The management of crucial customer relationships is vital to any business as it ensures that they continue to receive revenue and a basis on which they can develop and grow further. Current and very loyal customers can allow a business to grow further through referrals and the establishment of a good pre-existing reputation that comes with retaining these customers. It is absolutely essential that companies shift their emphasis from acquiring customers to maintaining and sustaining a loyal and pre-existing customer base as it saves time, becomes more profitable in the future and most significantly, ensures that the company continues to receive income and revenue as these customers are loyal and there has already been established, a trustworthy relationship (Clark, 2015). In contrast, acquiring new customers requires additional time and money that could be better spent servicing an already loyal customer base that are willing to contribute more to the overall business. In further supporting this established thesis of this paper, the following points and major issues will be discussed: 1) Financial implications 2) Good will and similar acts, 3) Examples of companies that utilize aspects of CRM well.
There are numerous financial implications associated with replacing customers rather than keeping them particularly if they are very loyal and generous. The first is that the business has to effectively lose revenue by losing these customers and then need to replace this revenue with new customers who are not as loyal and need time to develop a trustworthy relationship with the business (Clark, 2015). With any new customers, it takes time before they really start investing in a business and this means that the money lost from replacing customers may not be surpassed or supplemented for many years, therefore resulting in a substantial loss for the company overall. Financial implications also focus on these pre-existing customers stopping their continuous support of the company, which further affects how other customers perceive the company and whether they are willing to also invest in the company overall. For example, customers and clients are particularly pertinent to a financial firm that is reliant on commissions and a constant stream of revenue (Menton, 2015). Through referrals from existing and highly loyal customers, they are able to accumulate large revenue. When customers are lost, their referrals are also lost in the process and they will not be made by new customers until there is a well established relationship on a professional basis.
The second major point of this paper with respect to having good will with current stakeholders is also important. Current customers and clients of a company improve its reputation particularly if they are very loyal and have developed a long term relationship with the customer (Menton, 2015). Customers and clients will always compliment a good business their friends and family, which in turn generates further interest from other potential customers. Through the generation of good will with loyal customers, the company can become highly respected within communities both large and small and this in turn can inspire repeat business and friendly customers willing to invest more in the company overall. For example, good will may result in particular benefactors making sizeable donations to the company in return for good business and significant savings on certain products. A company can further grow and develop by having a good name and reputation with a particular community overall (Gallo, 2014).
There are also thirdly, a number of companies, which currently utilize the varying aspects of CRM very well and that are able to retain highly loyal customers for the long term. The first company of interest is Edward Jones within the financial sector of the United States. The philosophy of Edwards Jones is such that it focuses on the establishment of highly trustworthy and up front relationships with each and every client. CRM is utilized by asking financial advisors to introduce themselves on a face to face basis and developing a long term relationship that generates loyalty and trust. In turn, the company is provided with acts of good will in both small and large communities and advisors receive ongoing commissions, which contribute towards their overall pay on an annual basis. The branch structure of this company focuses specifically on the development of loyal relationships with respective communities. Another company that also utilizes very well, CRM, is Wal-Mart. Despite being a typical large and extended chain supermarket, it continues to focus on the needs of its respective communities across the United States and now globally in order to generate good will, passion for society and also significant revenue (Gallo, 2014). By providing its customers with sales and recommendations pertinent to each community that it services, it is able to continue developing a wonderful reputation.
As can be evidenced by these major points and numerous companies across the United States and globally, it most significant for companies to focus on retaining customers rather than trying to acquire them. A sign of a highly successful and prosperous company is one that is able to retain its customer basis and not have to focus on acquiring new customers as a result of discrepancies or a questionable reputation with the communities that it serves (Clark, 2015). Like with every organization, there is room for development but if it can effectively manage its current customers, then it will be able to further develop and automatically and seamlessly acquire new customers, crucial to any business particularly in developing and recovering economic times that require customer loyalty over everything else.
- Clark, D. (2015). How To Keep Your Customers Loyal Forver. Forbes, Retrieved from http://www.forbes.com/ Accessed on 11th April, 2016.
- Gallo, A. (2014). The Value of Keeping the Right Customers. Harvard Business Review, Retrieved from https://hbr.org Accessed on 11th April, 2016.
- Menton, J. (2015). Economic Growth Slows Sharply In Q1 2015: 5 Factors Slowing US GDP. International Business Times, Retrieved from http://www.ibtimes.com Accessed on 11th April, 2016.
