Suppliers which have responsibilities to customers need a system during production or service of needs of customers. Supply chain is an organized process which starts with raw materials to production of products and finishes with delivery of these products to customers. In order to gain successful supply chain activities, suppliers should manage the system, properly. Although there are many stage of managing supply chain, one of the most important part is management of customer relationships. Customer relationships management aims to meet needs of existing customers and gain new customers which results in profitable for company. In order to obtain efficient and effective relations in terms of both suppliers and customers, this four steps which are customer stratification based on their profiles and needs, understanding customer loyalty and lifetime value of customer, establishing measures of customer satisfaction, and supplier support and oversight must be provided by suppliers or companies. In these article, company refer to supplier.
First of all, customer stratification based on their profiles and needs is a significant part of managing the relationships between suppliers and customers. Preferences of customers differ in buying. Because every customer has different needs and profiles like buying potential and revenue. Although each customer has different purchasing behavior, customers can be categorized. Correct comprehension of purchasing of customers which is related to their profiles and needs is important to categorize them. Distribution companies which classify their customers based on their purchasing behaviors make more profit. For example, there are many customer stratification methodologies which provides optimal results for companies. According to Fowler, Natarajarathinam and Patwari, customer stratification framework includes extended solutions that fits in companies. This stratification process classifies customers more than one dimension and applies mathematical methods. Thus, measurement and providing details are considered and profit margin of company can be increased (2016, pp.16-17). Additionally, customer stratification proposes strategies such as customer-focused sales and boosts profits. Consequently, customer stratification is important to improve the relationships between supplier and customer and affects profitability of companies.
Secondly, understanding customer loyalty and lifetime value of a customer is another vital component of customer relationships management. Customer interaction with the company is a necessity so as to construct strength relationships between company and customer. Permanence of customers is important as much as presence of consumers for future of companies. Companies want to train consumers with long term relations. Customer loyalty is tendency to a brand, product or service which is gained by successful suppliers. Each company needs loyal consumers. Therefore, companies make an effort to build customer loyalty. Customer loyalty affects lifetime value of customer. Lifetime value of customer is described as a predictable activities which are estimating possible flow cash from consumers and future profit of companies. This is important that companies which understand customer loyalty and lifetime value of a consumer make analysis to develop customer relationships. For instance, “The move towards a customer-centred approach to marketing, coupled with the increasing availability of customer transaction data, has led to an interest in understanding and estimating customer lifetime value (CLV). There are several researches about the CLV formulas and calculating relations. But the effect of the CLV on the other departments of the organization and especially the effect of the CLV on the key parameters for organization’s profitability such as customer loyalty and satisfaction had little attention” (Kahreh & Kahreh, 2011). To conclude, today’s competitive business environment, companies are more costumer-focused and consider loyalty and lifetime value of a customer to have permanent relationships.
Thirdly, establishing measures of customer satisfaction is one of the significant step of customer relationships management. In the last century, there is many companies which supply similar products, services or brands. Thus, there is a competitive market in the world and there is many suppliers or companies which target the same customer profile. In order to be in existence in this compelling market, companies need long-term and a number of customers. Therefore, companies establish varied measures to pull customers into their company which ensure strength relationships between companies and customers. The most effective way of impacting customers which leads to a bond between customers and companies is meeting the customer satisfaction. If customer satisfaction is assured, customer loyalty will be provided, correspondingly. So, customer and supplier relationship will develop. Increased relationships with the customers affects profitability and productivity of companies, positively. Customer satisfaction includes trust and commitment customer and company aspects. Companies strive to strengthen the customer relations. For instance, companies practicing strategies that build a satisfaction of customers. According to Kumar, and Shaik, retail sector in India which is fast growing industry practices strategies like promotional schemes for customer satisfaction. One of this strategy is Payback Cards. Customers use this card and getting point each time they purchase something. Another strategy which is practiced by Indian retail sector is T24 program. Customers will get shopping benefits for talking and talk-time benefits each time they shop. They believe that they have been able to develop a differentiated offering in the crowded telecom space and also increase the satisfaction of customers and enjoy among the number of customers who patronize. Hence, they stand by their customers (2017, pp.29-30). In conclusion, providing customer satisfaction with establishing measures is a necessity for successful management of customer relationships.
Finally, supplier support and oversight is the last noteworthy step of customer relationships management. Rise in consumer demand and market competition led companies to intimate relations in terms of customer and supplier. There is a hierarchical and repetitive relationships between customer and supplier. Hence, suppliers support and their oversight have a critical role in customer-supplier aspects. According to Paasi, Luoma, and Valkokari, suppliers must meet expectations which arise from customers need issues such as quality, cost, and on time delivery. Suppliers provide these needs varied innovations (2010, pp.630-631). In conclusion, an organized supply activity which supports and manages customers enables better management of customer relationships.
As a consequence, customer relationships management is one of the most important part supply chain management. Customer stratification based on their profiles and needs, understanding customer loyalty, establishing measures of customer satisfaction and supplier support and oversight must be provided by suppliers are significant of management of customer relationships. Customer relationships management focuses on providing permanence of pre-existing consumers and new consumers with making maximum profit of companies. It is obvious that today’s market is highly competitive, if customer relationships management steps are properly implement, companies achieve the profit target.
Fowler, A., Natarajarathinam, M., & Patwari, K., (2016). Customer stratification for an
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Kahreh, M.S., Kahreh, Z.S., (2011). An empirical analysis to design enhanced customer lifetime value based on customer loyalty: evidences from iranian banking sector Abstract. Iranian Journal of Management Studies.
Kummar, P., Shaik, K.M., (2017). A study on CRM activities and its impact on customer satisfaction in big bazaar, Vijayawada, Clear International Journal of Research in Commerce & Management, (8), 29-30.
Paasi, J., Luoma, T., & Valkokari, K., (2010). Knowledge and intellectual property management in customer-supplier relationships. International Journal of Innovation Management. 4 (14), 629-630. doi: 10.1142/S1363919610002805