FORCES DRIVING CUSTOMER RELATIONSHIP MANAGEMENT:

 The following are the important  drivers (Psychological aspects)  that appear to have an important bearing on the decision to develop CRM approach:

1. Risk, Salience and Emotion

2. Trust and commitment

3. Perceived need for closeness

4. Customer satisfaction

I. Risk, Salience and Emotion:

Risk, Salience and emotions are psychological aspects involved in some way in every exchange/ purchase. The levels of risk, degree of salience and the emotion generated will affect the choice of product or service and supplier involved, as well as the ‘level’ of relational involvement the customer will seek.

Risk may be defined as “the perceived probability of loss interpreted by the decision maker” and presumes an element of consumer vulnerability in the exchange.

Salience may be regarded as the level of importance or prominence associate with exchange.

Emotion is the complex series of human responses (sometimes negatively described as ‘agitation of the mind’ or cognitive dissonance) generated as a result of the exchange.

Risk, Salience and Emotion are separately definable concepts but are not mutually exclusive. There is a close association between the risk perceived in, the salience associated with and the emotion generated by any given exchange situation. The high risk is often associated with high salience products or service and the high emotional outcome, although they are highly subjective and may differ from individual to individual.

It should be noted that a particular exchange relationship will generate a perception of high level of risk, salience and emotion with one customer yet, the same transaction in repeated will only generate a low level with another.

II. Trust and Commitment:

The requirement for trust and commitment appears to be an important indicator of when relationship management strategies may be potentially vulnerable. Equally the existence of trust and commitment among parties is seen by some central to the success of relationship marketing strategies and the main means by which the affective strength of a buyer-seller relationship can be judged.

Trust:

Trust is seen as an important driver to both relationships and relationship enhancement in that it would appear to reduce risk perception more effectively than anything else.

Trust is an essential ingredient in healthy personality, a foundation for interpersonal relationships a prerequisite for co-operation and a basis for stability in social institutions and markets. Generating co-operative behaviour trust may-

• Reduce harmful conflict
• Decrease transactional costs(e.g. negating the need for constant checks)
• Promote adaptive organization form(e.g. Network relationships)
• Facilitate rapid formation of ad hoc network groups
• Promote effective response to crisis
• Many different words are used to describe trusting situations. They are
• Probity: Probity focuses on honesty and integrity that may mean in business terms as professional understanding and reputation.
• Equity: Factors such as fair-mindedness, benevolence, caring values and sincerity are in evidence here.
• Reliability: Reliability relates to a firm having required expertise to perform its business effectively and reliably.
• Satisfaction: Satisfaction represents overall evaluation, feeling or attitude about other party in a relationship.

Commitment:

Commitment implies that both parties will be loyal, reliable and show stability in the relationship with one another. It is therefore, a desire to maintain a relationship, often indicated by an ongoing investment into activities, which are expected to maintain that relationship.

Whatever the industry, it is important to build trust and commitment if the establishment of a lasting relationship is the goal. There may be number of precursors to trust and commitment, including –

• Relationship termination costs
• Relationship benefits
• Shared values
• Communication and Opportunistic  behaviour

III. Perceived Need for Closeness:

Closeness can be physical, mental or emotional and can strengthen the feeling of security in a relationship. Close relationships are acknowledged to be more solid and likely to be longer lasting which are precisely the characteristics rational marketers are looking for.

Not all the customer want close relationships and some may only be interested in developing them with some parties and not with others. Sometimes, establishing high degree of close customer/employee relationship may also involve high risk and challenge.

IV. Customer Satisfaction:

Oliver defines Customer satisfaction as follows “Satisfaction is the customer fulfilment response. It is a judgment that a product or service feature, or the product or service itself provides a pleasurable level of consumption related fulfilment.”

Satisfaction can be viewed as contentment. Satisfaction may also be associated with some sense of happiness. For those services that really surprise in the positive way, satisfaction may mean delight. And in some situations, where the removal of negative aspect leads to satisfaction, the consumer may associate a sense of relief with satisfaction.

Retention in competitive markets is generally believed to be a product of customer satisfaction. Satisfaction is a psychological process of evaluating perceived performance outcome based on predetermined expectations.

Satisfaction drivers

Cumby and Barnes suggest that driver exist on five levels and ,that these generally involve progressively more personal contact with the service supplier:

• Core product or service
• Support service and systems
• Technical performance
• Elements of customer interaction
• Affective dimension of services

It is quite possible for the supplier to get things right on the first four levels and to dissatisfy the customer because of something that happens on the fifth level. This emphasize the importance of ‘critical episode’ in the exchange process