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Customer Relationship management Cycle


There are four phases to the customer life cycle. The four phases include; marketing, customer acquisition, relationship management, and loss/churn. The marketing part of the customer life cycle is when messages are sent to the target market to attract prospect customers. The next phases is customer acquisition which means prospects become customers when they place an order. The third stage is relationship management. Relationship management is when resell processes increase the value of existing customers. The end stage of a customer life cycle is loss/churn when inevitably in time a company may lose a customer.

The company then needs to establish a win-back process. The company then needs to decide which lost customers are of most value and try to win back their business. A CRM system integrates all four phases of the customer life cycle into three major processes. These processes are solicitation, lead-tracking, and relationship management. The diagram above depicts the four phases and the three major processes. It shows the flow of phases and what each phase means.


The E CRM or electronic customer relationship management encompasses all the CRM functions with the use of the net environment i.e., intranet, extranet and internet. Electronic CRM concerns all forms of managing relationships with customers making use of information technology (IT). E-CRM is enterprises using IT to integrate internal organization resources and external “marketing” strategies to understand and fulfil their customers needs. Comparing with traditional CRM, the integrated information for E-CRM intra-organizational collaboration can be more efficient to communicate with customers.

The concept of relationship marketing was established by marketing professor Leonard Berry in 1983. He considered it to consist of attracting, maintaining and enhancing customer relationships within organizations. In the years that followed, companies were engaging more and more in a meaningful dialogue with individual customers. In doing so, new organizational forms as well as technologies were used, eventually resulting in what we know as customer relationship management.

As the Internet is becoming more and more important in business life, many companies consider it as an opportunity to reduce customer-service costs, tighten customer relationships and most important, further personalize marketing messages and enable mass customization. ECRM is being adopted by companies because it increases customer loyalty and customer retention by improving customer satisfaction, one of the objectives of E-CRM. E-loyalty results in long-term profits for online retailers because they incur less costs of recruiting new customers, plus they have an increase in customer retention. Together with the creation of sales force automation (SFA), where electronic methods were used to gather data and analyze customer information, the trend of the upcoming Internet can be seen as the foundation of what we know as E-CRM today.

As we implement E-CRM process, there are three steps life cycle:

1. Data collection: About customers preference information for actively (answer knowledge) and passively (surfing record) ways via website, email, questionnaire.
2. Data aggregation: Filter and analysis for firm’s specific needs to fulfill their customers.
3. Customer interaction: According to customer’s need, company provide the proper feedback to them.
E-CRM can be defined as activities to manage customer relationships by using the Internet, web browsers or other electronic touch points. The challenge hereby is to offer communication and information on the right topic, in the right amount, and at the right time that fits the customer’s specific needs.


Towards E-CRM In the early 1990s, the concept of relationship marketing was formally introduced into the services marketing literature. Financial services institutions, airlines and other service providers found it profitable to retain and reward existing customers rather than run after new customers. It was established that building closer relationships with the customers resulted in better returns to organizations through the following means:

1. Increased use of services by loyal customers.
2. Charging of price premiums for customised services.
3. Referrals by satisfied customers that brought in new customers.
The concept developed for services marketing also found applications in the case of industrial and customer products. The conventional market approach based on 4 P’s (Product, Price, Place and Promotion) is strongly grounded in the industrial age where goods were mass-produced, mass distributed and mass-communicated using mass media. However, after the advent of Information era, it has become possible to target customers on a one-to-one and one-to-many basis and satisfy their individual needs.

The concept of CRM when seen in the context of e-business or transactions over an electronic medium, it translates in to E-CRM, which essentially deals with managing customer interactions over the web. After the adoption of the Internet and availability of electronic channels of communication, it is becoming possible to capture customer related information intelligently at the interaction stage itself. E-CRM applications are the generic of application systems which handle customer interactions over these new electronic channel of communications.
The whole model of CRM revolves around the customer life-cycle comprising the following four stages:

1. Customer requisition through referrals.
2. Customer development through personalisation and customisation.
3. Leveraging customer equity through cross-selling and up-selling.
4. Customer retention and referrals.

In e-CRM these four steps of CRM are managed by using electronic media.

The long-term business relationships provide many potential benefits for banks and clients. It is generally less costly for any service firm (bank) to maintain and develop an existing client relationship (Berry 1983). The customer can also make transaction cost savings by developing a long-term relationship with bank. The numerous studies carried on in USA reveals that transacting through Internet is much more economical than other channels. For instance, it has been estimated that while it costs nearly US $1.07 per transaction using the normal means, on the Net the costs comes to a mere cent. Even when compared with telephone banking (5 cents) and the ATMs (2.7 cents), the Net seems to have an edge. In addition, the strategic and social benefits may be considerable for both parties (Halinen 1989).

A long-term relationship may, for instance produce strategic benefits for the bank in its marketing by generating references and credentials or it may create competitive advantage by building barriers to switching. In Net banking the financial statement can be viewed, printed or down-loaded in any format for ease of analysis. Thus, Internet as a service-delivery channel shifts the control of transactions from the bank staff to the customer. Net bank customers find better information through websites than from the unwilling, less knowledgeable and non-cooperative banking staff.

Thus high level of customer control that translates into customer satisfaction and repeat purchase is the most critical advantage of e-CRM in banks. Other related benefits include decreased cost of sales and promotion, high supply-chain management integration and improved logistics management.

E-CRM is a approach in relationship management it benefits to its stakeholder who include employees, customers, suppliers and channel partners (Ragins and Greco, 2003) according to Rigby and et al. (2002) E-CRM takes many forms and depends on the objectives of organization. It is not only a technology or a software; this is a tool is used a line business process with the customers in a strategic way like E-CRM increase the customer loyalty, E-CRM gives more effective marketing, E-CRM includes customer service and support. According to Jellasi and Enders (2004) the benefits of E-CRM is to

1. Create long term relationship with customer with minimum cost.
2. To reduce customer defection rate
3. Increase the profitability from low profit customers
4. Focus on high value of customers.

Author – Steffy Simon
Email Id – [email protected]

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