Customer management has been an integral part of business processes since the early days of business, even before money was introduced. Development of products and services aimed at meeting the needs of the customer is what determines the effectiveness of the customer retention and loyalty strategies (Rao & Perry, 2002). This paper analyses the operational methods and strategies adopted by Nefab Packaging Company- UK in providing products and services and their effectiveness in terms of customer satisfaction
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The main business area for Nefab Company is packaging. It is an international company with global coverage. Its headquarters is in Sweden, but it has numerous subsidiaries in Europe and America including the UK (Nefab Group, 2013) where I happen to be one of the employees. Most of its operations involve working closely with other businesses around the globe with the intent of providing them with the best quality packaging solution for their products. Nefab Company has close to 20 major customers around the world with numerous other small customers distributed all over Europe. The company handles its customers using two approaches; its large global customers are all handled by the central management of the organisation while the other small to medium sized customers are handled at the company’s local offices in the respective countries (Nefab Group, 2013). To enhance its competitiveness and sustainability as a global packaging company, it has recently introduced customer relationship management department (Nefab program Manager, 2012). This department operates under the human resource department and is responsible for development and implementation of systems aimed at ensuring the levels of customer satisfaction are high in the company. Some of the main functions of this department are (Nefab program Manager, 2012):
Developing and focusing sight on the customers
Pay attention to customer lifetime value
Develop management support for a customer focussed strategies
Developing effective value for data collected from the customer
Developing an understanding of the levels of management involvement in customer management
Developing flexible business processes to support a wide range of customer needs
Advising the IT department on what to develop as an approach of enhancing customer satisfaction
The current customer relationship management system operates based on Microsoft’s CRM system. It is currently implemented in most divisions of the company (Nefab program Manager, 2012). Currently, the company is working towards increasing the levels of integration of those services into the business function and ensuring that all the guidelines and strategies are used efficiently to realize maximum benefit from the new department in the organisation (Nefab Group, 2013).
The Company’s Customers
This company works in the business to business sector and therefore all its customers are businesses seeking for packaging services. The main struggle for the company is to develop long-term relationships with other businesses globally. The fact that the company has very small customers, it is very important for the company to maximise on customer satisfaction as it cannot afford to lose any customer and must struggle to attract more in the global market. The major customers for this company are companies in six global industrial segments: Vehicles, Aerospace, Healthcare equipment Industry, Energy, and Telecom among many other industries.
The things that our customers are seeking are packaging products that are reusable and at the same time easily expendable. The packaging should also be designed in such a way that the quality of the products is not affected during transport. Moreover, the current levels of environmental sensitivity by many companies have resulted to companies seeking packaging that are as green as possible and have minimal harm to the environment. Furthermore, the customers require packaging that is optimal in terms of weight to minimize the cost of transportation of the product. These are the main areas that customer relationship management department is focussed on in this organisation.
This company has developed an approach that ensures all its customers are well known. The system is based on customer segmentation in terms of products they buy from the company. The segmentation is also done based on regions. This is important since the company has subsidiaries distributed all over the world. The process of product development is done through consideration of the specifications of each customer. This is mainly achieved by developing products based on customers’ instructions and directions. The application of customer segmentation allows this company to meet the needs of almost all its customers.
The development of this department will be central in promoting a sense of security, a feeling of being in control and trust among customers. The main reasons behind the development of the customer relationship management department in this organisation were to (Nefab program Manager, 2012):
Enhance customer lifetime value;
Develop the best strategic information and communication;
Develop customer retention strategies;
Enhance the levels of customer satisfaction .
This company developed this department as a central participant in the process of expanding and maintaining market share successfully. Particularly, retention of customers can be achieved through learning relevant information, such as expectations, preferences, habits, and names about customers (Nefab program Manager, 2012). This department is expected to develop a one-on-one relationship with customers as an approach of ensuring that they come back frequently developing close association between the company and its customers.
Furthermore, the department is also expected to increase the level of IT integration into customer management, resulting in high levels of intimacy between customers and the company. The high levels of using IT allow the organisation to a variety of employees in managing customer relationship removing the barrier associated with personalised attention of the customer (Nefab program Manager, 2012). This will result to sustained organisational performance and hence profitability even if certain employees are no longer working with the organisation.
Therefore, there are three main customer-related objectives in this initiative; customer retention, customer satisfaction, and customer loyalty (Nefab program Manager, 2012). The introduction of customer relations management department is expected to enhance the level of customer loyalty. By making this company more knowledgeable about its current customers as well as prospective customers will ensure the services offered to them are offered in the best manner available to satisfy the customer positively impacting on the levels of customer loyalty. A similar case is expected in customer satisfaction. Developing a positive experience between this company and the customer has been seen as the main approach towards ensuring the customer is highly satisfied. This department is also focused on ensuring the job done by the company is the best. This will ultimately result to high level of customer retention. For instance, this company has been suffering from numerous instances of confusion and misconceptions especially when employees are unable to tell what has been delivered to a specific customer and what needs to be delivered and when. This has portrayed the company as unresponsive to its customers. This has dealt the company a major blow in the process as it negatively affected customer satisfaction levels. These three objectives are related to one another. For instance, a customer who has a constant repeat purchase is said to be loyal while at the same time, a customer can only be loyal if the products and services are satisfactory.
Business Related Objectives
This department is focused on not only fulfilling customer related objectives, but also business objectives. In terms of business, objectives are collection and analysis of data to increase the understanding levels of customer. This is important in ensuring the organisation meets the needs of the customer and is in a position to provide current and future customer needs. This is also essential in developing future forecasts for production and sales prospects. The development of process automation is also another important objective of this department. It is necessary for the enhancement of efficiency and ultimately profitability of this organisation. Most investigations agree that the most important objective of customer relation management at organisational level is to gather information. Xu & Walton (2005) clearly explain the main reason for collection of information by an organisation as being to enable the organisation understand its customers, to meet the needs of the customers and also develop effective strategies to meet the company’s future prospects.
Customer Relationship Management Strategies
There various theories that try to explain the strategies used on customer relationship management. The most common ones analyse customer touch points, front office, back office, and warehousing. To be able to analyse the approach adopted by this company in managing its customers, it is necessary to review this parts.
This is the area in organisational processes that has numerous literatures regarding the implementation of customer relation management (CRM). Specifically, Bose has developed a very complex model that analyses all the necessary steps in the process of implementing CRM. This model is simplified by a list developed by David (1999). Thus, David’s list is comprehensive enough to provide guidance of the process of implementing CRM. Another implementation plan that is not as complex as Bose’s was developed by Chase (2004). The most important aspect of this plan is the detailed explanation of the integration levels.
These are functions in an organisation that the customer cannot view directly (Chen & Popovich, 2003). Many authors put more emphasis on the importance of an organisation using the CRM in determining the value of its individual customers. When analysing customer value, Zikmund provides a detailed review of various theories that analyse this issue. Moreover, Xu and Walton (2005) have developed a very distinct approach to classification of customers based on profit cost matrix.
Another important tool that is essential in analysing customer classification is the Identify Differentiate Interact Customize (IDIC) tool (Zikmund et al., 2003). This tool is known to provide detailed information on approaches of customer differentiation and product customisation. According to Zikmund and his colleagues (2003), customisation of the various stages in product development is essential in ensuring the products meet the specific requirements of the customers. Nefab achieves product customisation through the selection of materials and concepts for product development based on the specific customer requirements. This results to production of products that are customised for an individual customer. This is driven by Nefab’s objective that aims to replace its customers packaging departments which requires complete customisation (Nefab program Manager, 2012)
Another important tool that is effective on providing insights into the process to customers in terms of areas that data can be gathered from is the analytical model by Xu and Walton (2005). It is essential in developing background on the information that should be looked for. This allows a company to develop usable data from the customers especially for development of the customer based strategies. Nefab has an effective tool for data collection that is based on direct interaction with its customers on a regular basis (Nefab program Manager, 2012). Information is collected on their products on issues, such as the level of customer satisfaction and production requirement of the customer. The company also gathers information on their competitors especially on their prices and the approach to business of their competitors.
More so, a better explanation on the uses of customer knowledge is provided by Zineldin (2006). A combination of theories by Xu & Walton and Zineldin is used in the process of seeking information and developing effective use of the information.
In a study by Wilson (2006), it was evident that it is very important to analyse the value of a customer in the process of developing long term relationship with the customer. Zikmund et al. (2003) identifies the important values of customer lifetime as the period the customer is expected to last, cost of capital, retention rate, and profit margin. This is the area that Nefab is still struggling with. Its approach is focussed on determining the profitability of each customer based on the contribution margin. However, the company has completely separated loyalty and retention from the approach adopted for determining the profitability of its customers (Nefab program Manager, 2012).
According to this company, it is hard to develop a measure for profitability that is not based on income per product is uncertain and hence not realistic (Nefab program Manager, 2012). Thus, according to this company, the process of predicting future customer loyalty is impossible. The company depends on its employees to manage its customers in that the salesperson handles any conflicts or complaints from customers to ensure that they are preserved as customers of the company.
In terms of relationships, Peppers & Rogers (2001) suggested that the main objective of CRM is to allow an organisation to manage its customers on an individual basis. This is the area that Nefab is more focussed on. It has established its CRM strategies to ensure that customers are handled at a personal level. This is also coupled with development of personalised relations with its customers. The company strives to ensure that the customer comes back for more products and services. Nefab has established measures that increase the levels of openness between it and its customers. They allow their customers to be partners in the business (Nefab program Manager, 2012). The company has also established a variety of departments involved in management of sales including technicians, design teams and accounts manager. This is necessary to ensure each of its major customers is handled differently by the company. This is sometimes challenging to the organisation in terms of coordinating the numerous departments in the organisation.
These are firm’s functions that directly interact with the customer (Chen & Popovich, 2003). The IDIC model is also an effective tool for providing a description of the functions of the front office as per CRM (Peppers & Rogers, 2001). The primary role of the front office is to collect information from the customer in an easy was as possible (Peppers & Rogers, 2001). Nefab has tried to develop an effective front office by minimising the number of departments at the front office level (Nefab program Manager, 2012). The company has a centralised workloads and information for its large customers with global coverage. The local branches handle the other smaller customers. This allows the company to store information about all its major customers in a centralised place (Nefab program Manager, 2012).
Rao and Perry (2002) explain the importance of digitizing employee knowledge. Another important contribution to this part is the Greenberg (2004), analysis of culture and its importance in the process of implementing CRM as a strategy within an organisation. His analysis is comprehensive and very central in the development of CRM strategies that meet the requirements of a specific organisation.
A study by Curry and Kkolou (2004) found out that customer life cycle is very important for an organisation. They further assert that it should be handled while providing detailed information about each and every stage that the company’s customers go through. The common stages identified were targeting, translation, delivery, dissatisfaction management, and winning back lost customers (Curry & Kkolou, 2004).
These are the areas that this Nefab Company is struggling with. Its customer’s life cycle is initiated when they visit a customer’s firm as most of my colleagues described. This is then followed by sending of samples of packaging until the final solution is arrived at (Nefab program Manager, 2012). Once the customer has approved the design of packaging, the company delivers that packaging to the customer until when the production of a specific product comes to a stop. During this time, the company expects the customer to approach them again for a new packaging plan. The company completely lacks customer win-back and dissatisfaction management stages in the customer lifecycle.
Another important area in the front office, organisational culture is analysed by Greenberg (2004). He asserts that the culture of the organisation must be changed such that it aligns with the objectives of the organisation’s CRM initiative. Thus, the success of an organisation’s CRM depends on the levels to which its objectives align with the firm’s culture.
This is the area that Nefab has tried to deal with. The company has implemented an intensive training program for the sales persons with specific reference to behaviour and conduct (Nefab program Manager, 2012). The company has also equipped its workforce with computer skills. The company has endowed its employee’s a heavy responsibility especially in decision making. The company also promotes the development of independent culture at its subsidiaries. However, the cultural independence of its subsidiaries is limited as they operate based on a general cultural framework of the company.
This has positively impacted the performance of the company as the decision making paths has been shortened. The negative impact of this approach is on development of a centralised decision by the firm since its subsidiaries work very independently.
Customer Touch Points
These are the interactions that exist between an organisation and its customers (Chen & Popovich, 2003). The touch points are well illustrated in the ‘interact’ phase of the IDIC model (Peppers & Rogers, 2001). This model has a detailed overview of all the necessary areas in the touch points that exist at an organisational level. According to Peppers & Rogers, touch points are essential in the process of organising and streamlining the face of an organisation. Nefab Company has in the recent past involved the touch points in the process of organisational streamlining. This has been enhanced by the introduction of the CRM department as an approach to refining its front end with the endeavour to ensure its customers are well served (Nefab program Manager, 2012). The company has also increased the level of using the web as a customer interaction tool. It currently accounts for the most of the company’s customer leads.
A theory by Davids (1999) is comprehensive enough in developing approaches for examining how customers interact with an organisation. Furthermore, Peelen (2005) presents possible interaction points in an organisation that is similar to the work by Davids (1999) as well as Peppers & Rogers (2001). These points identified by Peelen are personal sales, telephone, e-mail, websites, and public media.
Nefab Company has tried to develop effectiveness of these channels of interaction. However, the company has limited use of media such as radio and television as it assumes that their customers are less likely to be there for interaction between the company and them (Nefab program Manager, 2012). The major forms through which this company interacts with its customers is through phone calls, email and direct communication.
Conclusion and Implications
From the analysis, it is evident that the theories analysed by various investigators are applicable at organisational level. It is evident that using CRM in business benefits a business since it offers effective objectives for management of businesses as well as its customers. The most important objectives in this case are customer retention and satisfaction, data organisation, and in-depth understanding of the customer. From analysis of the company, it has been evident that the most important aspect of CRM is the organisation of customer information. The ultimate results of this organisation are high levels of customer satisfaction and retention as witnessed in the organisation. The ability of an organisation to meet customer requests and respond to them in time depends on how organised is the approach to the collection and analysis of customer data. This evidently results to high levels of customer satisfaction. This result because of high levels of efficiency in customer management strategies.
From these results, it can be concluded that for an organisation to effectively gather and organise customer information, it requires to develop a customer relation management approaches. This allows an organisation to develop a comprehensive analysis of the customer on an individual basis. This is central to capturing relevant information in an approach that allows availability of the information from all departments in an organisation. Furthermore, the main benefit of CRM is to allow organisations to own and control information about its customers and not specific individuals or departments in an organisation. This is important in limiting the implications of employees exiting from an organisation where customer information is readily available for the replacement recruits as compared to the case where there was no CRM.
Moreover, CRM is important in the sense that customer information can readily be pulled and reviewed. This is an essential ingredient in organisational efficiency. In fact, new employees can use the stored information to develop an effective background about the customer. More so, CRM allows an organisation to develop approaches of handling objectives such as customer retention, satisfaction, and loyalty at once as they are assessed in terms of their impact on the organisational efficiency of the firm.
Implications of the study
This investigation analysed how customer relationship management is used in Nefab Company. The analysis focussed on the application of CRM in the organisation with relation to available theories that focus on the consumer market. The analysis reveals that it is important for an organisation to focus on developing strong relations with its customers other than focusing on the consumer market loyalty. Development of customer relation automatically results to high levels of customer loyalty. However, this investigation is limited to information gathered by other investigators in reference to one organisation. Further studies need to be done using more than one organisation. The investigations should collect data using quantitative as well as qualitative methodologies to further enhance the available information on the research issue. Other areas that need to be analysed in future investigations are:
Analysis of the effect of company culture on customer relations;
Investigate on the approaches to evaluating customer loyalty;
Examine how price and customer loyalty interact.
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