Monday, July 18, 2005

Customer relationship management

Customer relationship management is the overall processability and maintaining profitable customer relationships by delivering superior customer value and satisfaction. The aim of customer relationship management is to produce high customer equity, the total combined customer lifetime values of all of the company's customers.

The key to building lasting relationships is the creation of superior customer value and satisfaction, and company is needed to understand the determinants of these important elements. Customer perceived value is the difference between total customer value and total customer cost. Customers will usually choose the offer that maximizes their perceived value. Customer satisfaction results when a company's performance has fulfilled the buyer's expectations. Customers are dissatisfied if performance is below expectations, satisfied if performance equals expectations, and delighted if performance exceeds expectations. Highly satisfied customers buy more, are less price sensitive, talk favorably about the company, and remain loyal longer.

Companies want not only to acquire profitable customers, but to build relationships that will keep them and grow "share of customer." Companies must decide the level at which they want to build relationships with different market segments and individual customers, ranging from basic relationships to full partnerships. Today's marketers use a number of specific marketing tools to develop stronger bonds with customers by adding financial and social benefits for structural ties. Different types of customers require different customer relationship management strategies. The marketers aim is to build the right relationship with the right customers. In return for creating value for targeted customers, the company captures value from customers in the form of profits and customer equity.

In building customer relationships, good marketers realize that they cannot go it alone. They must work closely with marketing partners inside and outside the company. In addition to being good at customer relationship management, they must also be good at partner relationship management.