Written by Maja Djurica, Gordana Tomic, and Mile Smardzic, the article “Challenges of Relationship Management with Customers in Business Environment” was published on the Cambridge Business Review Journal, Volume number 17, Issue Number1. It appears on page 214-219 of the journal. The article explores the Customer Relationship Management (CRM) as an important strategy of establishing and enhancing relationships between suppliers and their customers.
In the article, the CRM strategy is identified as essential in promoting customer loyalty, which leads to increased business profitability, and low business costs (Djurica, Tomic, and Smardzic 214). Fundamentally, CRM aims at building a loyal customer base that consists of strategically important customers to promote business performance in an organization. In CRM, the relations benefit both the business and the customers.
By providing services that meet the expectations of customers such as high quality services and other benefits, customer loyalty is established (Djurica et al. 214). Moreover, customers are more likely to remain loyal to a particular company to minimize time and psychological costs associated with seeking services from another company.
The Development of CRM relationships
The development of company-customer relationships is gradual and involves many stages. Initially, a customer may not be aware of the company’s wares and thus a stranger to the company (Djurica et al. 215). At this stage, the management establishes a communication channel with the potential customers aimed at informing them of the company offerings and persuading the customers to try the same.
After the initial stage, the customer becomes an acquaintance to the company. At this stage, the management aims at satisfying the customers, removing any existing uncertainties, and promoting the company image to the customers (Djurica et al. 216). Offering quality products or services comparable to those of competitors is essential at this stage.
In the next stage, the customer becomes a friend to the company, which is enhanced by regular purchases. Through regular purchases, the management acquires specific knowledge of customer needs and tailors its wares to meet the tastes and preferences of the customers ((Djurica et al. 216). Additionally, at this stage trust relationships are established.
The trust relationships are essential in development of partnerships between the customer and the company ((Djurica et al. 216). When the company and the customers become partners, the company adjusts its offerings to suit customer demands and consumer changing needs. Additionally, the company aims at strengthening the relationships and maintaining customer loyalty.
Djurica et al. hold the view that, for a relationship to develop from friendship to partnership, the company must utilize customer information more effectively than the competition (216). Furthermore, the company must continually improve its offerings and programs in line with the changing consumer needs.
CRM faces many challenges in its implementation in many companies, as a strategy to gain a competitive advantage over other businesses. Firstly, due to the amount of customer data involved, CRM may fail to integrate customer data properly in building stronger customer relationships (Djurica et al. 216).. Most of the CRM initiatives also fail to get the intended user adoption and instead affect customer relations.
This often arises because the loyalty programs and marketing strategies used are intrusive and inappropriate to customers (Djurica et al. 217). CRM may also become ineffective if it fails to integrate other business applications. Additionally, government legislations also limit full implementation of CRM systems. The restriction regards the use of the customer data in promoting company products and services ((Djurica et al. 217).
Customer Experience Management
The management of customer relationships is often difficult and challenging. Most companies undertake to manage the customer experiences to overcome these problems.
Under customer experience management, three levels are identified; customer experience regarding the brand, transaction, and relationships (Djurica et al. 217). Through interpersonal relationships that relate to a given brand, brand experience can be established which is beneficial to the company. Brands have a connection with customer relationships hence essential in CRM.
Focusing on brand experience strengthens relationships associated with brand personality (Djurica et al. 218). Brand relationships are developed when the brand has a symbolic value that meets the psychological needs of the customer hence ensuring customer satisfaction. Therefore, experience focused customer management aims at offering products that meet customer needs and satisfaction.
Djurica et al. contend that, in order to maintain profitability, companies should terminate relationships with non-profitable customers (218). Additionally, customers with poor credit rating or dysfunctional customer behavior affect the business performance. If anything, dysfunctional customers affect the morale of employees negatively.
Therefore, ending a relationship with such customers to maintain business efficiency is essential. However, termination of a relationship with unprofitable customers should be done carefully to avoid negative publicity that might tarnish the company image (Djurica et al. 219).
Critique of the Article
The article offers an overview of the customer relationship strategy as an effective tool for attracting and maintaining customers and improving company profitability. The rationale given for establishing CRM by companies is one of the strengths of the article. The authors associate quality product offerings as a way of ensuring customer loyalty.
Further, the article identifies human behavior as connected to consumer behavior and loyalty, hence an essential component of CRM. However, the article fails to provide substantive reasons why companies adopt CRM as a business strategy. Only two reasons are identified viz. increased profitability and reduced business costs.
In the article, various analogues expound on the different aspects of CRM; for instance, the “leaking bucket” explains the importance of investing strategically in significant customers as opposed to seeking new customers. The article also excels in outlining the stages of development of CRM relationships. It identifies the inputs from the management of the company that can spur the growth of CRM relationships. The authors identify dysfunctional customer behavior as non-beneficial to the company; hence, it should be terminated.
With regard to presentation, the challenges of CRM, which is the main theme of the article, are not addressed adequately. The article also fails to specify the key challenges that face CRM coupled with failure to present the challenges in a sequence. Challenges often arise in the implementation of the CRM; therefore, effective implementation plans are essential.
However, the article does not explain how poor implementation strategies relate to failure of CRM to meet expectations. Additionally, the reasons why companies implement CRM are vague and unclear. Themes and main points do not come out clearly, and much of the information provided cannot account for the increased adoption of CRM management. There are also grammatical mistakes as well as poor sentence structure presentation.
The reference sources for the article provide information to support the authors’ arguments. However, most of the sources cited in the text do not appear in the references. For instance, in the customer experience management, the authors identify three levels of customer experience as suggested by O’loughlin Szmigin and Turnbull.
However, this reference source does not appear in the references. The authors also identify the three areas of interest that influence customer loyalty by O’Malley and Prothero but do not cite this source under the reference list. This indicates that most of the sources used in the article are neither valid nor reliable sources for further reference.
Most companies have implemented the CRM strategy as a way of retaining customers and remaining competitive. The article adds important value to understanding of CRM relationships in two ways. Firstly, it identifies the stages of development of CRM relationships and outlines what the management of the company should do to foster customer relationships.
Secondly, it specifies customer experience as the next front in CRM relationships. The authors advise businesses to terminate unprofitable customer, problematic customer relationships, and invest in a strategically important market segment to cut down business costs.
In my opinion, the importance of CRM relationships to a company and customers is well explained in the article. Additionally, the stages of developing effective CRM relationships and the new concept of customer experience are major contributions of the article. The article also excelled in explaining the importance of terminating problematic or dysfunctional customers and investing in loyal customer. However, the key challenges that affect the implementation of CRM relationships do not come out clearly.
In conclusion, I think the costs of implementation of the strategy and managing the CRM application is the main challenge facing CRM implementation. Additionally, setting out clear objectives prior to implementing the CRM would promote its effectiveness and adoption by users.
The implementation of CRM should be a joint strategy between IT department and management to ensure its success. Properly designed training programs aimed at providing essential skills to managers would enable them to utilize the CRM system effectively. Additionally, CRM strategy is a cultural change, which should be implemented in phases to ensure its success.
Works Cited
Djurica, Maja, Tomic, Gordana and Smardzic, Mile. “Challenges of
Relationship Management with Customers in Business Environment”. Business Review Journal 17.1 (2011): 214-219.