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Review of Related Literature

In the business arena, more and more organisations are able to realise the importance of having good relations with their clients. In this manner, many industries are trying to identify ways on how to promote or enhance client relationships. The customer-company relationship is based on a continuum wherein both "always-a-share" and "lost-for-good" relationships occupy the two extremes of the continuum. In an "always-a-share" relationship, transactions are arms-length and discreet. Customers are valuable and at the same time, replaceable. On the other hand, in a "lost-for-good" relationship, the probability that the customer will purchase again from the same company is extremely low when the customer decides to terminate the use of a product due to product defects or problems (Jacobs, Latham, & Lee, 1998). With these problems the performance of the business are being affected negatively. In order to solve the issue, different methods or approaches can be used to ensure good client relations. Hence, this part of the study will provide relevant literatures focusing on the ways on how to improve client relations. Ensuring Customer Satisfaction

According to Rust and Subramanian (1995), customer satisfaction brings many benefits as satisfied customers are not very price sensitive, buy additional products, are less influenced by competitors and stay loyal longer. Rust and Subramanian (1995) stated that customer satisfaction has been deemed directly to affect customer retention and companies' market share (Rust & Subramanian, 1995). In banks, service quality, service features, and customer-complaint handling determine customer satisfaction (Hansemark & Albinsson, 2004). Some factors that affect satisfaction are extended hours of operation and competitive interest rates as confirmed by the study of Levesque and McDougall (1996). In addition, there are researchers who discuss the links between satisfaction, loyalty, and profitability (Heskett et al, 1994). They are proponents of the theory called service management, which argues that "customer satisfaction is the result of a customer's perception of the value received in a transaction or relationship relative to the value expected from transactions or relationships with competing vendors. Pertaining to this theory, Hansemark and Albinsson (2004) stated:

"Loyalty behaviours, including relationship continuance, increased scale or scope of relationship, and recommendation (word of mouth advertising) result from customers' beliefs that the quantity of value received from one supplier is greater than that available from other suppliers" (p.28). They continued: "Loyalty, in one or more of the forms noted above, creates increased profit through enhanced revenues, reduced costs to acquire customers, 2004, p.28). lower customer-price sensitivity, and decreased costs to serve customers familiar with a firm's service delivery system" (Hansemark & Albinsson,

Customer Loyalty Customer loyalty is about establishing and maintaining a relationship with your customers. (Chow & Holden, 1997) A key to this mutually beneficial relationship is the awareness of customer preference or the present and potential needs and wants of a customer about any aspect of the business, whether it is about products or services because of possible customer turnover which will lead to decreased profits. Loyal customers can be easier to convince to try new products or services, charge higher prices and use as a willing referral (Khirallah 2000). Accordingly, any business's most advantageous strategic purpose is to gain customer loyalty. It has a constructive effect on company culture, development and bottom line (Dick & Basen, 1997). Customers will be able to see that the company is geared towards retaining customers through all business processes from management to staff. Aside from being a strategic purpose, gaining customer loyalty is also a key corporate challenge today especially in this increasingly competitive and crowded marketplace because of the eventual profitability it will provide especially in terms of international marketing (Chow & Holden, 1997). it has been noted that customers have both current and potential value to companies. Thus, another advantage of having a loyal customer base is that it is more inexpensive to maintain one than acquiring new customers. The cost to get new customers amount to 5-10 times more than that of keeping a customer because there are a lot more tasks to be done to acquire new customers. Having a regular customer base will shift the focus of business strategies to improvement of product and service quality among others (Bejou & Palmer, 1998). In 1999, fashion retail giant, Marks and

Spencer's (M&S) suffered a big loyalty test in Northern Ireland when customers expressed dissatisfaction about the stagnant fashion, inconsistency of sizes and high prices. Even those who considered weekly trips to M&S a must complained were greatly disappointed with the store. Customer loyalty has been one of the most discussed and most

misunderstood marketing concepts of recent years. Marketers have rushed to develop so-called loyalty schemes but do not always appear to have considered the key elements of why consumers remain loyal to a brand (Stum & Thiry, 1991). Some schemes have been dropped and new schemes were developed because customers use their card less nowadays. It is clearly a good time revisit the concept of customer or consumer loyalty. Firstly, a loyal customer and a satisfied customer are not necessarily the same thing. Customers may remain loyal for a number of reasons and may not even be happy with the product or service (Ryan, Rayner & Morrison 1999). A lack of customer defections does not necessarily indicate satisfied consumers. The cost of switching to an alternative supplier may be prohibitive or there may be a penalty clause. Switching supplier may be inconvenient. The alternatives may not be attractive.

Secondly, there are many reasons why a consumer may be loyal to a product, service or brand. These can include convenience (ease of access in the case of a retailer) or price. The major reason for staying loyal is genuine satisfaction of the customers. It is not about the marketer operating a defined loyalty scheme although this does have the potential to offer benefits in the area of improved consumer understanding and the data mining or merchandising opportunities that flow from this. Countless marketing academicians, statisticians and marketing professionals have beaten the fact that it costs more to acquire a new customer than to retain an existing one. Companies need programs to gain and maintain loyalty of customers in the face of increasing product parity and intensifying competition. However, the issues do not only stop to loyalty programs but also it is about the form and objectives of such programs.

Customer loyalty is characterised as the tendency of a client to choose one business or product over another for his or her particular needs or demand. For example, in the packaged goods industry, clients may be described as being "brand loyal" since they tend to choose a specific brand more often than others. Remember that the use of the word "choose" in the context of customer loyalty becomes more evident when choices are being made and actions were taken by any customers. It can be said that loyalty is shown by the actions of the customer.

Moreover, it is said that customer loyalty has become a catch-all term for the outcome of different marketing methodise in which customer data is used. Customer loyalty is the output of well-handled customer retention programs; customers who are given emphasis by a retention program demonstrate higher loyalty to a business (Bowen & Shoemaker, 1998). All customer retention programs rely on communicating with customers, giving them encouragement to remain active and choosing to do business with a company. Consequently, there exists an interaction between the desired results and customer satisfaction, customer loyalty and customer retention. They may go by other names such as customers, clients, buyers, etc. Without the customer it is impossible for any business to sustain itself especially those who are competing in the international arena. Achieving the desired results is frequently a result of customer actions. Any business without a focus on customer satisfaction is at the mercy of the market. Without loyal customers eventually a competitor will satisfy those desires and your customer retention rate will decrease.

Loyal client usually don't leave even for an appealing offer elsewhere. At the very least they will give you the chance to meet or beat the other organisation with the same products or services. Maintaining loyal customers is an integral part of any business (Schultz and Bailey: 2000). One of the approaches to get or retain loyal clients is through having quality products and services which are so satisfying that there is very little opportunity that the demands of the customer will not be met. Of course one of the difficulties understands the true customer requirements (Schultz and Bailey: 2000).

Even when you have the requirements in advance the customer can and will change them without notice or excuse. Having a good recovery process for a dissatisfied customer is a necessity. Customer loyalty studies have been able to discover and measures both the attitudes and experiences which directs to desirable behaviors. (Schultz and Bailey: 2000) It is a market research practice that is extremely actionableit identifies areas for improvement, prioritizes them, identifies remedies, and then provides feedback on their effectiveness. On the other hand, market researchers love to debate whether the scope of such research is really "customer satisfaction" or "customer loyalty." Many will even debate whether loyalty is an attitude or a behavior. It is easy to get caught up in the semantics, but the bottom-line is clear: we are talking about a type of research practice that promotes desired customer behaviors (Fournier, 1998).

Granted, this applies each and everyone in the business market. Still, losing customer costs can be considered as a great deal of money, and in market environments that are experiencing slow growth, the existence of customer base company is a precious asset (Shani & Chalasani, 1992). High tech markets have a nasty way of shifting. Contemporary and direct business organisation, or firms offering alternative services and products, can create sudden and unpleasant changes in the competitive business environment. In this regard, an organisation that has a clear comprehension of its perceived strengths and weaknesses are those companies that will be well-prepared to enhance and promote effective competitive strategies (Crosby, Devito & Pearson 2003). Industries with small customer bases are in need of objective feedback as soon as they are able to have real, paying customers and loyal customers. At the heart of all of this is the fact that it is easier and cheaper to gain business from an existing customer than to attract a new one. Too often, it seems, greater focus is placed upon acquisition of new customers than satisfying existing ones. This is ultimately expensive and the lack of current consumer focus inherent in the approach means that opportunities for increasing share of wallet from existing customers through cross-selling and upgrading products and services is lost.

Furthermore, this approach may frequently mean that companies are spending heavily to attract disloyal consumers and ignoring those who generate the most revenue and profits.

Customer Relationship Management

According to Cohen and Moore (2000), CRM is concentrated on the use of information technology so as to aid the organization to stay abreast of its customers' needs and concerns. Customer Relationship Management also helps the organization to respond in time and appropriately to their customers' calls. On the other hand, Jarre (2000) stated that Customer Relationship Management is a business strategy and process issue that involves several other strategies other than the application of technology. The approach on CRM covers all business processes that an organization employs so as to determine, select, obtain, enhance and retain its customers. Indeed, at present, CRM is regarded as the integration of business processes, technological solutions and advanced analysis, which enables companies to understand clients from a multifaceted perspective. Through this understanding, companies are able to establish deeper and more profitable customer relations (Zabin, 2004). The CRM strategy may be thought as a new development in business and management, when in fact, it has been around since time immemorial. There may be variations of the old concept in comparison to the present time. However, the objective remains the same. Before, CRM is applied in businesses through personal interactions. For instance, a shop owner in the past would know all his customers by name, their lifestyles, hobbies, occupations and buying preferences. When needed, all these information are stored and readily accessible for the shop owner to use (Zabin, 2004). Nowadays, this may not be very much applicable to modern companies. As an alternative, companies now depend on go-betweens to establish the connection for them. These come in the form of marketing vehicles, which act as a go-between communication flows, and contact management channels to intercede service and support flows. No matter how varied people define Customer Relationship Management, its main rationale remains the same, and that is the application of strategies to improve customer relations.

It may appear to be a simple management task. On the contrary, the implementation of CRM requires several factors. For instance, this strategy requires that an organization see customer relations as a means to recognize the needs and wants of its customers. The organization must successfully create, satisfy and sustain its clients while concurrently helping in the attainment of its objectives (Greco and Ragins, 2003). In order to come up with customized solutions geared towards the enhancement of customer functionality as well as to the recognition of new customer functionalities, customer intimacy and partnering are required. In turn, networking of customer relationships, which involves channel members, end users, advertising agencies, research firms are established and require management. In general, three important things must be incorporated to a CRM program. These include how to identify individual customers, how to gain relevant knowledge about individual customers and how to cross-sell to each individual customers in a real-time and context-sensitive manner (Zabin, 2004).

Aside from this challenge, the implementation of CRM also requires the organization to view this strategy holistically. This means that CRM should be assimilated well to all the processes within the organization, from marketing to collections. This is said to be a challenge as most companies employing CRM have this tendency to view this strategy narrowly, seeing it as a mere tactical series of transactions. In contrast, the effective strategic implementation of CRM needs information from all related departments for the purpose of using customer information intelligently that will eventually lead to the creation of strong customer partnerships or relations (Butler, 2000). Furthermore, the consistency of the response from different customer points of contact with the company must also be addressed as a possible challenge. For instance, online customers can acquire immediate response to their applications, questions and suggestions. However, this may not be true for customers who have contacted the company using a different channel such as the telephone or a traditional retail outlet (Butler, 2000).

Upon the company's realizations on what it actually needs, several CRM strategies can be employed. Weiss (1999) suggests that personalization and online interactivity can be used to help build emotional connections with stakeholders in ways that no other medium can. Forrest and Mizerski (1996) maintain that the highest use of the Internet among businesses has been as a listening medium. The World Wide Web has progressed into a medium with various generic relationships -building attributes (Weiss, 1999). The higher the quality of the data a company can obtain about its customers, and the more comprehensive the data is, the more the organization will be able to use decision analysis to predict customer behavior (Butler, 2000). More targeted and customized relationship strategies can result from better predictions of customer needs. Online CRM can enhance the

importance of the relationship for both customers and the e-business. Customers can receive more products and communications that are more suitable to their needs and lifestyles, and the e-business can benefit from a group of high-value repeat customers.


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