Customer Relationship Management

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You are a manager of a larger enterprise. You have completed a prestigious business school. You know all the modern manager tools and try to implement them in business. Your business dictionary is impressive. Words like business intelligence, benchmarking, reengineering, kaizen, outsourcing are used on a daily basis and you are convinced that you know their essence.

However, business results do not in any way reflect your knowledge and knowledge of your employees. You do not know what else you should do. You do not seem to be doing something good anyway. The buyer is the king – the maxim is what everyone in the company repeats as a mantra. But is the customer treated in your company just like the king? Perhaps the field of customer relationship management is problematic in your company, and you are not even aware of it.

Let’s go back to the healthy logic
Although almost all customer referral managers will say that they are the “start and end” of the business, and satisfying their specific needs is the basic purpose of a company’s existence, work in the area of ​​customer relationship management is often frustrated by logic and common sense. Most managers believe that the primary goal of managing customer relations – quality and product quality. The concept of quality of final value is determined by managers and engineers – technicians. By designing the concept of quality final value managers and engineers are most satisfied. They are confident that their product is technically perfect within the framework of existing technological capabilities. However, sales department can often not praise impressive figures. Instead of hearing and disbelief, one should start from the source – ask the customers what the problem is. Although customers often overlook various surveys, many people feel that they are not really asking for an opinion, but are only required to meet pre-structured surveys. According to a survey in which the data collected for five years, the reason for the “going out” of customers or the termination of buying a product in almost 70% of cases had nothing to do with the product itself, but with the service. Even when the product was a source of dissatisfaction, the problem was usually not classical in quality. Although it may be difficult to believe, a large number of problems were related to the fact that the buyer did not understand how to use the product and / or how to manage it. It is clear that the quality of customer relations has been scheduled.

Take care of the quality of the service
Quality is one of the most frequently mentioned words in business. The quality movement, in particular the overall quality management, particularly emphasizes the quality of products and business processes that result in creating new value. However, quality managers tend to remain at the finite quality. Yet, it is just the beginning of customer relations, but it’s never the end. Although they pledge to “fidelity of quality”, managers who pay attention to improving the quality of service, ie customer relationships are rare. The reasons may be different, but it often comes down to the fact that managers are difficult to manage something that can not be measured accurately. However, quality moves can not be accused of managerial neglect. According to the quality movement it is quite clear that quality is something that the customer determines. Famous Quality Award for Malcom Baldrige National Quality Award 25% of total points award rating rating for customer satisfaction. Large-scale court attorneys are often “unofficially” sued that in this category, many global companies “fall into the exam.” Why is that so? The area of ​​service to customers is often considered as “necessary evil” in practice. The costs of this service are considered to be administrative and are minimized. The service is often employed by people whose training is devoted to the least attention, the least paid, and in the hierarchy of the company, they are found somewhere in the basement. There are companies that have turned customer relationships into a “golden cock”. Buyers want to buy expensive insurance policies for damage to the product, and provide information to them via phone lines whose calls are charged. One US bank even recaptured and began to charge cash withdrawals “over the counter” to force customers to use ATMs. Bank managers have apparently forgotten that older citizens who, due to fear of “novelty” from ATMs, might have children and grandchildren who were certainly revolted with the bank’s relationship, so they could entrust their bank business to another bank. Rather than initiating a motivating and respectful approach, and giving ATM customers the incentive in the form of prize points, the bank acted repressively and thus lost its customers.

New or existing customers – the question is now
Many managers apply a customer relationship policy that can be summarized in the thesis: the old buyer is not happy, we are attracting a new one. But is this approach correct, especially from a cost perspective? According to some research, attracting a new customer is even five times more expensive than retaining the existing one. Likewise, it is even 10 times more expensive to regain the trust of a dissatisfied customer. Insight into business activity-based accounting shows a large discrepancy between costs associated with attracting new customers in relation to activities aimed at retaining existing ones. Enterprises thus spend on average two to 10% of sales revenue on promotion and advertising. Some companies even estimate marketing costs as a percentage of sales. This process initiates sales projections for the next period, and then determines the percentage of marketing expenses, thus gaining the impression that sales are causing marketing, which is meaningless. The reasons for bad customer relationship management should be sought in another fact – what you are promoting, you will get it. Sales staff are encouraged to gain new customers or sell new products that the company launches. It is at least encouraged to service relationships with existing customers. It is almost impossible to find a company that systematically monitors relationships with existing customers and measures the rate of their retention, let alone reward a positive trend of such numbers. Of all the above, it is not surprising that the customers are leaving. But will it come new? If we keep in mind that existing customers will not keep their bad experience for themselves, but will inform at least ten of their fellow men, loss of one customer simultaneously means a loss of ten potential. Although the existing but new customer base is significantly eroded and the corporate assets are significantly reduced, corporate management persists in misguided policy.

Who actually pays our bills?
The laws of the market economy are already well known to everyone. With the development of the capital market managers get the wrong picture that the venture capital comes from the investor. Although investors are important, the healthiest source of capital for the company is a retained earnings. The source of retained earnings is quite clear – it derives from customers. Due to the large-scale development of capital and financial derivatives markets, managers believe they are the most responsible to shareholders. Although all interest groups are important, their importance is not the same. No employees have no customers, and without customers there is no continuous cash inflow. Without buyers and cash inflows there is no investor interest in investing. Sound logic would lead to the conclusion that managers dedicate most of the time to the most important asset of the company – to current customers and to encourage employees to optimally meet their needs. However, the analysis of spending of manager time points to the astonishing fact that managers spend 80% of their time and effort on internal issues that do nothing to contribute to customer satisfaction. So most of the time it goes to planning, control, meetings on various internal issues, discussion of personnel criminals, etc. If managers were less concerned with themselves and reduced time spent on unnecessary meetings, and more attention was devoted to the organization of the customer relations service the effect would be is a lot better for everyone – both for buyers and for the company. If arguments to support the importance of systematic customer service development have not yet been sufficient, we can be of great authority in the field of management Peter Drucker. Drucker has coined the name of a profit center. However, after many years he said he saw his mistake and said that there are no profitable but only cost centers in the company. Profit does not come from within, but out of business. The profit center exists only when the buyer returns and re-orders the order and debits his debts. Until then there is only a cost center. If, therefore, after all, you have concluded that your business policy is somewhat wrong and that you do not treat your customer as a king, it is never too late to make a turn. With customers, you need to talk first, and this is the job of sales staff. Therefore, you need to get involved with their education, pay them properly, and point to their extraordinary importance for doing business. There is no reason to succeed. Remember, only the need to release products in sales relationship with customers does not end – it just begins. It is up to you whether it will develop into a relationship of mutual love, tolerance or rapid disagreement.

6 thoughts on “Customer Relationship Management

  • 04/12/2018 at 7:59 am

    At its core, customer relationship management (CRM) is all of the activities, strategies and technologies that companies use to manage their interactions with their current and potential customers. A saying frequently heard and said in many businesses is “customer is king.”
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