relationship marketingIn the early 1990s the concept of relationship marketing was

formally introduced into the field of service marketing. And further the concept was also found applicable in the case of industrial as well as consumer products. As the concept of relationship marketing has emerged the focus has been shifted from transaction marketing to relationship marketing .Traditional transaction marketing (TM) tended to ignore relationships and relationship building. The company was ready to switch from one supplier or distributor to another if there was an immediate advantage. The company assumed that it would normally keep its current customers, and it spent most of its energy to acquire new customers. The company neglected the interdependence among its main stakeholders and their roles in affecting the companys success.

Transaction marketing
* Focus on single sale * Orientation on product features * Little emphasis on customer service * Limited customer commitment * Moderate customer contact * Quality is primarily a concern Of production - (TQM ).

Relationship Marketing
* Focus on customer retention * Orientation on product benefits * High customer service emphasis * High customer commitment * High customer contact * Quality is concern for all.

Relationship marketing (RM) marks a significant paradigm shift in marketing, a movement from thinking only in terms of competition and conflict, toward thinking in terms of mutual interdependence and cooperation. It recognizes the importance of various partiessuppliers, employees, distributors, dealers, retailerscooperating to deliver the best value to the target customers. Here are the main characteristics of relationship marketing:

It focuses on partners and customers rather than on the companys products. It puts more emphasis on customer retention and growth than on customer acquisition. It relies on cross-functional teams rather than on departmental-level work. It relies more on listening and learning than on talking.

Relationship marketing calls for new practices within the 4Ps (see box). The shift toward relationship marketing does not mean that companies abandon transaction marketing altogether. Most companies need to operate with a mixture of the transactional and the relational marketing approaches. Companies selling in large consumer markets practice a greater percentage of TM while companies with a smaller number of customers practice a higher percentage of RM.

Relationship Marketing and the 4Ps

Product :More products are customized to the customers preferences. New products are developed and designed cooperatively with suppliers and distributors. Price : The company will set a price based on the relationship with the customer and the bundle of features and services ordered by the customer. In business-to-business marketing, there is more negotiation because products are often designed for each customer. place: RM favours more direct marketing to the customer, thus reducing the role of middlemen. RM favours offering alternatives to customers to choose the way they want to order, pay for, receive, install, and even repair the product.

PromotionRM favours more individual communication and dialogue with

customers. RM favours more integrated marketing communications to deliver the same promise and image to the customer. RM sets up extranets with large customers to facilitate information exchange, joint planning, ordering, and payments.

. (George, W. 1990)
The six markets model

Christopher, Payne and Ballantyne (1991) from Cranfield University. identify six markets which they claim are central to relationship marketing. They are: internal markets, supplier markets, recruitment markets, referral markets, influence markets, and customer markets.
Internal marketing

Relationship marketing also stresses what it calls internal marketing. This refers to using a marketing orientation within the organization itself. It is claimed that many of the relationship marketing attributes like collaboration, loyalty and trust determine what "internal customers" say and do. According to this theory, every employee, team, or department in the company is simultaneously a supplier and a customer of services and products. An employee obtains a service at a point in the value chain and then provides a service to another employee further along the value chain. If internal marketing is effective, every employee will both provide and receive exceptional service from and to other employees. It also helps employees understand the significance of their roles and how their roles relate to others'. If implemented well, it can also encourage every employee to see the process in terms of the customer's perception of value

added, and the organization's strategic mission. Further it is claimed that an effective internal marketing program is a prerequisite for effective external marketing efforts Referral marketing is developing and implementing a marketing plan to stimulate referrals. Although it may take months before you see the effect of referral marketing, this is often the most effective part of an overall marketing plan and the best use of resources. Marketing to suppliers is aimed at ensuring a long-term conflict-free relationship in which all parties understand each others' needs and exceed each others' expectations. Such a strategy can reduce costs and improve quality. Influence markets involve a wide range of sub-markets including: government regulators, standards bodies, lobbyists, stockholders, bankers, venture capitalists, financial analysts, stockbrokers, consumer associations, environmental associations, and labor associations. These activities are typically carried out by the public relations department, but relationship marketers feel that marketing to all six markets is the responsibility of everyone in the organization. Each market may require its own explicit strategies and a separate marketing mix for each.

Benefits of relationship marketing

Retaining customers for the long-term offers many benefits. The aim is for the company to obtain life time custom. Some of the benefits of relationship marketing include: Loyal customers will recommend your business to others, thus expanding your business for you. Loyal customers are willing to try some of your new products, because they trust you. Customers will be willing to pay more for your services/products if there are adjustments in pricing because they are loyal to you and trust your services/products. Loyal customers will tell you about problems with your products/services enabling to improve your products/services. The ultimate benefit will be an increase sales, market share and dominance. . Follow up with your customers and ensure they are satisfied after every transaction. This can help you to gain some great feedback both positive and negative. If you get in the habit of contacting your customers, at some point it will come natural. This will give you a way to market that is very personal to you and the customer involved. Relationship marketing is a great way to build your business and one that provides a high level of satisfaction to the business owner.

NEED FOR RELATIONSHIP MARKETING The aim of relationship marketing is to create strong, lasting relationship with core group of customers. It is to a firm's advantage to develop long term relationship with existing customers because it is easier and less expensive to make an additional sale to an exiting customer than to make a new sale to a new customer. It takes months to find and get a good customer but only seconds to loose one.Moreover A satisfied customer brings in more customers and he is the best advertisement for the firm. IMPORTANCE OF RELATIONSHIP MARKETING The relationship marketing helps the customer on one hand and the service provider on the other hand. The benefits which are associated with the customers are: o Customers remain loyal and receive more value compared to the competitors. o Customers have the sense of well being and quality of life as they have long term relationship with the service provider. o Customer think that the service provider knows their preferences and have tailored services to suit their needs over a period of time and they do not want to change this arrangement they have remain loyal. The benefits for the service producers are: o Due to good relationship management the service provider gets committed and loyal customers, thus increasing the purchases, which in turn increase the profits of the company. o Lower cost retaining the current customers cost much lower than making new customers as new customers attract advertising cost and other promotional costs, operating costs of setting up accounts and systems and cost of getting to know the customers. o Free advertising through word of mouth. o It is easier for the firm to retain the employees when the company has stable base of satisfied customers. CONSTRAINTS OF CRM CRM is not panacea for all marketing maladies. It has its own constraints. o CRM is not for everyone. When the market consists of a myriad of customers and the unit profit margins are not much, for instance selling washing powders, basic marketing is enough. CRM is an apt strategy when customers are of long-time horizons and profit margins are much.

o CRM assumes that customers play a passive role in relationships. But in the networked world, they have the ability to play an active role in managing relationships. Now a-days the marketing is towards collaborative marketing, in which the company collaborates with customers and makes them an integral part of the company's marketing activities. o CRM is mainly based on customer databases. The collection of data and storage of data for CRM comes in handy only. When the data collected is accurate and appropriate, is collected at a reasonable cost, analysed diligently, reported promptly in a lucid manner and kept secret from competitors. Simon London opines, "Data have little value on their own: They are useful only when they have context and relevance."

initiatives taken by service firms for CRM.. These include

o Emphasis on process reengineering for improving customers' terms of transaction. o Shift from 'cost plus' pricing to competitive pricing of services. o Progressive IT application for swift delivery channels o Improving value chain for customers. o Pursuit of TQM at operational and administrative units. o Three pronged strategy of product innovation, product delivery and product servicing o Focus on product augmentation as well as hybridization. o Shift from a "selling" to "marketing" mode. o Multiple platforms for swift redressal of grievances. o Periodical rating of service quality in house as well as by external agencies. o Enrichment of training calendar, with sharp focus On customer service.
Customer relationship management (CRM) is a widely implemented model for managing a companys interactions with customers, clients, and sales prospects. It involves using technology to organize, automate, and synchronize business processesprincipally sales activities, but also those for marketing, customer service, and technical support.The overall goals are to find, attract, and win new clients; nurture and retain those the company already has; entice former clients back into the fold; and reduce the costs of marketing and client service. Customer relationship management describes a company-wide business strategy including customer-interface departments as well as other departments.[

Benefits of Customer Relationship Management

A Customer Relationship Management system may be chosen because it is thought to provide the following advantages: Quality and efficiency

Decrease in overall costs Decision support Enterprise ability Customer Attentions Increase profitability Improved planning Improved product development
In order to implement CRM in an effective way, one needs to consider the following factors:

Create a customer-focused culture in the organization. Adopt customer-based managers to assess satisfaction. Develop an end-to-end process to serve customers. Recommend questions to be asked to help a customer solve a problem. Track all aspects of selling to customers, as well as prospects.

Furthermore, CRM solutions are more effective once they are being implemented in other information systems used by the company. Examples are Transaction Processing System (TPS) to process data real-time, which can then be sent to the sales and finance departments in order to recalculate inventory and financial position quick and accurately. Once this information is transferred back to the CRM software and services it could prevent customers from placing an order in the belief that an item is in stock while it is not.

eCRM This concept is derived from E-commerce. It also uses net environment i.e., intranet, extranet and internet. Electronic CRM concerns all forms of managing relationships with customers making use of Information Technology (IT). eCRM is enterprises using IT to integrate internal organization resources and external marketing strategies to understand and fulfill their customers needs. Comparing with traditional CRM, the integrated information for eCRM intraorganizational collaboration can be more efficient to communicate with customers. As the internet is becoming more and more important in business life, many companies consider it as an opportunity to reduce customer-service costs, tighten customer relationships and most important, further personalize marketing messages and enable mass customization.[9] ECRM is being adopted by companies because it increases customer loyalty and customer retention by improving customer satisfaction, one of the objectives of eCRM. E-loyalty results in long-term profits for online retailers because they incur less costs of recruiting new customers, plus they have an increase in customer retention.[10] Together with the creation of Sales Force Automation (SFA), where electronic methods

were used to gather data and analyze customer information, the trend of the upcoming Internet can be seen as the foundation of what we know as eCRM today.

As we implement eCRM process, there are three steps life cycle.

1. Data Collection: About customers preference information for actively (answer knowledge) and passively (surfing record) ways via website, email, questionnaire. 2. Data Aggregation: Filter and analysis for firms specific needs to fulfill their customers. 3. Customer Interaction: According to customers need, company provide the proper feedback them.

We can define eCRM as activities to manage customer relationships by using the Internet, web browsers or other electronic touch points. The challenge hereby is to offer communication and information on the right topic, in the right amount, and at the right time that fits the customers specific needs.

Different levels of eCRM

In defining the scope of eCRM, three different levels can be distinguished: 1.Foundational services:This includes the minimum necessary services such as web site effectiveness and responsiveness as well as order fulfillment. 2.Customer-centered services:These services include order tracking, product configuration and customization as well as security/trust. 3.Value-added services:These are extra services such as online auctions and online training and education
eCRM strategy components

When enterprises integrate their customer information, there are three eCRM strategy components[1]:
1. Operational: Because of sharing information, the processes in business should make customers need as first and seamlessly implement. This avoids multiple times to bother customers and redundant process. 2. Analytical: Analysis helps company maintain a long-term relationship with customers. 3. Collaborative: Due to improved communication technology, different departments in company implement (intraorganizational) or work with business partners (interorganizational) more efficiently by sharing information.

Differences between CRM and eCRM

Major differences between CRM and eCRM:

Customer contacts

CRM Contact with customer made through the retail store, phone, and fax. eCRM All of the traditional methods are used in addition to Internet, email, wireless, and PDA technologies.

System interface

CRM Implements the use of ERP systems, emphasis is on the back-end. eCRM Geared more toward front end, which interacts with the back-end through use of ERP systems, data warehouses, and data marts.

System overhead (client computers)

CRM The client must download various applications to view the web-enabled applications. They would have to be rewritten for different platform. eCRM Does not have these requirements because the client uses the browser.

Customization and personalization of information

CRM Views differ based on the audience, and personalized views are not available. Individual personalization requires program changes. eCRM Personalized individual views based on purchase history and preferences. Individual has ability to customize view.

System focus

CRM System (created for internal use) designed based on job function and products. Web applications designed for a single department or business unit. eCRM System (created for external use) designed based on customer needs. Web application designed for enterprise-wide use.

System maintenance and modification CRM More time involved in implementation and maintenance is more expensive because the system exists at different locations and on various servers. eCRM Reduction in time and cost. Implementation and maintenance can take place at one location and on one server.

Cloud solution(this is for reference reading) Today, more and more enterprise CRM systems move to cloud computing solution, "up from 8 percent of the CRM market in 2005 to 20 percent of the market in 2008, according to Gartner".[14] Moving managing system into cloud, companies can cost efficiently as pay-per-use on manage, maintain, and upgrade etc. system and connect with their customers streamlined in the cloud. In cloud based CRM system, transaction can be recorded via CRM database immediately.[15]

Some enterprise CRM in cloud systems are web-based customers dont need to install an additional interface and the activities with businesses can be updated real-time. People may communication on mobile devices to get the efficient services. Furthermore, customer/case experience and the interaction feedbacks are another way of CRM collaboration and integration information in corporate organization to improve businesses services.[16] There are multifarious cloud CRM services for enterprise to use and here are some hints to the your right CRMsystem.
1. 2. 3. 4. Assess your companys needs: some of enterprise CRM systems are featured Take advantage of free trials: comparison and familiarization each of the optional. Do the math: estimate the customer strategy for company budget. Consider mobile options: some system like Salesforce.com can be combined with other mobile device application. 5. Ask about security: consider whether the cloud CRM provider give enough protect as your own. 6. Make sure the sales team is on board: as the frontline of enterprise, the launched CRM system should be the help for sales. 7. Know your exit strategy: understand the exit mechanism to keep flexibility.

CUSTOMER RETENTION STRATEGIES:

1. Welcome the complaints you receive. Your starting point for customer retention techniques is understanding why youre losing your existing customers. Most lost customers dont actually complain, and just simply walk away. Analyze those complaints that you do receive for trends in why youre losing customer loyalty then make appropriate changes. Use appropriately customer satisfaction survey questions to prompt customers for product & improved service ideas. 2. Instigate loyalty programs. Provide your frequent customers with money-off coupons or other loyalty programs as part of a simple customer retention strategy. You benefit from plenty of repeat purchases and they spread the good word about the benefits of purchasing from your business. Use online business systems to track and monitor the conversion rates of these individual loyalty schemes. 3. Send out questionnaires and surveys to existing customers. All the best customer retention strategies require constant feedback from the customer to establish what is working and what is not working. Surveys, questionnaires and customer loyalty research are the perfect way of doing this. Incorporate special offers or gifts to encourage responses. 4. Check for repeat sales often to instill your companys brand. Your existing customer base will be more loyal as they make more purchases. Improve sales performance by providing newsletters and regular communications to make sure theyre informed of new product lines, offers, related products, etc.

5. Reactivate dormant customers. Customers that purchased from you previously are more likely to come back and purchase more (just so long as they were not displeased by the service). Try contacting customers you havent heard from in a while to see if any of your current offers would interest them. Basic customer service training tips always state that holding onto existing customers is much easier than gaining new ones so you should start treating former customers due to their greater potential. 6. Have you scheduled a frequent communications plan to your customer base? Your communications are fundamental to any customer retention techniques. However, has to be planned out. You have to provide a strategy for how often you want to contact existing customers and decide upon what communication type should be used (e.g. e-mail, newsletters, etc.). 7. Provide exceptional customer service. This one is easy! The better the service you provide, the more customers youre going to retain, and the more loyal they will be. For online systems make sure you have enough customer service operatives and server performance monitoring tools to ensure customers have rapid access to your website and customer support teams. 8. Make a good first impression. Have you heard the old maxim first impressions last? Well its very true. The simplest customer retention strategy you can implement straightaway is to make sure that the first contact you make with customers is positive, easy and courteous. This applies whether youre selling online, face-to-face or door-to-door. 9. Make courtesy top priority with all customer-facing staff. You will surely lose customers rapidly if your staff are not courteous. Instigate training programs for all customer service staff in good communications, active listening and attentiveness to customer satisfaction. Make it part of their annual performance review too by using different types of performance appraisal methods. These customer retention strategies do cost money but pay off big-time with the amount of repeat purchases you receive. A side benefit is that more staff are more likely to enjoy their roles and be more professional and polite even with their own colleagues. 10. Do regular reviews. Do you think that applying these customer retention strategies is a once off thing? You need to do regular reviews on a scheduled basis to establish if complaint rates are dropping, what the nature of complaints are, customer satisfaction levels (i.e. from questionnaires), etc. Always be looking to improve the level of satisfaction the customer is receiving.