Using integrated solutions as market-shaping/market-driving strategy in
oil industry
Part 6
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لینک بخش 5
این پژوهش به عنوان تز پایانی دوره MBA در یکی از دانشگاه های مطرح اروپایی
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1- Introduction and definition
The concept of customer
relationship management (CRM) can be considered as a rather new notion because
it has been in use since the early 1990s (Ngai, 2005 )
(Buttle, 2009 ) (Agarwa et al, 2006) . Accenture’s research shows that
customer relationship management issues remain one of the executive suite’s
biggest concerns in all organizational levels (Freeland, CRM: The Key to Superior Business Performance,
2004).
A survey reveals that innovative firms
are more than twice as “non-innovative” companies to practice CRM technologies
to help them in customer retention and increase in revenues (Freeland, CRM: The Key to Superior Business
Performance, 2004).
Thus, many firms seek more benefits via implementing CRM to manage the
relationships with their customers more effectively which would ultimately lead
to greater customer loyalty and retention and, also, profitability (Nguyen et al, 2007). Although CRM
has become widely recognized as an important business approach, there is no
universally accepted definition of CRM. There have been many suggestions for
definition of CRM two of them are shown in table-1
CRM
is the core business strategy that integrates internal processes and
functions, and external networks, to create and deliver value to targeted
customers at a profit. It is grounded on high quality customer related data
and enabled by information technology (Buttle, 2009 ) P-15.
|
Customer
relationship management (CRM) is an information system that tracks customers’
interactions with the firm and allows employees to instantly pull up
information about the customers such as past sales, service records,
outstanding records and unresolved problem calls tracks (Nguyen et al, 2007) P-104.
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Table 1‑1Definitions
of CRM
From above discussions it can be found out that in CRM,
relationship with customer, services, and insight and information about
customers are important constituents of CRM. As this report is about developing
a solution strategy these elements would be discussed in more detail.
2- Definition of Relationship
A relationship is composed of a series of
interactive episodes between dyadic parties over time. Some suggest that some
emotional content (affective connection, attachment or bond should be added to
the interaction and relationship is a social construct (Buttle, 2009
).
The fundamental reason for companies wanting to build relationships with
customers is economic. Companies generate better results when they manage their
customer base in order to identify, acquire, satisfy and retain profitable
customers which are the key objectives of many CRM strategies. To understand
the importance of relationship in CRM the concept of customer lifetime value
should be clarified. Lifetime value (LTV), -also known as customer lifetime
value (CLV)-is defined as:
“The present day value of all net
margins earned from a relationship with a customer, customer segment or cohort”
(Buttle, 2009 )P-35.
In B2B relationships, loyal buyers are more tending to concentrate
on long-term benefits and involve in collaborative activities beneficial to
both parties than disloyal buyers, consequently improving the competitiveness
of both partners and reducing transaction costs (Lam et al, 2004). In B2B context,
customers want a long-term relationship with suppliers due to; product
complexity, product strategic significance, service requirements and financial
risk (e.g. in buying large items of capital equipment) (Buttle, 2009 ). In
oil and gas industry, due to complexity of the complicated capital equipment
and systems which in turn lead to high price and financial risks of these
items, all of above-mentioned circumstances exist.
3- Services
The significance of services to the world
economy has been increasing steadily meanwhile the importance of tangible goods
has declined. Considering this trend companies naturally pursue providing
better services, whether they are in service business or in manufacturing industry
which should trust on services to remain profitable or even get ahead of
competitors via this type of competitive advantage (Berry et al, 2006). Although, most
companies develop their service activities gradually infrequently a firm
introduces a service forming a completely new market or driving and reshaping
the existing market in a way that the firm benefits unexpected abundant profits
(Berry et al, 2006).
4- The Importance of
Services in CRM
Services are based on relationships,
finding solutions to customers' problems, and building relationships. The
services' content is delivered in processes and driven by people (Kumar. R et al, 2006). In a survey
focusing on how to build and sustain a high-performing workforce, increasing
customer care and service was managers’ second-most critical strategic issue
and mentioned as “important” or “very important” by 81 percent of participants (Freeland, CRM:
The Key to Superior Business Performance, 2004). CRM comprises three
major functional areas; marketing, sales; and services and support (West, 2001
as cited in Ngai, 2005). In addition,
services play an important role in the industrial marketing, since augmented
products such as technical consulting and long-term costs of maintenance and
operation are more important than selling price. The economic benefits of
customer relationship are easily justified in terms of enhancing LTV. Companies
also benefit non-economic paybacks from improved customer trust, commitment and
cooperation. (Ahmad & Buttle, 2001)
5- Services and
Relationship with Customers in Oil Industry
The owners of advanced, complicated and
integrated machinery and equipment items operated in capital-intensive industries
–such as oil and gas- have to meet severe performance targets and often require
more support in terms of condition monitoring, diagnostics and root cause
analysis of failures. Furthermore, services are required to improve operational
skills and machinery performance (Panesar & Markeset, 2008) (R.Kumar et al, 2009). Moreover,
with today’s lean staffs, plants often do not have sufficient resources
in-house to oversee the regular and on-going activities necessary to keep
complex equipment and systems operating at their best. Additionally, specific
equipment, system or application expertise is often required (Perfomance Plus, 2011) (Flowserve, 2011).
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