Relationship Marketing: Old wine in a new bottle?
The article Relationship Marketing: Old wine in a new bottle? presents a very good discussion that starts with “Why is marketing not working?” and the need for organisations to allign themselves to ensure a customer focus in a changing environment and consumers.
It describes the evolutions from transaction to relationship marketing and from reactive to proactive and even collaborative marketing.
The increasing importance of CRM is put in context:
- “When you lose a customer, you lose his lifetime value.
- A 5% increase in customer loyalty will result in profit increase of more than 25%.
- In nearly every industry, 20% of customers account for 80% of the profit.
- Seven out of ten customers switch to competition due to poor services.
- It takes up to twelve good experiences to overcome one bad experience of a customer.“
“These made marketers realise the advantages of CRM – increased loyalty of consumers, decreased transaction cost, delivery of consistent, high quality customer experience, more repeat business, improved cost management and increase in profit.“
The essential organisational change management required is put in context, as is the role of technology and the fact that CRM is not panacea for ailments.
“CRM as an integrated business strategy that places customer at the centre of a business’s consciousness. The organisation should align all channels and business processes against target customers based on their value to the business and establish an enterprise-wide means for capturing, analysing and shaping customer behaviour. The business objective of CRM should be clearly understood and a consumer-centric culture should be fostered across the organisation. It should be understood that fundamental changes in the way customers are treated cannot happen by some reworking of the sales and marketing departments. The whole company- the way it’s organised and managed, the training imparted to the employees, evaluation and reward schemes for the employees – must be reworked.“
The conclusion summarises well:
“Relationship marketing has evolved from the age-old paradigm practised by the corner shops. The changing consumer behaviour made it imperative that the companies align their processes and practices with the consumer at the centre and not their products. CRM is thus a process to build profitable relationship with customers, thereby fostering repeat business. For successful implementation of CRM, the whole organisation culture – the way people think and behave – needs to be made consumer friendly. Any marketing paradigm, be it relationship or collaboration based, can prove effective only if marketing is seen as a philosophy cutting across the organisation and not as a functional silo performed by marketing department.“