherecteristics of CRM :

1)Customers should be managed as important assets.

2)Customer profitability varies ;not all customers equally desirable.

3)Customers vary in their needs, preferences ,buying behavior , and price sensitivity.
http://www.fineprint.com/http://www.fineprint.com/http://www.fineprint.com/


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4)By understanding customer drivers and customer profitability companies can alter there

offerings to maximize the overall value of their customer portfolio.

As a result of this research the author concluded that it is find out that to retain the existing

customer is more important then to find out new one. But to main tain the relationship with

existing customer it is very important for all the departments of organization to invove in CRM

proess.Nowadays it become easy through computer tntegrated CRM software.Organizatins have

to keep them selves updated of the customerschanging lifestyles and to providw them with therir

intended product quality and characteristics .Another important thing that is not all the customers

are same for companys perspective.So the customer must be give as much importants as his or

her level desires.


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CHAPTER THREE : RESEARCH METHODS

3.1Method of data collection

We developed a questionnaire that had questions based on our independent variables. Those

questionnaires were handed out to students that were sitting in informal groups.

3.2Sampling Technique

While working on this research report in our own and other university, we figured that it was

best to collect data which would be both convenient and relevant. We went up to students of

other semesters and collected data from them.

3.3Sample Size

Sample size for the research was 250 students. It seems necessary because this was one

way we could figure out if our results were relevant and factual. It gave a better insight towards

our aim of gaining knowledge about the topic.

3.4Instrument Of Data Collection

A questionnaire with 10 questions for independent variable were developed for we

thought it would produce more effective results.

3.5Validity and Reliability Test

3.6Research model developed


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Quality Of customer service

Direct MailCustomer Retention

Dependent variable

Loyalty Cards

Independent Variable

3.7Statical Technique


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CHAPTER FOUR : RESULTS

4.1Findings and interpretation of results:

4.2Hypothesis Assessment Summary:

H1:Giving quality customer service to its valued customers has a positive impact on customer

retention.

H2:Informing the customers about new products and any innovation by direct mailing has a

positive impact on customer retention.

H3:Using of loyalty programs like giving loyalty crads or rewards especially to valued customers

has a positive impact on customer retention.

CHAPTER 5: DISCUSSION , CUNCLUSION , IMPLICATIONS AND

FEWTURE RESEARCH


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5.1CONCLUSION:

It is quite evident that organizations and businesses nowadays must implement the customer

relationship management (CRM) programs.Through which they can know the customers

changing needs or desires about the products. As environment is becoming innovative day by

day there is a possibility that organizations lose there valued customers to their competitors

.While it is more important to retain the old customer than to make new one.Firms must use

CRM technology with innovation like loyalty programs , quality services and direct mailing to

make better relationships with customers hence retaining them as an assets.

5.2DISCUSSION:

The CRM technology makes the relationship of customers with their sellers or

organizations.When organizations give care to their customers by using CRM , the customer

perceived this as special.He or she perceived that the organizations have special concerns about

their needs and wants . By this way this way this perceived good relationship helps in retaining

yhe valued customer. It is also very important for the organization to know about the new CRM

technologies and to implement them.This is not only with respsct to any one department but the

whole organization have to take part in it because firms are in the market due to customers.

5.3FUTURE RESEARCH:

This to recommend that there is a need for more research in different CRM technologies to find

the impact of their implementation on customer satisfaction , customer retention and customer

loyalty.Two important CRM techniques are :

1) Customer profile

2) Customer participation


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REFERENCES

International Journal of Electronic Business Management, Vol. 7, No. 1, pp. 57-69 (2009) Ji-

Tsung Ben Wu*, I-Ju Lin and Ming-Hsien Yang

Journal of Marketing Peter C. Verhoef Vol. 67 (October 2003), 3045

Asian Social Science; Vol. 9, No. 10; 2013 Published by Canadian Center of Science and

Education , Choi Sang Long1, Raha Khalafinezhad1, Wan Khairuzzaman Wan

Ismail2 & Siti Zaleha Abd Rasid2

Frederick Hong-kit Yim(Doctoral Student), LeBow College of Business,

Department of Marketing, Drexel , Journal of Personal Selling & Sales Management,

Arezu Ghavami , Alireza Olyaei, Lulea University Of Technology,2006


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APENDEX

Questionnaire

The Impact Of Customer Relationship Management On Customer Retention

Note: Your information will be kept confidencial

Name: Email:

Age Group: 18-25, 26-31, 32-40Your Qualification: Post Graduate, Graduate, Under Graduate

1)Do you have Loyalty card? Yes No2) What in your opinion loyalty card is useful in customer retention?

a) Strongly Agree, b) agree, c) Neutral, d) Disagree, e)strongly disagree

3)Is there anything about the customer service that stands out as being superior?

a)Patient , b)Enthusiastic , c)Listened Carefully , d)Friendly ,e)Responsive

4)How best the customer service representative can handle the customer problem?

a) byresponding quickly , c) ask customer to wait d) no response

5) Is it good for customer service representative to be knowledgeable?

a)Yes b)No

6)How often do you likely to purchase a product associated with any reward?

a) 2 or 3 times a month, b) once a month c) every 6 months d)2-3 times a year

7)How often do you use the web to find product information?

a)Every day,b) Once a week c) Several times a month d) never

8)How likely are you going to recommend and revisit the website which is advertised by

direct email?

a)Very likely , b)Likely ,c)Unsure d) Unlikely e)Extremely unlikely

9)Please indicate your evaluation of direct email adds by effectiveness:

a)Strongly effective , b)Effective ,c)Neutral ,d) Ineffective , e)Strongly ineffective


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