What Are The CRM and E-Loyalty Challenges That Brands Face Online? I. Introduction …………………………………………………………...3 II. Importance of Customer Relationship Management (CRM)..4 III. Importance of E-Loyalty ……………………………………………4 IV. Customer Relationship Management (CRM) and E-Loyalty Challenges Brands Online …………………………………………5 V. Conclusion ……………………………………………………………9 References …………………………………………………………….….. Businesses exist because of its customers. This is the main reason for the need to develop a good relationship between the customer and the business organisation. For many years, a lot of businesses have started to invest in customer relationship management (CRM). It has been defined as loyalty programs for businesses and is considered to be an important tool in keeping the loyalty of the customers towards a specific company. E-loyalty is essential in a way that even small businesses could take over the market share and the profitability of large companies by using e-loyalty programs. Frequently, small businesses act like consumers in that some sole proprietors use online programs in targeting nationwide and global customers by using accurate information regarding the business and the use of consumer programs such as credit card reward programs as a strategy in keeping their loyal customers satisfied. It is common that these reward systems are tailored according to the needs and expectations of the customers. Importance of Customer Relationship Management (CRM) Customer Relationship Management (CRM) is a ‘software’ that helps a business organisation in managing its customers better. (Walsh, 2007). CRM software enables the sales people and service representatives to have a quick access over the information related to the customers. This allows the sales force of the company to immediately provide the customers with a more customized service according to the customers’ needs regarding the products and services the business is offering. (Williams, 2006) According to Kumar andReinartz (2006), CRM is defined as a strategic process of selecting the customers a firm can most profitably serve. It is also capable of shaping the interactions between a company and these customers with the goal of optimising the current and future value of the customers for the company. (Kumar and Reinartz 2006, 6) Based on the definition, CRM is an enterprise-wide process that has the potential to affect decisions related to marketing communications; pricing, customisation of products and services, resource allocation across different customers or customer groups, and customer support services. Due to the effectiveness of CRM strategy, it has become commonly used today in maximizing the customer value across the global customer portfolio of the company. (Ramaseshan et al., 2006) E-loyalty is defined as a long-term strategy used in online marketing by businesses based on a value proposition in order to enhance the relationship building between the company and its customers. (Reid Smith and Associates, 2001). It is “the customer's favorable attitude toward an electronic business, resulting in repeat purchasing behavior”. (Anderson and Srinivasan (2003, p. 125) Basically, the importance of customer loyalty lies in the positive effect on long term profitability. “According to Reichheld and colleagues (Reichheld et al., 2000; Reichheld and Schefter, 2000), the high costs of acquiring new e-customers can lead to unprofitable customer relationships for up to three years”. Studies has shown that on average, it is more expensive to attract a new customer in comparison to implementing a retention strategy. In their study of the Internet clothing market Reichheld and Sasser (2000), “found that customer acquisition cost is 20 per cent to 40 per cent greater than acquiring a new customer in the traditional retailing marketplace. This leads to higher losses in the early stages of the relationship, but in months 24 to 30, the Internet customers are likely to spend twice as much as they did in the first six months. In an earlier study, Reichheld and Sasser (1990) found that existing customers are not only less price-sensitive; they are more economical to maintain than new customers. Therefore, if this additional propensity to spend can be directed towards an extended range of products rather than mere repeat purchases of the original product, then the possibility of increasing profitability is high.” “Yin (1999) defines “hard-core” loyalty as consisting exclusively of repeat purchase behaviour. At the same time, Bentley’s study (1999) has linked customer loyalty directly to profitability by confirming Reichheld and Sasser’s (1990) suggestion that loyal customers are less sensitive to price changes and are more susceptible to being charged premium prices.” E-loyalty is about engendering trust and value towards the valuable customers by humanizing digital loyalty. Therefore, it can be said that it helps create a strong relationship with the website’s prospective customers and customers online. Implementing E-loyalty programs in B2B can be more effective than the traditional B2B marketing because the Website offers a virtual sales and training room that is accessible 24 hours a day. An advantage of the e-loyalty program is the fact that it provides real-time feedback via Web logs, tracking software and customer feedback prompts. This feedback allows the administrator to identify problems and provide quicker feedback. Therefore, it is more convenient on the part of the customer. (Anderson and Srinivasan, 2003) Due to the fact that the Web is interactive, it can closely mimic a human relationship through the use of ‘two-way' dialogs. (Smith, 2007) Each customer has the option of searching for alternative websites, rather than to spend a long time waiting for the product representative to return their call when a customer is engaged in a traditional business process. The use of creative product demos online gives the client a more personalized ‘real life’ experience that is critical in building the first impression towards the quality of professionalism of the company. It is essential that one realises that branding revolves around awareness, whereas loyalty, is a much more intricate concept as it provides an emotional bond between the customer and the product or services that the company offers. It is the aim of loyalty to create bonds strong enough to stand any future obstacles that the organisation may encounter. Branding can easily be accomplished through numerous web advertisements. Increasing the awareness of an organisations ‘brand name’ can be seen as an essential process when it comes to convincing the prospective customers in utilising the company’s products and services. Brands may further be enhanced through constant communication between the customer and the company. This process is essential as eventually brands may loose their edge in their respective markets. For this reason, the organisation has to constantly promote the viability of a brand. However, there are also unforeseeable risks in brand innovation. (Kania and Slywotzky, 2000) One of which is maintaining customer satisfaction in a highly competitive global markets. It is a challenge for an organisation to design a long lasting strategy that ensures the customers experience with the existing brand, leaves the customer content. This eventually results in customer loyalty. On the other hand, customer loyalty derived from e-loyalty concerns creating a two-way relationship between the customer and the company. Such a relationship requires constant interaction, trust, and mutual respect. In the absence of loyalty programs, businesses could be incapable of building a strong bond that is sufficient to defend a brand against a strong competitor. The tight competition of web markets contribute to a large number of challenges in Customer Relationship Management (CRM) and E-loyalty regarding maintaining brands online. The most important challenge that online companies face is building a solid customer loyalty rather than expanding the online channels of the company. According to Jones and Sasser (1995), a high level of customer satisfaction, has the potential to lead to improved customer loyalty. (Jones and Sasser, 1995) The authors noted that: “customer-satisfaction information can be used as a critical barometer on how well the company is serving its customers.” (Jones and Sasser, 1995, p. 95) When a customer repeatedly returns to a website in order to purchase specific goods or services, it is more likely that the customer is satisfied with the service that they are receiving from the organisation. Thus, it can be inferred that such an organisation has been able to develop a loyal following. Immediate response to customer concerns is an additional aspect to which the website administrator must give special attention. (Gommans, Krishnan, and Scheffold, 2001) The implications of this may mean that the company has to be online 24 hours a day in order to keep up with the demands of the global markets. To address this issue, the company needs to have a wide connection globally in order to set up a group of administrator across the country in order to keep the company’s operational expenses low as well as be able to keep the business running all the time. The use of e-loyalty enables the company to identify the ‘root cause’ of the most dissatisfied calls. (e-Loyalty Corporation, 2004) The administrator or the marketing staff has the ability to immediately take the necessary actions to satisfy the needs and wants of the dissatisfied customer. This strategy could eventually increase loyalty between the company and its customers. The market share of the company can be enormously affected when a customer fails to receive a prompt service from the company. The constantly growing number of online businesses, makes the search for an alternative website easier regardless of the costs. Prices may be irrelevant to the customer hence the organisation needs to strive hard in order to retain its loyal customers. Research showed that customers weigh the ‘after-delivery satisfaction’ more than the price they have to pay. (Jiang, 2004) In order to obtain an adequate level of ‘satisfaction’ that extends after delivery, reliability should be maintained at all times. ‘Reliability’ is often linked to aspects such as delivery time, whether the product was delivered as promised, and the consistency of customer service including order tracking, on-time delivery, customer support and quality of product and service provided. (Smith et al., 2000) Up to the present, there is still a huge portion of the market segment that could be considered as prospective customers for online trading. Building ‘trust’ with the customer is the most difficult challenge of all. It is equally important for the company to spend extra time and effort in winning the trust of its customers because it could affect the long-term business transactions between the company and the customer. Customer concerns regarding security, privacy, and protection against business scams are still very high. (Anderson and Srinivasan, 2003) Many people have qualms in providing credit card information to an online business that has no physical location, as risk perception is believed to be higher in such businesses. Others lack trust in online businesses regarding confidentiality issues such as keeping their data confidential. Moreover, it is a challenge for e-loyalty technology to continuously upgrade and develop new methods to prevent entirely, the risk of security related problems over the use of online business transactions. The fierce competition in the global market makes it difficult for organisations to fully benefit from CSR and e-loyalty in order to be competitive with the demands of today’s markets. With regards to this issue, some companies offer multiple promotions that run throughout multiple product divisions; such as customer support centres; and sales teams. The use of e-loyalty programs has the ability centralize all customer communications into ‘one voice’ that remembers and recognizes the needs of its customers. Hence only promotions that directly meet the customer's specific needs and satisfactions are advisable to use. The use of other multiple promotions such as benefits or rewards could also contribute to establishing the challenges in establishing online brands. Specifically, the application of benchmarking on the CSR and e-loyalty programs of the company should be used in measuring the performance of the company against other similar companies that use similar programs. Benchmarking serves as a guide on whether the company is below industry level regarding the application of CSR and e-loyalty programs. (SSPA news, 2004) Organisations face the challenge of determining their over all marketing performance as compared with other organisations in the same industry. The purpose behind this is to ensure that the business is competitive enough with enough market-share to keep the business successful and profitable. Establishing online branding is a critical factor of making web businesses successful. In order to win the trust and loyalty of the global consumers, the company needs to establish a good rapport and strong professional relationship with its customers. The use of customer relationship management (CRM) and e-loyalty programs enable an organisation to build a good long-term relationship with its customers. A lot of online businesses are becoming more customer-oriented with the use of CRM and E-loyalty programs. Specifically, CRM programs provide an excellent customer service by shortening the time requirement in every customer inquiry amongst other concerns. On the other hand, while e-loyalty programs enhance the relationship between the customer and the organisation by making its customers feels special. It can be concluded; CRM and e-loyalty programs largely contribute to the success of online consumer marketing. CRM and e-loyalty programs face a lot of challenges in developing online branding. These challenges include: building solid customer loyalty, providing immediate responses towards satisfying the customer concerns and continuously upgrading and developing new technology that could totally prevent the risk of security related problems over the use of online business transactions. Benchmarking of CRM and e-loyalty of similar organisations within the industry could prove to be useful in maintaining high standards of CRM and e-loyalty programs. References: 1 Anderson, R.E. and Srinivasan, S.S. (2003) ‘E-satisfaction and E-loyalty: A Contingency Framework’ Journal of Psychology and Marketing; 20(2), pp. 123 – 128. Retrieved: May 6, 2007 < http://delivery.acm.org/ > 2 e-Loyalty Corporation (2004) ‘e-Loyalty Highlights Key Focus Areas for Growth in 2004’ Retrieved: May 6, 2007 < http://www.eloyalty.net/ > path: News & Events 3 Feakins, K. and Zea, M. (2000) ‘How Conoco Broke the Convenience Store Mold: Building Brand Equity through many “Moments of Truth”’ The New Brand Strategy: Are You Experiencing? Mercer Management Journal. 2000, Number 12. pp. 49 – 51. Retrieved: May 6, 2007 < http://www.mercermc.com/ > 4 Gommans, Krishnan, and Scheffold, (2001) ‘Figure 1: The E-Loyalty Framework’ in ‘From Brand Loyalty to E-Loyalty: A Conceptual Framework’ Journal of Economics and Social Research 3 (1) 2001, pp. 43 – 58. Retrieved: May 6, 2007 < http://jesr.journal.fatih.edu.tr/ > 5 Jenamani, M.; Mohapatra, P.K.J.; and Ghose, S. (2002) ‘Benchmarking for Design Evaluation of Corporate Web sites a Study’ Quarterly Journal of Electronic Commerce, 3 (4), 391 – 315. 6 Jiang, P. (2004) ‘Customer Intention to Return Online: Price Perception, Attribute-level Performance, and Satisfaction Unfolding Over Time’ European Journal of Marketing. Vol. 39, No. ½, 2005 pp. 150 – 174. Emerald Group Publishing Limited. Retrieved: May 6, 2007 < http://faculty.lebow.drexel.edu/ > 7 Jones, T. and Sasser, E. (1995) ‘Why Satisfied Customers Defect’ Harvard Business Review, November – December, pp. 89 – 99. Retrieved: May 6, 2007 < http://searchcio.techtarget.com/ > 8 Kania, J. and Slywotzky, A. (2000) ‘What Ever Happened to Burma-Shave?: Pattern Thinkers can Outsmart Brand Rivals in a Changing Marketplace’ The New Brand Strategy: Are You Experiencing? Mercer Management Journal. 2000, Number 12. pp. 35 – 46 Retrieved: May 6, 2007 < http://www.mercermc.com/ > 9 Kumar, V. and Reinartz, W. (2006) ‘Customer Relationship Management: A Database Approach’ 10 Ramaseshan et al. (2006) ‘Issues and Perspectives in Global Customer Relationship Management’ Journal of Service Research 2006; 9; 195. November 2, 2006 Retrieved: May 6, 2007 < http://jsr.sagepub.com/ > 11 Reid Smith and Associates (2001) ‘What is E-loyalty?’ Retrieved: May 6, 2007 < http://www.e-loyaltyresource.com/ > 12 Smith, E.R. (2007) ‘Building B-to-B E-Loyalty’ CRM Today Retrieved: May 6, 2007 < http://www.crm2day.com/ > 13 Smith et al. (2000) ‘Understanding Digital Markets: Review and Assessment’ Brynjolfsson, E. and Kahin, B. ‘Understanding the Digital Economy, MIT Press, 14 SSPA news (2004) ‘What Other Service Areas Should You Benchmark?’ July 13, 2004 Retrieved: May 6, 2007 < http://www.thesspa.com/ > 15 Walsh, K. (2007) ‘Customer Relationship Management’ Retrieved: May 6, 2007 < http://projects.bus.lsu.edu/ > 16 Williams, E. (2006) ‘What is CRM (Customer Relationship Management)?’ Retrieved: May 6, 2007 < http://searchcrm.techtarget.com/ > 17 Ribbink, D. (2004) ‘Comfort Your Online Customer: Quality, Trust And Loyalty On The internet’ Retrieved: May 7, 2007 <http://www.emeraldinsight.com.chain.kent.ac.uk/Insight/ViewContentServlet?Filename=Published/EmeraldFullTextArticle/Articles/1080140601.html>
Table of Contents page number
Introduction
Importance of E-Loyalty
Customer Relationship Management (CRM) and E-Loyalty Challenges that Face Brands Online
Conclusion
Thursday, May 15, 2008
Add a Comment
Add a Comment
<<Home