• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

CRM - Does theory work in practice?

Extracts from this document...

Introduction

CRM- DOES THEORY WORK IN PRACTICE? There is great debate on the use of Customer Relationship Management in practice. There are two differing views and in this discussion document both points will be analysed with use of examples and the relevant theory emphasised by models and frameworks. "CRM is about having a good IT system, therefore, many firms believe they are carrying out CRM when in fact they are not" To answer the validity of this part, there needs to be investigation into the practical use of CRM. Black Horse financial services markets regulated products to the customers of Lloyds bank. Special sales force advise more than half a million customers each year through its high street branches generating more than �140million in premium income. Although there has been a huge increase in public awareness through media coverage for demand for life assurance and retirement provisions, research shows that the majority of the market prefer to interact face to face when taking out pensions. However to enable target markets to be selected and data regarding customers and their background would take days to be accessible. The slow IT system needed to be improved and be user friendly by the marketers of the firm. After careful selection the Viper software was chosen. After a year Black Horse was happy with the system and the ability to quickly interrogate a large amount of information at a customer level. ...read more.

Middle

The top 10% of customers for this client are worth 38% of the total value and the bottom 10% made up minus 28% value. The diagram below shows how such a theory can be extremely advantageous in the fields of CRM. * Group A- Offer preferential value , possibly tailored product/service to these customers * Group B- Offer normal undifferentiated product/service * Group C- or the lowest valued customers should either be turned into the higher level customers or be lost as these are seen to be unprofitable clients to the organisation Segmenting by customer value "Marketing and in particular the managing of the buyer-seller interactions, is composed of highly specialist tasks, often crossing business functions. Consequently, organisations must learn to perform their tasks in such a way as to deliver effective customer relationship management (CRM)" The above statement refers to the true essence of CRM. The theory therefore will explain the different parts of the statement and then this will be compared to the two examples and they degrees in which they comply with effective CRM. Theoretical Approach Customer relationship management is a combination of relationship marketing and database marketing. The table below highlights some key differences of this approach to traditional marketing. Relationship marketing Marketing mix Customer retention new customers One to one one to many Mutual advantage make a sale Active contact-interaction one way communication Join problem solving one-way problem solving The theory is that by endorsing a marriage like relationship, both the firm and the customer can prosper. ...read more.

Conclusion

For example: * Conduct market segmentation analysis * Identify likely customers for new and existing product lines * Generate direct marketing campaigns * Track and monitor campaign effectiveness Conclusions Black Horse have used their CRM software solution to help the flow of information regarding their customers. They have failed to make CRM in integral part of the business environment. Instead they have only used this concept in obvious benefitail areas. They are after all mainly concerned with corporate objectives in the short to mid terms but hopefully with further use of their database will begin to identify the need to use CRM in all forms of their business and communicate this through more effective direct marketing and other business functions. Royal & SunAlliance have been more customer focused and have a higher degree of relationship marketing. The dissection of customer value poses very powerful information but must be used to its potential. There have been trends towards using the VIPER sytems by marketers to gain the powerful data, but in practice it is not being spread through all or most of the business. CRM is not only a database solution which assists in segmentation, relationships and loyalty information but very benefitail intangible results to the organisation. It may be optimistic though to assume that companies adopt a thorough CRM ethos. It could be defended that it takes a great deal of time, money and investment to change the environment of the business in most or all of the different areas. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level ICT in Business section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level ICT in Business essays

  1. I have selected a nursery because there is high demand in the UK as ...

    Mixed Good Location Ealing Ealing Ealing Ealing Special offers None None None None All of the nurseries listed above occupy children aged from 0-5 because they all teach by the National Curriculum and are inspected by OFSTED. TARGET CUSTOMERS C1 The target customers for my nursery will be parents who

  2. Business Aims and Objectives.

    Therefore this saves time. Facilities to share common data Databases are used to store a great deal of information relevant to the business. A business may have internal databases for: * Customer records * Product lines * Spare parts * Staff records * Suppliers * Order files Each database record will contain information relevant to that topic.

  1. Apple Incorporation - Case Analysis

    The amount of product introductions hitting the market requires that each company continue pursuing more innovative products in a shorter period of time. Lack of newly enhanced product will reduce customer demand even more than what is being affected by the weakened economy.

  2. Effective blending of Entrepreneurship and Professionalism.

    But recently, they have woken up and started working towards improving the efficiency of the organization. Today's businesses, especially the large ones, simply will not survive in this period of rapid change and innovation unless they acquire entrepreneurial competence. In many cases, the Entrepreneurship needed can only come from existing businesses.

  1. The Use of Geographical Information Systems (GIS) And International Technology Transfer by Non-Governmental ...

    in Heslop,L. A. McGregor and Griffith M (2001) Technology sale when completed is judged by a success of technology transfer for the organisation that is the source. For the buyer success only comes after successful and profitable commercialisation and market acceptance. Today's paradigm stresses the importance of building enduring relationships with clients; the vendor should be concern with

  2. Buisness at work

    They do this by beating the competition around them. Beating the competition can be done in many ways. - Growth: A policy of expansion to increase sales and market share (market share is the percentage of the market taken by the product of a business). - Price cutting: Asda also has an objective of providing quality products and customer service.

  1. BUSSINESS AT WORK - Coca Cola

    usually grow into larger businesses such as private limited companies, multinationals, franchises, etc. Below is a description of the types of ownership of a business: - Sole Trader - Usually if you set up a business, you may do so for a number of reasons: redundancy, dissatisfaction with your present job, or developing a hobby or interest into a business.

  2. Compare existing documents from three different banks: Abbey, Lloyds TSB, and HSBC.

    It is also set in white, making the text highly visible for the reader and makes it seem clear cut. Information is mostly in bullet pointed form, with the sentences being shortened, and more easily read. Major headers are bolded and font size increased, with a thin red line underneath to make it clear and defined.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work