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The revolution within the
New Economy has increased competition among buyers and
sellers in e-business. To attract and retain
customers, underlying tenets to success are
convenience, personalization, and excellent service.
Customer relationship management (CRM) is focused on
providing and maintaining quality service for
customers, by effectively communicating and delivering
products, services, information, and solutions that
address customer problems and requirements.
The
application of CRM to an e-business strategy also
includes the personalization and customization of
customers’ experiences and interactions with the Web
site, call centre, or other method of customer contact
with the e-business. To be effective, the CRM solution
will take into account customer characteristics, how
buyer decisions are made, and the systems most able to
deliver the product, service, or solution.
An
essential aspect of CRM includes support for customers
and the establishment of trust and loyalty. Customer
loyalty is the degree to which a customer will stay
with a vendor or brand, and is increasingly the
competitive advantage in the e-business world. It
costs about five to eight times more to acquire a new
customer than to keep an existing one, so the
incentives are high to build sustaining client
relationships. Considered another way, increasing
customer retention rates by only 5% can translate into
profit increases of 25 to 90%.1 Despite the
importance of e-loyalty, over the past decade customer
loyalty has been decreasing. The introduction of
e-business has hastened the trend to shop, compare,
and switch in a Web-based environment.
Ultimately,
loyalty is not sustained by technology, but rather
through a consistently superior customer experience.
Customer service, which is related to CRM, is a series
of activities designed to enhance the level of
customer satisfaction for a service or product.
Customer service helps purchasers resolve problems
encountered in the purchasing phase or during the
after-sales support process. Types of customer service
functions and tools might include providing search and
comparison capabilities, tracking accounts or order
status, ordering online, or real-time Web chat
support.
The
cases and readings in this Theme illuminate key
characteristics of CRM development and how to
establish loyalty with customers as it applies in B2C
(business-to-consumer) and B2B (business-to-business)
environments. Insights are provided about how to
develop and retain customers, and the consequences of
failed e-business client-customer relationships. The
cases provide vivid examples of how CRM is expanding
to include customized and comprehensive client
solutions. It is important to note how strategy, as
discussed in the previous Theme, impacts the form and
function of CRM, and ultimately the success of each
profiled company.
NOTES
1. F. Reichheld and P. Schefter, “E-loyalty: your
secret weapon on the Web,” Harvard Business Review,
78(4)(2000): 106.
Part 1: Customer
Relations Management
Part 2: Customer
Service in E-Business |