Customers are most valued in any industry and their needs should be put first in regards to both service and product satisfaction. Needs and desires of the target customers should be looked at and be addressed be successful in achieving the objectives and goals of the industry. For example in the fashion industry, the customer’s needs should be investigated and met by the fashion firm, to be able to attract and retain their customers which results to greater benefits.
Customer value is the total benefits that customers get when they purchase services and products. It is the difference in between the cost of a product and the value that is gained by the customer using the product. When a customer has gained benefits more than the cost of services and products then the customer value is high. When less benefits are gained by the customer in comparison to the products and services then the value is low. Firms should meet customers’ needs since this is essential factor for a competitive strategy as well as customer advantage. When better customer value is created, there is improved firm performance, creation of competitive advantage and, shareholder value is also subsequently developed. Customer value can also be negative when the customers have complaints on the products, poor customer services, high prices and quality of what is sold to them in terms of products and services. I do agree with the idea of customer value because the industry will have developed and customer value also will be high and thus retaining good relationships in field of Customer Relationship Management (CRM).
Customer relationship management (CRM)
CRM is an approach used in business that seeks to have a company’s customer value and profitability improved by maintaining the already developed relationships with customers who are targeted to increase the value of the shareholder this is according to (Payne, 2006). Swift (2001) makes suggestions that CRM is an effort that is made by a company to understand and have influence over how customers behave through communication. He believes that this strategies main purpose is to improve the profitability, loyalty and retention of the customer. He also stresses that the whole organization should be embraced by this effort and not just some parts of it. The central concept apart from the definitions that one has to choose from is the customer. CRMs main goal which is the most important is creation of better relationships with their customers and by doing this they respond better to the customer’s desires and needs. When these relationships are developed and maintained better revenues and profitability will be accomplished while commitment, loyalty and, trust are gained from their customers (Payne, 2006).
When predictions of consumer decision making and behavior, the overall satisfaction measurements have been used to achieve this (Garbarino & Johnson, 1999). Traditional marketing into the new relationship marketing paradigm shift has however has even increased the number of factors that have effect on the behavior of the customers. These factors are loyalty, commitment and trust of the customers (Morgan & Hunt 1994). For relationships to be successful trust is of importance and should be considered. Trust is being aware of confidence in a partner being reliable and of integrity during an exchange of goods and services (Morgan & Hunt, 1994). Commitment is a relationship that is continuous and involves behavior dedication and emotions that are strong to a company. While loyalty is the commitment that customers hold deeply and gives them the ability to purchase products and services frequently, from time to time.
Good relationships exist when customers keep on returning to one specific store to buy products frequently. This is not applicable at times when for example they come back because of the low prices or convenient locations. This may not be a relationship as one may come back because of the low prices and convenience in location. Focusing on database marketing primarily does not help a company’s reflection of a relationship. When firms send out tailor made emails and offer memberships of loyalty clubs they might think they are providing services that are right while the customers in most cases will gain from the clubs but this is not relationship marketing and it does not mean that a relationship exists. For companies to maintain and develop relationships they should create interaction practices and good communication networks. They should also remember that it is the customer who decides if a relationship exists or not in the end. Firms should make sure those customers think there is an existing relationship between them and not be based on their own efforts (Gronroos, 2000).
It is argued by Gronroos (2000) that customers do not just buy the goods but the benefits that come with it. This goods function as services to him or her. No matter where a service is found, it is crucial for relationship development and maintenance. When strategic perspectives are being chosen there should be careful examination of target customers to find out factors that create value (Gronroos, 2000). The perspective that is core product is when the competitive advantage is gained by core solution quality. Service in these cases is important for relationship development and maintenance. The second perspective that is strategic is the perspective of prices where the main mean for competition is low price. Firms should have a sustainable cost advantage and have know how to maintain it. Imagery values perspective is created by firms in addition to product core value. This approach should have a core product that functions and is attractive and resources that are heavy put on strategies for marketing. The last perspective strategy is service, where roles of the service components are put in customer relationships. This approach allows for competition with total service offers that contain the core product.
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For CRM to be practiced there is need to have interactions with the customers. It is emphasized by Brown (2000) that it is of prime importance to identify the key customers of a firm and embrace customer strategies so that competitors have a difficult time getting through. This strategy will gain loyal customers who in turn will increase the firm’s profitability (Greenberg, 2004). CRM customer satisfaction is influenced by four main factors namely: products, culture of the organization, sales activities and after sales activities and services (Gronroos, 2000). It is a combination of all four factors that brings about customer satisfaction.
Customer Relationship Management is essential if the fashion industry is to develop and maintain good relationships that are beneficial to the industry as a whole and at the same time ensure that they meet the customers’ needs. Through this, customers will be loyal and committed to specific fashion industry as they trust them to fulfill their wants and bonds of long lasting trust is developed over time. The customer’s loyalty helps industries to develop competitive advantages that are sustainable. CRM also help in increasing the prices without having to take big risks and through this generate barriers to market entry. In the end customer relationship management allows for both the customers and the company to gain, hence creating a win win situation.