CRM Essay Example | Topics and Well Written Essays - 1000 words

CRM - Essay Example 1. Introduction Is the customer always right? The customer may be the king, but is it worth pursuing to retain all the customer accounts? These are some of the dilemmas an organisation face, especially when a customer relationship have entered a cul-de-sac. The basic premise of customer relationship management is about attracting, developing, maintaining and retaining profitable customers over a period of time (Massey et al., 2001). Figure 1: The basic premise of customer relationship management Adapted from source: Massey et al., (2001) 2.Theoretical underpinning Payne and Frow (2005) delineate functional dimension of CRM and stated that it concerns with creating improved shareholder value through development of appropriate relationships with key customers and customer segments by making a fusion of the potential of relation marketing strategies with IT to create profitable, long-term relationships with customers and other key stakeholders. ... re 2: The service profit model suggested by Bentum and Stone (2005) Source: (Hussain et al., 2009, p.120) From the figure above, the service profit chain (SPC) is evident and urges that the value creation process is indeed a horizontal cross-functional process, rather than standalone views contained within each function (Heskett et al., 1994). Behind the theoretical underpinning of CRM, a major vector is to be able to fight competition; and an enterprise after implementing the CRM system should be profitable and add to shareholder’s value. However, at the core of the CRM remains the customer which must be attracted, developed, maintained, and retained in a profitable way. But does it mean that all the customers to be retained for as long as possible? Should the organisation pursue it with obsession? Saubert’s (2011) case study on â€Å"Which accounts are worth keeping?† provides a clue to this question. Saubert suggests that there should be a fruitful communion o f attrition propensity and profitability models (Saubert, 2011). Studying in the context of Australian Banks for credit card holders, Saubert opine that while devising customer retention strategies, firms should weigh the value earned from each customer. The firm’s CRM strategy needs to be guided by answer to two fundamental questions: Figure 3: Two fundamental question that must guide a firm's CRM strategy Adapted from source: (Saubert, 2011) Saubert (2011) opines that while firms usually strive to increase customer loyalty and reduce attrition but tend to overlook these two questions. The Performance Improvement Council (2008) states that in an ideal world, loyal long term customer relationships would eventually evolve towards partnerships and quotes Michael LeBoeuf, author of How to Win Customers & Keep