Customer loyalty is all about attracting the right customer, getting them to buy, buy often, buy in higher quantities and bring you even more customers. However, that focus is not how you build customer loyalty. Before dwelling deep into the topic, let us understand why is winning customer loyalty so crucial? Several years ago, Bain & Company documented the outstanding financial results you can achieve by cultivating customer loyalty: A five-per-cent increase in customer retention increases profits by 25-95 percent . The reason? Most of these relationships are unprofitable in the initial years due to the cost involved in acquiring new customers. Only later, when the cost of serving loyal customers falls and the volume of their purchases rises, do relationships generate big returns. That finding prompted a lot of executives to search for ways to keep their customers loyal. Also the company doesn’t need to invest in the marketing campaign aggressively to lure in already satisfied customers which brings down costs and improves profits. With e-commerce websites eating into the business of traditional brick-and-mortar stores, it’s hard to retain loyalty as a purchase is just a few clicks away. Retail stores across the globe have introduced the concept of relationship retailing using which a business seeks to create a relationship with their customers instead of treating each transaction as a unique event. This practice is intended to foster repeat business and customer loyalty. A tool that is being used extensively by the Indian retail stores is CRM i.e. customer relationship management. CRM is a combination of policies, processes, and strategies implemented by an organization to unify its customer interactions and provide a means to track customer information . It involves the use of technology in attracting new and profitable customers, while forming tighter bonds with existing ones. Customer Relationship Management is wildly...
Please join StudyMode to read the full document