THE NEED AND IMPORTANCE OF APPLYING CRM STRATEGIES

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1 Bob Constantin THE NEED AND IMPORTANCE OF APPLYING CRM STRATEGIES Academy of Economic Studies Bucharest, Faculty of Commerce, 6, Piata Romana, Sector 1, Bucharest, +4021/ Saseanu Andreea Simona Academy of Economic Studies Bucharest, Faculty of Commerce, 6, Piata Romana, Sector 1, Bucharest, +4021/ Abstract: Customer Relationship Marketing represents a relatively new approach for the companies that wish to create a profitable long term relationship with their clients. CRM applications allow companies to collect and to use information about their customers in order to customize their offer for every client, to increase client s trust in the company and to coordinate their relationship with clients a lot more efficient in all market stages. Every company may take advantage of a relationship marketing approach. In the present work paper we propose to examine the most important strategies necessary for companies to implement relationship marketing and also we would like to expose the benefits for the firms that already use relationship marketing strategies. In some situations, this approach is easier to implement (business to business situations or service industries), in others, such as consumer goods industries, it is more difficult. In conclusion, a relationship marketing strategy is becoming a must for surviving on market. Key words: customer relationship, management, relational marketing, strategy. 1. Introduction The Customer Relationship Management CRM represents an essential tool for a company desiring to create a long term, profitable relation, with its clients. CRM has developed from a technology uniting a telephone call with an interface offering information to the respective client CTI or Computer Integrated Telephony. The client felt as being in the center of attention of the company by the customized message it received. At present, CRM uses the Internet and the potential offered by the data bases. CRM development was possible due to the constantly increasing volume of personal information as well as due to the use of a set of specific characteristics of the client, regardless the way this contacted the company. Thus, one can speak about the transforming of the traditional marketing in a relational marketing. 2. Traditional marketing vs. Relational marketing The relational marketing may be define as a continuous process used by the company to create value for its clients, having as starting point their individual needs. The specific traits of this concept may be the most emphasized by a comparative review with the traits of the traditional marketing, as can be noticed in the following table: Traditional marketing vs. Relational marketing Table no. 1 Traditional marketing Accent put on a sole transaction Short term thinking and acting Directing towards the product characteristics Moderate contact with the clients Relational marketing Accent put on assuring a good relationship and the retention of the buyers Long term thinking and acting Directing towards the client s benefits High contact with the clients 755

2 Capitalizing the company s resources by directing towards the market Limited engagement towards buyers Short term empathy Quality is mainly a concern of the production Non existing of a structure to continue the business Focusing on sales The basis is the result of the sales Concluding a business means searching for another Capitalizing the company s resources by directing towards the clients High engagement in providing products and services to clients Empathy and long term relations Quality is the concern of all employees. Creating a structure to strengthen the partnership relations, creating clubs or groups of members for the frequent buyers. Partnership relations directed towards results Fast, certain and lasting results leading to building relations One sale means a start, the target being the results and long term business Non differentiated marketing Customized marketing (1 to 1) The main objective of a relational marketing strategy is making loyal the clients and winning their exclusivity. The starting point of this process represents the potential clients, those who would be able to acquire the goods and services of the company. The company hopes that, once bought its products, the satisfied clients will repeatedly come back. The company will further make sustained efforts to transform the repeatedly coming back clients, experiencing a high satisfaction level in relation with the products and its services, in loyal and stable clients. The maximum fidelity level one client may feel towards the company, its products/services or trade marks, represents its exclusivity. The exclusive client is the one appealing to only one of the products/services or only to a certain trade mark to satisfy its needs. 3. CRM STRATEGY In the context of transgressing towards the relational marketing, the management of the organizations, adopting new vision, needs a data basis containing information about its clients, in order to administrate efficiently the relations with these. Thus has occurred the need to apply a CRM strategy by using Internet and its offered facilities. At present, there is no unique definition for CRM, due to the fact that there is a large variety of CRM. CRM represents essentially a strategic approach occupied to create an improved value for the shareholders by the development of some relations in accordance with the main clients and the important market shares. CRM unites the IT potential and the potential of the relational marketing strategies to create profitable and lasting relations with the main clients and shareholders. CRM offers increased opportunities to use data and information both for understanding the clients and for creating value together with these. This needs an inter-functional integration of processes, people, operations and marketing capacities, representing a premise through information, technology and applications. Thus, CRM means building and keeping a long term relation with the consumer. This relation is based on the IT technologies and on the use of Internet. A unique data basis of addresses provides the company complete information about all clients and assures the control of the sales. Main functions of a data basis: Administration of existing partners/clients, information and their unique features; Collecting data about a certain partner/client using several sources as: operational data, records of the business transactions taking place between the company and the client, offers sent to clients, orders, meetings with clients, their complaints etc.; Transforming the data gathered from several sources about a certain client in a coherent information, easy to access, offering a complete image about the respective client. 756

3 CRM applications help the companies to collect and use data regarding the clients by 2 mechanisms: making possible the collection of information referring to each transaction made by a client; further, the information took over is processed and converted in the data base, in knowledge about the consumer. 4. STAGES OF CRM STRATEGY In order to implement a CRM solid solution, at the level of the company, running through some important stages is required: winning the support of all organizational levels; identifying and dividing the clients per groups of interests; achieving a client structure; measuring performances; planning. Stage 1 winning the support of all organizational levels In order to implement the CRM strategy it is required, first of all, to accept the concept at the level of the whole organization. It is very important that people understand the CRM concept, the need to use it, the advantages that may be obtained as consequence of its application, the content, functioning, implications for the design of the website. Stage 2 identifying and dividing the clients A viable CRM strategy must be based on establishing a customized relation with the most important among the clients of the company. Each client must be treated with differentiation, because each has specific needs. The Internet offers the possibility to treat in a differentiated manner each person, because each individual is unique and has unique desires and needs. The achievement of a valuable CRM presumes understanding the needs and desires of each client, as well as the way these desires may be satisfied using the Internet. In this stage running through 4 sub stages is required : 1. identifying clients, especially the most valuable for the company; 2. differentiating clients, their dividing using a series of criteria such as the value for the company, the needs and their unique desires; 3. interacting with clients, establishing methods of gathering more and more information about the clients of the company, what are they the most interested of, what make them sensitive, etc.; 4. customizing, finding ways of communication adjusted to every and each client which must be based on the knowledge accumulated about these. An important classification is the one dividing the clients in 3 categories. MVC: Most Valuable Customers, representing the main value of the company MGC: Most Growable Customers, clients with a high growing potential BZ: Below Zero Customers. Each group may be divided in subgroups, based on demographic data, of the known needs, desires. Thus, the company s strategies must be designed so that to provide: retention of those in MVC group; transforming MGC in MVC; reducing costs in order to serve those form BZ category. Another classification of the portfolio of clients of an organization may be achieved from the profitability potential and its value viewpoints. Thus, there are four categories of clients: star clients, productive clients, question mark clients and problematical clients. 757

4 The star clients are the clients characterized by a high potential of profitability and by a high value, fact leading to directing the company towards a strategy of their customizing. The star clients are represented by persons appealing only to the products and/or services of the company to satisfy their needs. The productive clients are those having a high value, but with a relatively low profitability potential. This category of clients need less important investment from the company, but measure of making them loyal may be practiced, such as customizing client cards. The question mark clients are represented by clients presenting a high profitability level, but a relatively reduced value, the objective of the company being to try to transform them in star client. The problematical clients have a low level of profitability and sometimes, do not present real chances of development. Under these conditions, for this category of clients, no measures of customizing are imposed, but there is a trend of excluding them from the company area of interest. The company will decide, after such a classification those categories of clients to direct to its efforts in a view to winning their fidelity and even of the exclusivity. Thus, as concerns the question mark clients, obtaining their loyalty will be tried, for the productive clients obtaining their fidelity is recommended and in case of the star clients reaching the exclusivity is to be tried. Stage 3 achieving a client structure This stage is very important for the company, because it achieves a profile of the needs and desires of the different groups of clients, as well as of the method they may be better satisfied by means of the Internet. The process of achieving a Customer Mapping presumes an interactivity between the company and the client, an active listening from the company, as well as an activity of learning the needs, desires of the main clients. The point of starting in designing a Customer Map must be the client itself, and not what the management of the company desires or what makes the competition. A CRM strategy must be based, thus, on what the clients needs and search for, rather than what the company s management thinks. Stage 4 measuring performances (results) In this stage a set of easy tools allowing the company to measure the traffic recorded on the website had in view, but especially methods to emphasize the impact the CRM strategy had among the clients must be found. Measuring the efficiency of the investment in CRM is difficult, if classical indicators, such as ROI (Return of Investment) are used. The advantages offered by such a strategy are most of the time qualitative and less measurable from the quantitative viewpoint. Never the less, a series of studies show there is an average ROI of approximately 10 months, which may differ depending on the company or project. The basic idea is that CRM projects should be based less on technology and more on creating and maintaining a relation with the clients and other partners of the company, on selecting the information needed and on training and motivating the employees. Stage 5 - planning The last stage in the development of a CRM strategy is represented by establishing a plan. This should include aspects such as: objectives, method of measurement of the performances, methods of changing the attitudes, changes at the organizational level, the design, content, functions and method of interaction, etc. 5.CONCLUSIONS Creating a profitable and lasting relation with the clients and the employees contributes to a significant increase and to obtaining a profit, fact representing the premise of any business. The staff employed in sales reduces the cycles of sales and increases significantly the indicators of performance (turnover per client, turnover per category of products/services, enlargement of orders etc.), the marketing expenses decrease, creating opportunities and attracting clients are considerably improved. The company achieving all these activities may enhance the productivity and may reach the objective of clients retention, under the conditions where the costs decrease and the promptitude as concerns settling the clients requirements increases. 758

5 Implementing a CRM solution brings advantages by optimizing all the processes related to the relation with the clients. These applications are meant to release the employees from a series of useless activities related to the potential or existing clients, so that those to become preoccupied to work efficiently and with pleasure and focused on what means the most for the clients: offering high quality products and services. BIBLIOGRAPHY 1. Bruhn, M. (2001): Directing towards clients grounds of a successful business, Editura Economica, Bucharest, 2. Mathas, S., Krishan, MS, Fornell, C.(Oct. 2005): Why do Customer Relationship Management Applications Affect Customer Satisfaction?, Journal of Marketing vol. 69 pg Pop, N. Al. (2005):Attachment of the client towards the company main lever of relational marketing, Marketing-Management magazine, vol. 1; (85)