Introduction
Customer relationship management is increasingly becoming one of the main strategies that modern organizations use to improve their performance in a competitive business environment. As firms seek to improve their profits, the focus on customers as an important part of the organization has led to an increase in the number of studies carried out to investigate how good companies can use CRM to enhance their growth and performance.
According to Boulding, Staelin, Ehret and Johnston (2005, p. 156), for organizations to develop a long-term relationship with its customers requires a special focus on customers. In recent years, organizations in the United Kingdom have invested heavily to improve their relationship with customers (Danaher, Conroy & McColl-Kennedy 2008, p. 44).
For instance, medium and small business enterprises in the UK have invested heavily in information technology assets in an effort to better manage how they interact with their customers not only during a purchase, but also before and after the purchase (Bohling et al 2006, p. 181). However, the impacts of these efforts are arguably diverse, with some companies benefiting from such investments and others finding less significance returns from the investments.
In this speech, it will be argued that the heavy investment in CRM through a focus on certain areas such as IT assets play an important role in improving the performance of SMEs, and that the trend has improved the image of these organizations within their customers in the UK kingdom.
To develop this argument, this speech will focus on two questions;
- Is there evidence supporting the critical role of CRM among UK’s SMEs?
- Given that CRM enhances organizational performance, what strengths and opportunities does it inject into the SMEs in the UK?
What is CRM?
CRM represents an approach to organize business interactions with its customer in way that is more effective, better and faster based on a customer-centric ground. In fact, CRM is not a single project or activity but an entire discipline in business management. According to Winer (2001, p. 83), CRM allows organizations to execute relationship marketing on the enterprise-wide level. It has a direct impact on a large number of core business operations and processes.
The relationship between a business organization and its customers determines the ability of the organization to build an image of itself within the minds of the customers, which in turn determines the ability to attract and maintain customers (Francalanci & Morabito 2008, p. 54).
Therefore, CRM represents a process that companies sue to better understand their customer groups and to provide an instant or quick response to the shifting customer desires. Currently, organizations in the UK are applying information technologies such as CRM software to improve their interaction with customer groups (Marketing UK 2003, p. 6).
What benefits does effective CRM bring to SMEs in the UK?
Bendapudi and Leone (2002), CRM represents a better way for SMEs to create a competitive advantage by making an organization the best at understanding and communicating customer issues and desire. In addition, CRM allows organizations to be the best at service delivery and creation and keeping of new clients.
According to Bendapudi and Leone (2002, p. 86), one of the areas that SMEs focus on is the need to have a clear picture of their sales pipeline in addition to their existing customers. CRM is a process that allows organizations to develop a good knowledge of their sales channels and their customers, their problems and desires.
With software-based CRM, SMEs in the UK are increasingly achieving the ability to identify and target individuals who have the greatest potential as customers. According to Bendapudi and Leone (2002, p. 88), CRM has replaced the mass marketing approach within the minds of most UK business organizations because it allows them to focus and fine-tune their marketing efforts to make them more productive (Adelaar 2008, p. 22).
Secondly, IT-enhanced CRM allows SMEs to easily track and analyze their customers’ buying habits. For instance, these CRM systems house customer and sales information in one place, which allows the organizations to have automatic access to a wide range of reports on products and services and how customers respond to these (Buttle 2004, p. 123).
In addition, CRM allows a better coordination and cooperation among the different departments within an organization (Brynjolfsson & Hitt 2006, p. 542). Departments across an organization function more cohesively when effective CRM is in place, which ensure that departments are not separated from each other by systems functionality and access to information (Homburg, Droll & Totzek 2008, p. 131).
Finally, CRM decreases the overall costs that would otherwise be spent in mass marketing because CRM simply retains customers on a long-term basis rather than having to attract and lose customers (Johnson 2004, p. 24).
Conclusion
From a critical analysis, it is evident that CRM that is enhanced with technology is one of the main strategies that SMEs in the UK can apply to better understand their customers, their needs and purchasing patterns (Devaraj & Kohli 2003, p. 274). By maintaining a long-term relationship with their customers, SMEs are set to avoid spending huge resources on mass marketing projects, which will in turn improve their performance and competitiveness (Avlonitis & Karayanni 2009, p. 443).
To compete with large and multinational organizations, SMEs have no option but to create a better understating of the market, customers, customer behavior and buying trends in addition to responding to the dynamism of customer needs and desires (Iriana & Buttle 2006, p. 24). Arguably, it is only through effective CRM that SMEs in the UK can attract and retain customers and improve their ability to respond to customer needs and desires.
References
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