ELK ASIA PACIFIC JOURNAL OF MARKETING AND RETAIL MANAGEMENT. ISSN (Print) ISSN (Online) Volume 5 Issue 3, July (2014)

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1 AN EXAMINATION OF CUSTOMER RELATIONSHIP MANAGEMENT AND ITS EFFECT ON CUSTOMER LOYALTY Prof. Dr. M. H. Salim Director, Musaliar Institute of Management, Pathanthitta, Kerala ABSTRACT The paper attempts to examine customer relationship management in the Nigerian telecommunication industry and its effect on customer loyalty. The study was conducted through a structured questionnaire, surveyed among 50 random sample respondents each from 4 telecommunication firms, making it a total of 140 respondents. The collected data was analysed using descriptive statistics and variance estimation technique. The research findings depict that customer retention is a major benefit that is accruable to an industry and to firms and can be achieved through better understanding of customer needs and addressing of issues. Promotional activities and quick service delivery are the strategies adopted by players in this industry to facilitate customer loyalty. Keywords: Customer loyalty, Promotional activities, Service delivery, Customer relationship Introduction There are different kinds of strategies implied by different organisations since past like strategy for supply-push in order to produce services and products with determined modules in accordance to the customer s level of satisfaction. Later it turned inefficient and so there evolved another strategy, termed as strategy of demand-pull. This strategy aimed in the process of producing services or products as per the preferences of the customer. However, this strategy too gets replaced by customer-centric approach called CRM or Customer Relationship Management. CRM turned up to be the feedbackreversible approach through the treatment offered to varied customers under different provisions to meet mutual benefits for respective organization as well as targeted customer. CRM gets assistance of organizational aspects that can offer services/products as per preferences of the customers and thereby increase customer s loyalty. As a whole this gets expected in accordance to costs towards lower operation as well as increased revenue (Zong, 2008). CRM is a business philosophy, strategy and technology and the same coordinates with a mediated strategy through data driven technologies that laid emphasis on the creation of two

2 way communications in relation with customers to create some intimate knowledge in the firm about the needs of the customers, things that they want along with the patterns of buying (Pedron and Saccol, 2009). On the other hand, perspective, CRM is a managerial strategy offering assistance to the organizational collection, analysis and above all management of the customer based data by the application of IT tools to understand the satisfactory needs of the customer as well as establishment of the same on longterm benefits. In reference to the telecommunication sector, CRM is noted as ways to be used towards the process of mediating data which is both in the form of written as well as oral information collected from sender towards the recipient, added by return over feedback attained from receiver to sender on regular punctual timings. It has been recognised as a recording track for making a programme and necessary adjustment. It also assists firms in acquiring as well as retaining customers and further maximizes value for lifetime. Before 2001, consumers of Nigeria Telecommunication (or the NITEL) struggled out of inefficiency of providers of telecommunication service, functioning under government. Because of globalization and deregulation of the Nigerian industry for telecommunication, 2001, consumers are independent to make a selection among eight numbers of operating service providers by Expansion and deregulation of telecommunication services and products prompted various changes in the services of mobile telecommunication and considered competition being necessitated through CRM principles. Increased products/service menu are based on emerging firms in the field of telecommunication and under excessive competitive edge the participants were compelled to employ different kinds of strategies towards the process of separating products/services away from competitors within the strategies termed under CRM. To meet the Organizational goals, consumers demands must get identified and delivery of services and products satisfying such needs must be backed by efficient services/products than the competitors. Thus, with some reasonable

3 precision, CRM to some extent must get structured for maximisation of customer loyalty. Understanding modern telecommunication mobile users demands the service providers for many operators (Oyatoye et al., 2013), which is a challenge. Current literature on the strategies of CRM has assisted some aspects to meet these challenges of telecommunication industry. CRM has been studied in accordance to the attainment of customer loyalty, especially for the banking sector (Melodi et al., 2012; Ogbadu and Usman 2012; Babatunde and Ajayi, 2010). These researches failed to lay emphasis on CRM systems in terms of maximising loyalty of the customer. Kotler and Keller (2005) stated that CRM concentrates in managing complete data about the selected individualised customer and further aims in understanding the points to maximise loyalty of the customer. Thus, this research aims in the process of examining CRM s role in managing consumers from telecommunication in Nigeria and the same is developed to investigate CRM practices over the telecommunication firms in context of consumer loyalty. Literature Review Theoretical postulations declared that higher the rate of organisational practices, better the customer relationship, and higher note of customer loyalty for respective brand too depends on the same. According to Parvatiyar and Sheth (2001) there are many researchers, IT sector in particular and decision technologies, who are part of new methodologies as well as techniques for the purpose of creating effective information systems to manage right relationships with the customers. Ragins and Greco (2003) stated that CRM is subject to offer various benefits, which is more than the trend of repeated purchaser; commitment of the customer with an emotional attachment to respective seller. These aspects can be inclusive of liking, trust, and the trend of believing the ability of the organisation to respond promptly to the problems of the customers. Customers can be considered as organisational assets who can remain favourable for the word-of-mouth mode of advertisement and are relevantly resistant towards offers of the competitors. This demands excessive efforts for an

4 extremely satisfying state of customer to turn away business attachments. Achumba (2004) notes that a new customer can be attained through a complex approach of awareness in context of distributive channels and products of the firms. Thus, fallout is to generate revenue through the means of increasing retention of customer by CRM. CRM occupies a wide ranged spectrum of organizational system and is identified as a business strategy, offering integrated scope to all the business related areas, that can also affect respective customer (sales, marketing, services), by integrated position of process, people and technology for the purpose of optimization of customer satisfaction. According to Dyche (2001) CRM is an infrastructure allowing increase of customer value, and right way to motivate customers value to gain loyal. Oliver (2008) declares about CRM value that is subject to create and further maintain better and long term connection with customers. Customer loyalty remains complex to CRM. Aspect of loyalty is about the repeated use services/products of the company by customers and consistent pattern of purchase that continues even after changes in business. As per Babatunde and Ajayi (2010) declared CRM as a kind of emerging customerinnovation that emphasises development related to the benefits of the customers through the delivery of value towards the customer for the purpose of enhancing intimacy with the customer. This is subject to increase levels of quality as well as enhanced penetration of business. Croteau and Li (2009) stated that CRM remains to be a tremendous step in the process of creating a system, which can be offered as a way of retaining loyalty of the customer. However, Greenberg (2008) stated that CRM demands about the changing behaviour of the customers. CRM systems adopted by a business aims in offering benefits that is concerned about creating long-term connection with the customer. As against this, consumers are familiar with the process of dealing with determined businesses that remain proactively concerned about the understanding as well as the process of serving the demands of the customers (Vimani, 2007). CRM remains as an umbrella terms related to the customer being at the centre of an organization. In

5 the same way, CRM is also about the relationship with the customer across all the other related functions of the business, interaction points and audiences. In the process of retaining relationships with the customers, the approach of loyalty remains as the basic sale principle for longer duration. It is here that CRM is a tremendous step in the process of creating a system for offering means to retain individual loyalty (Croteau and Li, 2001). For comprehending CRM, there is the need to understand the aspects of customers dynamics as the customers never remain consistent to the theoretical hypothesis (Greenberg, 2001). Brown (2000) declares CRM as being neither a determined concept nor any kind of project. Rather, it is noted as a business strategy that concentrates in understanding as well as anticipating and managing organizational demands in connection with the potential customers. The approach follows stages; such as, process of strategy, organizational along with technical change, that withstand a company in the process of seeking better management approaches in relevance to own enterprise in context of behaviours of the customers. The ultimate goal is to retain and relevantly grow determined profitable customers with clear understanding of attributions related to service, representing value and further create loyalty. The aspect of CRM comprises of five elements (Handen, 2000), which are - i. strategy, ii. technology, iii. segmentation, iv. process and v. organization. He came up with technology-enabled approach in order to convert driven data in the form of business actions and the same remains in response to and simultaneously; in anticipation with actual behaviour of the customer. From the perspective of technology, CRM is noted as a representation for measuring as well as allocating organizational resources towards the activity having greatest returns of profit related to the customer relationship. Successful implementation strategy of CRM rests over the crafting strategy of the customer. The old-fashioned analysis of the segmentation has been designed for the

6 process of determined objective attained from banking vision. Complex task related to crafting has been noted as a strategy related to customer that aimed in figuring customer towards the creation and cut off for right track of management that offers answer to the selected fundamental questions noted below: How our value proposition is subject to change in order to earn more customer loyalty? What can be the potential value related to the increase of customers loyalty? How much variation is possible in reference to the customer segments? How much resources are subject to get allocated towards CRM? The basic objective of CRM stand different from business having competitors in terms of attaining customization meeting demands related to segmented customers in creating customer loyalty in due course time (Babatunde and Ajayi, 2010). Gartner (2010) is about the three phases, CRM that can support connection between relevant business and customers in order to: Acquire; CRM that can assist a business in the process of attaining new customers by excellent management contact, direct mode of marketing, selling and meeting after-service demands. Enhance; web-enabled CRM in correlation with tools of customer service that gives excellent service from determined team for the trained as well as skilled sales and specialists related to service, offering customers the ease of one-stop shopping. Retain; is about the CRM software along with databases that can enable business in terms of identifying as well as rewarding loyalty of the customers and improve targeted marketing as well as relationship initiatives of the market. Developments related to customer relationships is subject to trace historical roots from pre-industrial time, most of which are in direct interactions among the agricultural producers and their consumers (Sheth & Parvatiyar, 1995). Chen and Popovich (2003) stated that CRM is not about being a really new concept, but in reference to current developments in IT and enterprise related software technology, there is the demand for practical relevance. CRM is the most dynamic mode of technological topics in context of current

7 marketing evolution. As per Parvatiyar and Sheth (2001) there are also the attributions in context of preponderant CRM to lead towards the key drivers like rapid advancement of technology, adoption of TQM (total quality management), growth in service sector, hyper-competition along with empowerment of people in organizational development. The drives of CRM have its roots from the approach of relationship marketing with the aim to improve customer profitability by drifting product-centric and customercentric marketing aspects. According to Bose (2002) CRM emerged due to difference in customers and their preferences as well as buying habits. As derived by him, all the customers are same and thus CRM is not relevant. Eventually, through the means of understanding drivers of customer as well as profitability, companies are efficient enough to act better in offering that they release in the market with the aim to maximise entire value related to the customer portfolio (Chen & Popovich, 2003). CRM in the modern scenario is more about receiving businesses across the determined margins through current marketing environment that is identified to remain as a highly saturated and excessively competitive (Chou, Ding, & Unithan, 2003). Payne and Frow (2004) derived that CRM is liable to create philosophy of relating marketing, which aims in the process of creating, developing and further enhancing relationships in the berst possible way, with the targeted customers. This aims in maximising value of the customer, profit of the corporation, leading to the value of the shareholders. Basic aim is related to the development of customers experiences about the way they initiate interaction with the respective company that can lead to higher level of satisfaction, developed customer loyalty and long-run profitability. Dimensions of the technology related to CRM that is usually the core distinguishing feature from RM, is about serving as an enabler distinguishing CRM from RM with nebulous, hazy and imperceptible aspects, particularly as the customer is implied in the strict way for the final beneficiary related to the output of the firm. Equally RM in the strictest way remains effective to its contemporary practice which is not enough to dispense with the mode of technology or related

8 solutions. Thus the current research considers CRM under wider ranged perspective meant to manage customer interactions, against narrower perspective of attaining solution to technology/ application/ software package, offering suicidal derivations to various CRM programmes. According to Chen and Popovich (2003) CRM programme is a simple technological solution and remains bane towards various implementations of CRM approaches under strategies that are liable to culminate higher note of failure in the application of CRM. Methodology Method for the survey for this research is based on structured questionnaire as well as focus group discussion (or the FGD). There are 4 telecom firms from Nigeria: Glo, MTN, Airtel and Etisalat. Random selection of a sample of 50 respondents gets selected from these firms in order to represent whole population. Sample size of total 140 respondents was added to this research. Questionnaire copies were given to the employees from these telecom firms (comprising management personnel from top level, middle level and low level). Head offices are from the telecom firms and there are branches selected from south west, Nigeria. Various questionnaire copies get administered by selected enumerators from four telecommunication firms. Total 160 questionnaires were returned and rest 140 turned up valid and relevantly collated for further analysis. Collected data are further analysed through variance analysis as well as method for regression. Derivations and Discussion Derivations are mentioned in Table 1-3. Derivations from FGD showed all the sampled telecommunication firms having CRM principles. Moreover, CRM is even part of managing interactions with customers in the telecommunication firms. CRM is identified as the strong tool to generate more customers and the same gets retained, and almost every firm can earn determined customers loyalty. Sampled firms also showed CRM as a kind of business strategy that can be employed for comprehending customer, further retaining them by offering better experiences, attracting new customers, and lastly increasing profitably by diminished cost of

9 the customer management. Details are illustrated in the sections noted below. CRM in Telecommunication Consumer Management Empirical derivations as noted in Table 1 show that CRM in the management process for the telecom consumer is (p < 0.05). This is subject to enhance customer loyalty by delivering efficient services. It can remain uninterrupted mode of communication that can reduce tariff in selected peak periods, as well as ability towards disallowing of communication interference. CRM can further give opportunity for understanding and addressing basic concerns related to the customers. Though understanding customer must get ensured, there is the need to connect the demands of the services and products within telecommunication firms, noted as F=6.43; p<0.05. I t is here that CRM is effective in generating more customers as in F=6.69; p<0.05 gets retained. CRM also follows F=7.43; p<0.05, in order to ensure collection of integrated data for the customers. Analysis initiated in the selected firms one by one remains effective to CRM over the process of gaining customer loyalty by descriptive lens as in Table 2. Process of retaining current customer remains as the highest effect over CRM, in connection, between MTN and the customers, same as

10 the derivations from GLo telecom firms. However, developments of the image of the firm remain as the highest influencing factor attained from Etisalat telecom firm. As a whole, CRM attains highest effect over retention of current customers and is liable to increase customer loyalty. Strategies to Promote Customer Loyalty by Telecommunication Firms There are various strategies considered by telecom firms in the process of promoting customer loyalty through sampled telecom firms (see Table 3). Amidst all these excellent service delivery (which is 31%), there is the quick response to relevant complaints (as 22%) and promotional activities (as 47%). Conclusions CRM thus is strong in showing effective strategy for the retention of customer. Benefits in relation with telecommunication firms having CRM initiative attain better communication with customer, along with the increased level of effectiveness and efficiency. While dealing with customers, determined firms must integrate CRM into single mode of operation. This can assist telecom firms towards a simultaneous development of customer acquisition as well as rates of retention.

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