The importance of keeping customers for as long as possible, in what Essay - 1

The importance of keeping customers for as long as possible, in what is seen often as a short-term approach to sales - Essay Example Enterprises have early understood the difficulty in acquiring customers and also the value of maintaining good relationship with customer. Modern management techniques and use of IT though innovative means have defined added new dimensions to managing customer relationships. Now, for many enterprises empowering the customer has become a way of life, which in turn has led to shift in power with their customer relationships (Kotler et al., 2009). 2. Concept and definition Drotskie (2009) quoted Seybold (2002) and explained â€Å"customer relationship management (CRM) means determining who your customers are and building relationship with them†, and Drotskie adds further that it involves understanding each and every customer so as to develop profiles of their individual needs. Thus CRM enables the enterprise to understand the customer very closely so that its services can be tailor-made to meet each individual requirement (Zeithaml & Bitner, 2003; cited by Drotskie, 2009, p. 15). Kotler et al. (2009) also support these definitions and stated that customer relation management as the â€Å"process of carefully managing detailed information about individual customers and all customer ‘touch points’ to maximise customer loyalty. ... ocuses to increase revenue, profits, and shareholder value through targeted marketing activity such as developing, maintaining, and enhancing successful-customer relationships† (Bolton & Tarasi, 2006). 3. Principles of customer relationship marketing As Kotler et al. (2009) suggest, one of the important â€Å"goals of marketing is to develop deep, enduring relationships with people and organisations that could directly or indirectly affect the success of the firm’s marketing activities. Relationship marketing aims to build mutually satisfying long-term relationships with key constituents in order to earn and learn and retain their business† (Kotler et al., 2009, p.22). Relationship marketing has four dimensions (1) customers, (2) employees, (3) marketing partners (channels, suppliers, distributors, dealers, agencies), and (4) members of the financial community (shareholders, investors, analysis) and its outcome is the marketing network, a unique asset for the comp any. Figure 1: The four dimensions of relationship marketing Adapted from source: Kotler et al. (2209) Of these dimensions, the customer relationship marketing is most significant and more and more companies are now designing separate offers, services and messages to individual customers, that they gather based on information about past transactions, demographics, psychographics, and media distribution preferences (Kotler et al., 2009). Their objective is to build customer loyalty, by focus on the most profitable customers, products, and channels and achieve growth and capture larger share of customer’s pocket. This they undertake by estimating individual customer lifetime value and design their market offerings and prices, which would enable them not to make instant profit, but to make a profit over the