CRM is defined as Customer Relationship Management Concepts. In earlier days many merchants and traders were practicing relationships for many years, they believed that the business can only be built on trust factor with the customers. As soon as there was an introduction to the industrial revolution phase, these practices have undergone major changes. Instead of focusing on the relationship building the businesses turned their heads towards mass productions, mass communications etc. to gain economies of scale. The manufactures started focusing on manufacturing in order to make their operations efficient and to minimize the cost of production.
Different intermediaries like retailers, distributors etc. took the charge of responsibilities like warehousing, transport and delivering the goods to the final customer which gained maximum efficiency at a much lower cost, and there was a huge gap between the manufacturer and the customer. This gap reduced the immediate contact with the customer and have negative effect on the relationships with the customers.
After the industrial era again the relationship practices started emerging. There were many factors which were responsible for this shift in the orientation i.e. for the evolution of CRM:
- Increased growth of the technology
- Emerging competition in the market
- Growing importance of the service firms
- Adapting the practice of total quality management
There was an advancement in the communication methods, information and technology which helped the marketers to directly connect with the customers. The marketers were now able to gain more knowledge about the customers and respond effectively to satisfy their needs.
Competitiveness in market :
In competitive markets rather than focusing on new customers, marketers found it more profitable to retain their existing customers and focus on their needs. This has expanded the relationship orientation and created many opportunities for the marketers to cross sell their products and services to the customers.
Service Sector :
Service sector almost contribute 50% share to the economy, Service firms are those where there is direct interaction of the marketer and the buyer of the service. These direct contacts create opportunities for better understanding, a better appreciation of needs as well as constraints and emotional bonding all of which facilitate relationship building.
Benefits of CRM :
There are some important benefits that are provided by the CRM, these benefits include :
- Customers become more profitable over a period of time
The reason behind this is as the organization focus more on retaining the existing customers through relationship building the more share of wallet of the customer is thus achieved.
- Customer Profitability is Skewed
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