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CustomerRelationship Management

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Customerrelationship management is a business approach to creating wideranging knowledge concerning customer preferences and behavior anddeveloping strategies and programs that encourage customers toenhance business relationship with the organization. CRM initiativeshave led to increased competitive among companies as evident bygreater revenues and reduced operational costs. The core concept ofcustomer relationship management is its focus on collaborative andcooperative relationship between the customers and the company andother marketing actors. This paper presents the application ofcustomer relationship management at a retail company in Singaporeknown as Eu Yan Sang. This paper also discusses what customerrelationship management means, its benefits, and the various modelsassociated with it.

Customerrelationship management is a business approach to creating wideranging knowledge concerning customer preferences and behavior anddeveloping strategies and programs that encourage customers toenhance business relationship with the organization (Parvatiyar &ampSheth, 2001, pp. 1-2). Understanding the customers’ needs andprovided value-added services are factors that measure the failure orsuccess of companies (Mishra &amp Mishra, 2009, p. 83). In customerrelationship management, attracting new clients is merely perceivedas an intermediate step in the process of marketing and establishingcloser relationship with customers and transforming them to becomeloyal to the company should be made equally significant elements ofmarketing.

Customerrelationship management initiatives have led to increased competitiveamong companies as evident by greater revenues and reducedoperational costs (Chen &amp Popovich, 2003, p. 673). By handlingcustomer relationships properly and effectively, retention rates andcustomer satisfaction are improved. Technological innovations, theinternet, and competitive environments are just some of the factorsthat transform a one-to-one scheme into a reality. Companies canenhance these relationships by customizing the customers’ shoppingexperience, improved predicting capacity of buying patterns online,entice clients with special services or offers, assess the customers’economic advantage, and establish long-term beneficial relationships(Chen &amp Popovich, 2003, p. 676).

Thecore concept of customer relationship management is its focus oncollaborative and cooperative relationship between the customers andthe company and other marketing actors (Parvatiyar &amp Sheth, 2001,p. 4). Another significant aspect of customer relationship managementis customer selectivity which entails that all customers profitequally (Parvatiyar &amp Sheth, 2001, p. 11). Thus, the company mustbe careful in adapting its marketing and program efforts throughsegmentation and selection of the right customers for certainmarketing programs. Another component that drives the implementationof customer relationship management is the total quality movement(Parvatiyar &amp Sheth, 2001, p. 7). TQM is usually adopted bycompanies to enhance quality and lessen costs, it became needed toinvolve customers and suppliers in applying the program at allaspects of the value chain.


Thereare various models involved in customer relationship management. Thisincludes IDIC,Buttle`s Value Chain, QCI, Payne`s Five Processes, and GartnerCompetency Models. The IDIC model postulates that organizations musttake four important actions so as to establish closer relationshipswith customers (Yim et al, 2004). These four actions includeidentifying the customers and what they want differentiating thecharacteristics and selections of customers interacting withcustomers and customizing the products to best suit the demands ofthe customers. Gartner’s model is made up of eight building blocksincluding CRM vision, strategy, valued customer experience,organizational collaboration, processes, information, technology, andmetrics (Yim et al, 2004). In a QCI model, the heart of the processis in customer management activity (Yim et al, 2004). Overall, QCI ismade up of a set of procedures that organizations have to adopt so asto acquire and maintain the loyalty of their customers. Payne’smodel involves five processes namely strategy development, valuecreation, multichannel integration, performance assessment, andinformation technology (Yim et al, 2004). Buttle`s Value Chainrecognizes five major steps in the expansion and completion of a CRMapproach: customer portfolio analysis, customer intimacy, networkdevelopment, value proposition development, and manage customer lifecycle (Yimet al, 2004).

TheCompany: Eu Yan Sang

EuYan Sang is a company that focuses on providing traditional Chineseherbs and medicine made of highest quality to clients in the region(,2014). Eu Yan Sang has wide range of products intended to cure almost alltypes of sickness or improvement of well-being. The company hasproducts that provide strength to the immune system, relieve coughs,nourish blood, and replenish energy (,2014).Products range from health foods, dietary supplements, beverages,personal care products, and packaged tonic soups (,2014).

EuYan Sang is Singapore’s first traditional Chinese medicine companyestablished in 2000 (,2014). Atpresent, the company has improved its products to meet the lifestyleof the people and the brand has constantly developed its relevance.The strength of the company is in pursuit in R&ampD of traditionalChinese medicine and in maintaining the finest products by way ofscientific strategy including fingerprinting of unprocessed herbs toguarantee constancy in its effectiveness (,2014).

EuYan Sang is a company that operates globally. In a globalcompetition, it is best to obtain the customer’s trust and loyalty.This is only possible by knowing the customers’ preferences. Sinceculture is diverse, there are also varied preferences amongcustomers. Hence, CRM would be beneficial for Eu Yan Sang in theirgrowth and expanding business.

ButtleValue Chain Model

Theprimary objective of the Buttle’s Value Chain Model is to ensurethat the firm constructs long-term beneficial relationships with thecustomers (Buttle, 2001, p. 52). Hence, some customers would be quiteexpensive to acquire and service. In a Buttle Chain Model, there arefour kinds of customers – the high life-time value customer,“benchmarks” or customers that other clients tend to imitate,“inspirations” or customers that seek new applications, and the“cost magnets” or those that absorb an excessively high quantityof fixed cost thus allowing other customers to gain profit.

Customerportfolio analysis encompasses an examination of potential and actualcustomer base to recognize which clients the company wants to caterto in the future. This can be done by extracting information ofcustomers from the database. Those who are chosen will be the mostgreatly favored customers including those that will produce profit inthe coming years. On the next phase of value chain is customerintimacy in which the company gets to discover the individuality,profile, history, prerequisites, anticipations and preferences of theclients that the company has selected. Customer intimacy can bedeveloped through Email marketing.

Developmentof network will determine, brief, and handle affiliations with thecompany’s network associates. These are the companies andindividuals that add up to the development and value propositiondelivery for the selected clients. The network can encompass externalmembers including partners, suppliers, investors, owners, andemployees. Development of value proposition encompasses recognizingvalue sources for clients and proposition development and experiencethat comply with the prerequisites, preferences, and expectations.The customer lifecycle is the journey of the customers from a suspectto a status of an advocate. Handling the customer’s lifecyclenecessitates attention to structure and process. Structure is the waythe company arranges itself to handle relationships with the clients.Process is the way company manages the significant procedures ofcustomer acquisition, retention, and development, and how the companywill measure the presentation of its customer relationship managementapproach.

Tomaximize the value of customer relationship at Eu Yan Sang, thecompany must first realize that not all customers will have the sameor equal value. As soon as a group of customers is selected, thecompany has to develop intimacy by using the data of the customers tounderstand their demographics, locations, and behaviours. Inaddition, EuYan Sang can incorporate the process of developing customerrelationship through acquisition of customers. Acquisition ispossible through market orientation. The customers are introduced tothe company’s products and services. Through marketing, Eu Yan Sangwill be able to grow the number of its customers. The increasing costof enticing new clients on the internet as well as the considerabledifficulty in retaining them makes the loyalty of customers theessential asset for most online vendors. Market orientation is madepossible through information dissemination.

Customerswill only purchase products that they have knowledge about. Afterwhich, the company enhances its network by not engaging incompetition. Rather the company has to reorient the employees andinfluence satisfaction and retention among the customers. Valuecreation is then established by improving and focusing on productinnovation. Asthe customers grow, they are retained through value creation.Inability to satisfy the customers can damage the power of retentionand loyalty. Hence, high levels of quality are meaningful whencustomers believe that there is improvement in the value of productsand services (Ramzi &amp Mohamed, 2010, p.891).When a company continues to exhibit the finest quality in itsproducts, customers will keep coming, hence loyalty is formed. Theloyalty of customers will have massive impact on the company’sperformance and is, in fact, considered as a significant source ofcompetitive advantage (Murthy et al, 2004, p.293).

Loyaltyof customers can be established through production of programs thatencourage continued patronage. Loyalty programs are often in the formof discounts, free goods, special services or cash (Berman,2006, p. 123). Through loyalty programs, customer relationship isdeveloped. Successful relationship with customers is focused onchanging customer information to knowledge (Hong-Kitet al, 2004, p. 267). Customer relationship can be enhanced throughacceptance of customers, evaluation of situations, assisting personalawareness of the needs of customers, devising means to meet the needsof customers, and providing assistance to customers. Asrelationship is established, Eu Yan Sang must manage the relationshipstrategically by reinventing the processes and the structure ofproviding products and services.

TheButtle Chain Model is made up of four supporting conditions namelyleadership and culture, data and information technology, people, andprocesses.

  1. Leadership and Culture

Leadershipis a process of increasing the capacity of organizations to obtaingoals. A leader must have full knowledge of the organization’sbackground and operations. Successful groups have leaders who sethigh standards and goals across the whole range. The strength of anorganization depends on the quality of relationship established bythe leader among its subordinates. Leadership in Eu Yan Sang isevident in the length of time that the company has operated. Eu YanSang was first established in 1873. The current Chairman andExecutive Director of Eu Yan Sang is Mr. Robert Eu. The company is aleader in providing quality medicinal herbs.

  1. Data and Information Technology

Informationtechnology has served as a vital tool in bridging communicationthrough the use of communication technologies and traditionalcomputer. Connectivity enables computers to interact and share data,thus greatly expanding the usefulness and capacity of an informationsystem. Eu Yan Sang is a company that operates globally. Tocommunicate their products to their customers, Eu Yan Sang makes useof their websites and other forms of technology.

  1. People

Nomatter how automated a business may be, productivity can only beimproved through the level of drive and the efficiency of theworkforce. Hence, Eu Yan Sang trains its employees to develop theirskills and improve oneself through acquisition of new techniques andnew equipment necessary in performing tasks.

  1. Process

Processrefers to the sequence of events conducted to complete an operation.At Eu Yan Sang, the manufacture of products undergoes series ofassessments and monitoring to ensure the highest quality.


Customerrelationship management is a significant factor in increasing profitand gaining customer retention and loyalty. As a process, customerrelationship management begins with acquisition of customers throughmarket orientation. After which, it proceeds with customer retentionthrough value creation, and lastly, loyalty and retention areextended through the use of information technology.


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