A research Proposal Framework on the impact of customer relationship management on the customer retention by an organization.
The proposed research will be guided by three main questions:
- What is the impact of the CRM on customer satisfaction and retention?
- How can benefits and objectives for CRM be defined?
- Can customer retention be a good measure of CRM performance
- Literature Review
Xu and Walton (2005) carried out a study to investigate the motive behind the implementation of CRM by corporate managers and its effect on customer perception about the organization. The study found put that the major reasons for implementing CRM are: it leads to improved customer lifetime value, it offers strategic information, it helps in retaining the existing customers, and it improves the overall customer satisfaction. This findings are supported by Gronroos (2004) observation that developing a sustainable and effective relationship with customers helps to provide a sense of trust, security and feeling of control. Giving the customers a sense of trust makes them to rely more on products and services offered by the organization, and thus it does not only motivates them to remain loyal to the organization but it also gives them a motivation to promote the products and services of the company through word of mouth (Day, 1999: Boatwright & Cagan, 2010).
According to Nitzan and Libai, (2011) customer retention is one of the main objectives of any company. Customer retention helps the company to have a more accurate sales projection and be able to understand the customers more which leads to better satisfaction. However, according to him, CRM is not directly related to customer retention. Xu and Walton (2005) findings are contrasted by Guo, Xiao and Tang (2009) who found out that customers are more motivated by the quality of products, pricing and the way in which the accessibility of the company’s products when they need them rather than the company initiated measures of developing relationship. In his study he found put that 60% of the customers are not motivated by the CRM strategies to purchase or remain loyal to the company’s products. On addition to this, 55.3% of those interviewed claimed that they perceive CRM as one of the measures employed by the entities to try and woo customers in their products rather than producing high quality products and services and letting the customers to decide by themselves.
Gummerson (1994) maintains that having a sustainable customer relationship management is imperative as it is a key to reaching and maintaining a successful share in the market. He further asserts that Retention and intimacy, and profits are the main benefits of CRM. In retention, the organization is able to learn and gain information about customers such as habits, names, preferences, and expectations, and the customer behavior which helps to understand them better. For example, if an or……………………..