Sales and Customer Relation (Customer Behavior)

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Customer Relationship Management (CRM)
Learning Objectives
Define CRM;

Understand the importance of CRM;
Explain the determinants of CRM and the key stages in its development; Discuss the main functions and various models of CRM;

Explain the role of salespeople as relationship developers
Discuss the management of customer relationships.

Customer Relationship Management (CRM)

What is Customer Relationship Management (CRM)?

CRM is “the development and maintenance of mutually beneficial long-term relationships with strategically significant customers” (Buttle, 2000)

CRM is “an IT enhanced value process, which identifies, develops, integrates and focuses the various competencies of the firm to the ‘voice’ of the customer in order to deliver long-term superior customer value, at a profit to well identified existing and potential customers”. (Plakoyiannaki and Tzokas, 2001)

Customer Relationship Management (CRM)

Understanding Customer Relationship Management (CRM)? CRM is a business philosophy based on upon individual customers and customised products and services supported by open lines of communication and feedback from the participating firms that mutually benefit both buying and selling organisations.

The buying and selling firms enter into a “learning relationship”, with the customer being willing to collaborate with the seller and grow as a loyal customer. In return,, the seller works to maximize the value of the relationship for the customer’s benefit. In short, CRM provides selling organisations with the platform to obtain a competitive advantage by embracing customer needs and building value-driven long-term relationships.

Customer Relationship Management (CRM)

Determinants of CRM

Trust
The willingness to rely on the ability, integrity, and motivation of one company to serve the needs of the other company as agreed upon implicitly and explicitly. Value The ability of a selling organisation to satisfy the needs of the customer at a comparatively lower cost or higher benefit than that offered by competitors and measured in monetary, temporal, functional and psychological terms.

Customer Relationship Management (CRM)

Determinants of CRM In addition to trust and value, salespeople must: Understand customer needs and problems;

Meet their commitments;
Provide superior after sales support;

Make sure that the customer is always told the truth (must be honest); and Have a passionate interest in establishing and retaining a longterm relationship (e.g., have long-term perspective).

Customer Relationship Management (CRM)

Stages in the development of a Customer Relationship

The Pre-relationship Stage
The event that triggers a buyer to seek a new business partner.

The Early Stage
Experience is accumulated between the buyer and seller although a great degree of uncertainty and distance exists.

The Development Stage
Increased levels of transactions lead to a higher degree of commitment and the distance is reduced to a social exchange.

The Long-term Stage
Characterised by the companies’ mutual importance to each other.

The Final Stage
The interaction between the companies becomes institutionalized.

Customer Relationship Management (CRM)

Stages in the Development of a Key-Account Relationship
High

Synergistic KAM Partnership

Degree of involvement

Mid-KAM
Early-KAM

Low

Pre-KAM
Transactional Nature of customer relationship
(Millman and Wilson, 1995)

Collaborative

Customer Relationship Management (CRM)

A Relationship Life Cycle Model
High cooperation Low competition

Prerelationship stage

Development stage

Maturity stage

Decline stage

Low cooperation High competition
Time
(Wilkinson and Young, 1997)

Customer Relationship Management (CRM)

Class Exercise

What should the focus and main activities of a global salesperson be in each stage of the relationship development process?

Why? (Please...
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