Customer Relationship Management and Engagement

Introduction

How companies respond to increased competitiveness evident in the current business environment is should be of great interest to both businesses and marketing researchers. In recent times intense competition within diverse industries such as information technology, chemicals, and financial services has given rise to situations where firms are making attempts to differentiate themselves through the provision of customer solutions (Tuli, Kohli & Bharadwaj, 2007). Through strategies such as customer engagement companies can develop customized and integrated goods or services that satisfy a customer’s business needs (Tuli et al., 2007). It has become crucial for the success of a company to understand the customer position with regards to their business needs (Letelier, Flores & Spinosa, 2003).

Responses based on the development of relationships have been reported to be a worthwhile venture in attempting to maintain profitability (Hutchings & Knox, 1995). On such response is the use of customer engagement which in essence involves turning a prospective customer to a brand idea enhanced by the surrounding context (Manyika, Roberts & Sprague, 2007). This strategy can be implemented using various approaches and has reportedly been successful in the effective creation of brand loyalty (Mollen & Wilson, 2010). An example of this is cited in successful Korean print media that solely features the work of contributing consumers (Manyika et al., 2007).

This example illustrates the concept of using consumers as innovators could go a long way in creating avenues for engagement (Manyika et al., 2007). Thus it can be said that customer engagement can help build long-term relationships and enhance profitability.

Problem Statement

According to Hutchings & Knox, customer engagement can be defined as the process that enables a company to alter the perception of the customer with regregard a brand (1995). The concept of customer engagement is important to the well-being of the organization based on the fact that performance can be directly related to its ability to combine different resources into offerings that create value for the specific market segment (Ivens, Pardo, Salle & Cova, 2009). This suggests that in the bid to ward off competition, the ability of a company to understand the needs of its clientele and include these in its offerings can improve the amount of profit it is likely to generate.

For the customer, successful engagement should result in the development of “whole products” which in essence serve to satisfy a wide range of customer requirements and increase participation in organizational processes (Hutchings & Knox, 1995). The wholeness of these products is aimed at developing brand credibility which has been reported to have a direct impact on satisfaction and secondary impact on brand loyalty and commitment (Sweeney & Swait, 2008). This is because consumer participation through schemes such as engagement has the potential to yield important benefits for the firms including increased share of expenditure and profitability (Ashley, Noble, Donthu & Lemon, 2010).

However, for the companies and executives who seek to achieve this goal long-term success is pegged on the continuous capacity to offer the customer the best value for the price (Bull, 2010). This implies that the company needs to address the issue of its relations with the customer to identify the customer needs (Letelier et al., 2003). This leads to a situation where relationships become potential assets that need to be maintained and properly managed (Ashley et al., 2010).

Another means of building relationships in marketing is through customer involvement which entails making the consumer participate actively at some stage of production (Prahalad, Ramaswamy & Venkatram, 2000). Despite the fact that Involvement has been successful creation of loyalty with products such as software reports indicate it is poorly suited for all product categories (Prahalad et al., 2000).

Research Methodology

The researcher will study various articles published in peer-reviewed journals and books on the subject of customer relationship management and engagement. The articles selected will include academic articles, case studies, surveys, and reports. The selection of only peer-reviewed articles is expected to provide adequate screening to ensure only valid information is included in the report.

This literature review will take the form of a systematic review. A systematic implies that the researcher will provide information from a narrow set of articles that answers the research hypothesis. The information is presented in a manner that allows the researcher to build a conclusion based on arguments posed in the papers. This method was selected because it provides an objective report on current knowledge on a given topic of interest (Green, Johnson & Adams, 2006). It is hoped that keeping this criterion will provide a quality report for the reader.

Literature Review

As mentioned in the introduction this report aims to identify strategies that can help to draw and keep customers interested in the company and their product or service. This is crucial as indicated in marketing reports that’s state that acquiring a new customer is always more costly than maintaining existing customers (Sweeney & Swait, 2008). Such a position does suggest that the success of a company lies in the ability to develop strategies to keep their existing clients satisfied thus maintaining profitability.

This scenario has already become apparent in industries such as telecommunication, banking and retail where the reduction of high customer turnover has become a top priority (Sweeney & Swait, 2008). The nature of competition that characterizes these industries indicates that company performance can be measured by its ability to integrate a variety of resources to satisfy market requirements (Ivens et al., 2009). This implies that for a business to maintain profitability it should hone an ability to adapt its products or services to meet market needs.

The customer engagement process requires that a business shifts focus from the product to the customer (Prahalad, Ramaswamy & Venkatram, 2000). This process is essential because it is through this engagement process that a business can develop “whole products” which in essence serve to satisfy a wide range of customer requirements (Hutchings & Knox, 1995). As a result of customer satisfaction the company can enjoy a degree of brand loyalty through repeated interaction with the business (Sweeney & Swait, 2008). This in turn suggests that the company needs to have access to information that pertains to the customer which can be used to identify diverse needs.

The role of customer engagement therefore becomes is important to the well-being of the organization upon considering the importance of customer relationship management in business. Customer relationship management provides an essential understanding of the role of the company with regard to the customer. From this, it is possible to deduce that relationships are significant potential assets and as such fostering and managing them properly is just as important as the product or service (Manyika et al., 2007). In doing this a company must first understand the customer and the customer’s needs before developing an appropriate engagement concept (Liang & Tanniru, 2006).

The analysis and definition of customer requirements are essential because customers are reported to have diverse needs (O’Brien, 2010). This position suggests that a successful business must look to incorporate these diverse needs into its product or service.

Successful customer engagement has yielded significant benefits for firms that have attempted this strategy as illustrated in a report indicating a case of Korean print media and the decision to transform a consumer into an innovator (Manyika et al., 2007). This case depicts a firm that made a decision to print a newspaper that included only articles prepared by contributing writers who are the consumers (Manyika et al., 2007).

The result of this initiative has seen this company enjoy enhanced brand loyalty that most likely has also translated into increased financial returns. It is possible to assume that this is due to the fact that increased consumer participation has the potential to yield important benefits for the firms including increased share of expenditure and profitability (Ashley et al., 2010). Similar success has been observed in a case illustrating the use of technology to improve customer relations. This was observed in a report that highlighted the trend in Nordic banks that used technology to remain competitive and maintain brand loyalty (Luneborg & Nielsen, 2003). This information provides an indication that customer engagement may be a solution to the dilemmas caused by increased competition.

References

Ashley, C., Noble, S. M., Donthu, N. & Lemon, K. N. (2010). Why Customers wont Relate: Obstacles to Relationship Marketing Engagement. Journal of Business Research, pp. 1-8.

Bull, C. (2010). Customer Relationship Management (CRM) Systems intermediation and disintermediation: The Case of INSG. International Journal of Information Management, 30, pp. 94-97.

Green, B. M., Johnson, C. D. & Adams, A. (2006). Writing Narrative Literature Reviews for Peer Reviewed Journals: Secrets of the Trade. Journal of Chiropractic Medicine, 5, pp. 101-117.

Hutchings, A. F. & Knox, S. T. (1995). Creating Products Customers Demand. Communications of the ACM, 38, pp. 72-80.

Ivens, B. S., Pardo, C., Salle, R., & Cova, B. (2009). Relationship Keyness; The Underlying Concepts’ for different forms of Relationship Management. Industrial Marketing Management, 38, pp. 513-519.

Letelier, M. F., Flores, F. & Spinosa, C. (2003). Developing Productive Customers in Emerging Markets. California Management Review, pp. 1-40.

Liang, T. P. & Tanniru, M. (2006). Customer- centric Information Systems. Journal of Management Information Systems, 23, p. 9-15.

Luneborg, J. L., & Nielsen, J. F. (2003). Customer – focused Technology and Performance in Small and Large Banks. European Management Journal, 21, pp. 28-269.

Manyika, J. M., Roberts, R. P., Sprague, K. L. (2007). Eight Business Technology Trends to Watch. The Mckinsey Quarterly, pp. 1-11.

Mollen, A. & Wilson, H. (2010). Engagement, Telepresence and Interactivity in Online Consumer Experience: Reconciling Scholastic and Managerial Perspectives. Journal of Business Research, 63, pp. 919-925.

O’Brien, H. L. (2010). The Influence of Hedonic and Utilitarian Motivations on User Engagement: The Case of Online Shopping Experiences. Interacting with Computers, 22, pp. 344-352.

Prahalad, C. K., Ramaswamy & Venkatram. (2000). Co-opting customer competence. Harvard Business Review, 78, pp. 79-87.

Sweeney, J. & Swait, J. (2008). The Effects of Brand Credibility on Customer Loyalty. Journal of Retailing and Consumer Services, 15, pp. 179-193.

Tuli, K. R., Kohli, A. K., & Bharadwaj, S. G. (2007). Rethinking Customer Solutions: From Product Bundles to Relational Processes. Journal of Marketing, 71, pp. 1-17.