Customer Relationship Management (CRM): Meaning and Steps for Reducing Customer Defection Rate

Customer relationship management is a combination of policies, processes and strategies implemented by an organization to unify its customer interactions and provide a means to track customer information. It involves the use of technology in attracting new and profitable customers, while forming tighter bonds with existing ones.

Customer relationship management pulls together, analyzes and provides easy access to customer information from all these various touch points. It helps to assess the value of individual customers, identify the best ones to target and customize the company’s products and interactions to each customer.

The purpose of customer relationship management is to enable a company to better service its customers through the introduction of reliable service, automated processes, personal information gathering and processing and self-services. It attempts to integrate and automate the various customer serving processes within a company. It can be done through the use of multiple communication channels (phone, WAP Wireless Application Potential, Internet etc.)

Customer relationship management involves three general areas of business. They are as follows:

1. Marketing information system: It provides information about the business environment, including competitors, industry trends, and macro environmental variables.
2. Sales-force management system: It automates some of the company’s sales and sales-force management functions. It keeps track of customer preferences, buying habits, and demographics, and also sales staff performance.
3. Customer service system: It automates some service requests, complaints, product returns, and information requests.

Steps for Reducing Customer Defection Rate

In order to reduce or control the defection rate of the existing customer, the marketing companies need to follow the following steps:

1. Define measurement basis for retention rate: For reducing customer defection rate, first of all, the measurement basis for retention rate should be defined. For a newspaper, renewal rate is a measure of retention. For college, it is admission in second year after completing first year.
2. Analyze causes of defection: For reducing customer defection rate, the reasons for defection should be analyzed. The major reasons for defection can be poor service, poor products, high price, inconvenient distribution etc.
3. Calculate loss of profit: Customer defection results in loss of profit. Profit loss from lost customer should be calculated in terms of life time value of lost customers.
4. Introduce anti-defection measures: For reducing customer defection rate, the company should introduce anti-defection measures such as extra benefits and services that add value.
5. Find out cost of reducing defection rate: The cost of anti-defection measure such as extra benefits or services should be calculated. The cost should be less than benefits of reducing defection rate.
6. Listen to customers: Customer feedback is essential for reducing defection rate. Exit interviews of customers can also be useful. Complaints and suggestions should be carefully handled.

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Emerging Trends in Marketing in a Competitive Market

The new trends in marketing as follows:

1. Globalization

Globalization is an emerging trend in marketing. It refers to free flow of ideas, goods and services all over the world. Effect of globalization is increasing in marketing. Increasing globalization is crating both opportunities and challenges for marketers. It is also creating international competition.

2. Changing technology

Changing technology is also an emerging trend in marketing. Development in information and communication technology, electronics, new materials and nano-technology development advances are opening many new opportunities for marketing.

3. Direct marketing

Direct marketing is also increasing. Direct mail, catalogue, telephone, television etc. are used in direct marketing. Now-a-days Internet and websites are also using and e-commerce is getting popular. Business-to-business purchasing is growing fast on the Internet.

4. Service marketing

The role of service products to satisfy needs, wants and demand of customers.

5. Outsourcing

An emerging trend in marketing is outsourcing. It is the process by which marketers purchase inputs such as capital, human resources, technology, machines, raw materials, technical know-how, skills, services from other organizations throughout the world. Outside suppliers are playing greater role in supply of goods and services.

6. Relationship marketing

Relationship marketing is also the emerging trend in marketing. It is concerned with building long-term mutually satisfying relationship with customers. Marketers focus on managing their customers as well as their products and series. They also focus on quality, value, customer satisfaction, customer loyalty and partnership with customers.

7. Quality marketing

Quality marketing is concerned with customer satisfaction. In order to deliver customer satisfaction, marketers have to offer ‘quality’ in their goods and services. Now-a-days total quality management (TQM) is getting popular.

8. Growth of global brands

Global companies, with very large size and scale of activities, have now been growing. These companies are able to establish their brands in global markets. Global brands in electronics, foods, clothing, autos, intellectual property etc. are becoming popular all over the world. Due to the practices of licensing and franchising strategies global brands are increasing.

9. Global life style

Advances in global communication, television networks, transportation, technology, cross cultural exchange, flow of tourists across the globe etc. are promoting global life styles. Global life style is providing added opportunities for marketers.

High-tech industries: Now-a-days high-tech industries also growing. Mechanization, automation, computerization, robotics, information technology, biotechnology, nano-technology, new materials and artificial intelligence are getting popular. Marketers can achieve gain economies of scale by using high-tech.

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Considerations for Global Market Entry: the age of globalization and tough competitive market

This 21st Century is the age of globalization. Today’s world has become a ‘small commercial village.’ Due to the development of trade and commerce, science and technology etc., many companies are going global. The need to think and act from global perspective is universal. Globalization increases global competition. It brings competition everywhere in the world. Thus, this is the age of competition. Today’s company should pay more attention to quality and price to survive in the competitive market. The variety of products and products forms in the market will significantly and substantially increase the customer choice. Besides these, the companies should create value to global target customers, it should gain competitive advantages, it should focus on needs and wants of target markets and it should follow positioning strategy to create strong brand image in global markets. In this regards, we can say that it is a great challenge to do marketing in the era of globalization.

Consideration for Global Market Entry

Going global is very challenging job. So a company should consider many things for global market entry. They are as follows:

1. Political risks: A company going global should consider the political risks of global market. The elements of political risks are political instability, terrorism, civil war, etc. These all factors should be uncertainty in global markets.
2. Access to market: Many factors may limit companies to access to global market. They are reservation policy for nationals, local content requirements, balance of payment problems, competition with local industry, regional cooperation agreements, etc. These all factors should be taken into consideration before going global.
3. Cost structure: Cost structure should be taken into consideration for the companies going global. They should consider costs associated with factors of production such as land, capital, labor etc. Similarly they must consider the wages rate and tax related matters as well.
4. Logistics: Logistics which is also known as physical distribution that consists of transportation, inventory management, warehousing, materials handling and order processing. These all are crucial to success in global markets. The cost of making goods and services readily available to global markets are very important for market entry. Similarly, there should be adequate infrastructure facilities, good governance, etc. in host country.
5. Foreign exchange rate: The companies going global need to deal different currencies at a time. They need to follow foreign exchange regulations of the concerned countries and need to solve the currencies exchange problem. They should consider the exchange risk resulting from changing rates and control procedures.
6. Marketing programs: Different countries have different political system and different government decisions. Different laws, rules and regulations of their own, govern marketing activities in different countries. So, the companies going global should prepare marketing programs as per the law, acts and local environment of host country.

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Holistic Marketing Concept: an approach to recognize and reconcile the scope and complexities of marketing activities

Holistic marketing concept is an approach to marketing that attempts to recognize and reconcile the scope and complexities of marketing activities. These activities are concerned to the relationship marketing, integrated marketing, internal marketing, social responsibility marketing and performance marketing. Marketers can create, maintain and renew customer value through holistic marketing concept.

The holistic marketing concept is the new and emerging concept which emphasizes the development, design, and implementation of marketing programs, process and activities. This concept recognizes that “everything matters” with marketing. It also recognizes that a broad, integrated perspective is necessary to get success in marketing.

According to Philip Kotler and Kavin Lane Keller –“The holistic marketing concept is based on the development, design and implementation of marketing programs, processes, and activities that recognizes their breadth and interdependencies.”

Components of Holistic Marketing

1. Relationship Marketing

It is a key component of holistic marketing. Marketers need to establish long-term relationship with customers. Relationship marketing is an act of building of long term mutually satisfying relationship with the different kinds of customers to earn and retain their long-term loyalty because they are good partners in creating value. Relationship marketing’s focus is not immediate sales; rather it is directed at building a large group of satisfied and loyal customers. Customer retention and winning back lost customer are the key strategy in relationship marketing. This marketing uses sustained long-term efforts in delivering value to the customers and profit to the firm.

2. Integrated Marketing

Integrated marketing is coordination of all of a company’s marketing activities in establishing marketing strategies such as packaging, media promotion, point of purchase materials, after sales services etc. It is the process of mixing and matching marketing activities to maximize their individual and collective actions. Marketing organizations must integrate their systems for demand management, resource management and network management.

3. Internal Marketing

Internal marketing is the process of bringing out support for a company and its activities among its employees, in order to encourage them to promote its goals. It describes the task of hiring, training and motivating able employees who want to serve customers well. It also refers to investment in human resources to train and motivate employees to better serve the customers.

4. Social Responsibility Marketing

Social responsibility marketing is a management orientation that holds that the key task of the organization is to determine the needs and wants of target markets and to adopt the organization for delivering the desired satisfactions more effectively and efficiently than its competitors in a way that preserves or enhances the consumers’ and society’s well being. It implies the orientation of the organization’s social responsibility to face the major environmental and demographic challenges.

5. Performance Marketing

It focuses on the value of marketing efforts. Performance marketing is practiced to ensure financial accountability in profitability term. Holistic marketing concept uses performance marketing to ensure profitability from marketing efforts and activities.

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