TABLE OF CONTENTS Abstract Chapter 1 Introduction Introduction.6 Aims and Objectives...8 Scope ..9 Rationale.10 Methodology...10 Conclusions & Recommendations11 Chapter 2 13 Customer Loyalty Programmes.23 Loyalty as Strategy33 Rhetoric Vs. Reality..36 Chapter 3 Methodology Research Methodology.40 Summary of Results.46 Chapter 4 Analysis Results48 Literature Review The Concept of Loyalty
2Discussion of Results.56 Origin and Motives64 Tescos definition of Loyalty.63 Success Factors..66 Strategic implications of the Clubcard72 Competitive Pressures....77 Chapter 5 Conclusions and Recommendations Conclusions81 Limitations...89 Recommendations89 References93 Appendices
ABSTRACT:Customer relationship management is perceived as very important part in twenty first century. Deregulation in the energy market has changed the entire way business was done. Southern electric is second ranked company in the United Kingdom and it is a part of Scottish and southern energy .Southern electric has demonstrated phenomenal growth in the last five years and it has drawn attention from all business groups. Literature review from the published CRM material and the use of qualitative and quantitative survey discovered the value of true CRM and its importance in the energy market. It is recommended that if concerned areas are given appropriate attention in that case much needed boost and help can be given to improve further relationship between employees and CRM.
1.1 INTRODUCTION: Competition of energy companies in the UK are forcing energy firms to be more customer centric. In recent time focus of energy firms have shifted to customer satisfaction and there has been competition to be on the top for customer satisfaction in all areas of business. Before company can think to be productive and profitable it is imperative to innovative Customer Relationship Management (CRM) strategies and reaches to a great extent, in achieving the desired results. Being customer focus and relationship management have become very important marketing and business tactics for many companies looking competitive advantage.Customer relationship management is basically a strategy and it is used to get more knowledge about customers' needs and perception about their approach to a specific product or service in order to create stronger relationships. The most useful way to think about CRM is as a strategic planning that will assist company for better understanding about there customers need and how company can meet those needs and improve bottom line at the same time. With the available wide range of internet based facility, companies have found it difficult to maintain relationships with customers since the ecommerce is widely in use across the globe. Computerization has revolutionized the entire way firms are approaching their CRM strategies because computers have also changed consumer buying behaviour. Information on any customer contacts can also be accumulated in the system. The motivation behind this approach is to develop services provided straight to customers and to use the information in the system for targeted marketing and sales purposes. A CRM stand for Customer Relationship Management and the origin of CRM lay in the observation that one element in competitive advantage is the ability of companies to retain customers. Companies have taken stance to implement a strategy of fulfilling the customer so as to maximise potential future earnings. This seems to become especially valid approaches considering the current Internet focus of competitors are just a click away.
Gas and electricity market was deregulated in 1996 by the British Government and with the opening up of the economy and globalization this market has gained attention from new market entrants. This is why knowledgeable customer is challenging the energy industry. Therefore in this current competitive situation, for an energy company
6 to survive competition, succeed and make profit, there is no option left except to understand and learn by actively responding to consumers needs. Companies are offering customised products like e-billing, online meter reading service and so on but these are common offering by all the companies and customers want much more customised service in unique way, further to this Government watch dog is constantly monitor energy companies and impose heavy fine in order to save customers and to make sure competition reaches to pick level so the main objective of deregulation remain fulfilled. The battle of all energy companies in the UK for gaining a greater market share, is taking on the new dimension. In the current energy crisis and inflation due to falling pound strength against dollar, companies are finding it quite difficult to meet the expected high growth. In order to strengthen their sales, Energy companies are in pursuit of innovative ways and means of achieving real growth through new strategies that help acquisition of new customers and retaining the most loyal of the existing customers. Success of an energy companys strategy for new customer acquisition will depend on its ability to understand perception of customer and using these into effective and operating models. It is only possible by making sure and ensuring a good customer experience at every customer touch point is the ultimate goal of a successful growth strategy and good customer experience will drive new customer acquisition and promote customer retention so higher marketing cost can also be controlled and that will translate into increased profits. All energy companies are quite conscious about relative costs of acquiring new customers. Management in company will always emphasize on getting maximum market share. Most companies want to keep customer with them for longer period, rather than getting new customer or creation, with the result retaining customer is a goal of the every day. In fact energy companies are fully aware that losing the existing customer and acquiring new customers is an expensive transaction for the company. Further to this it acts as a black spot on the companys reputation Therefore, the challenge for the energy companies are to retain and maximise the profitability of the existing customer relationships by fulfilling each and every need of customers. With the shift from a profit-centric to a relationship-centric business approach, CRM has become main thing. Energy firms are adopting CRM to unite people, process and products more effectively to get on the true relationship with the customers. Towards this end, Company expects to propose various ideas and approaches to understand the fundamental marketing motivations driving the CRM trend. In order to gain the challenging preferences of the customers and to stay ahead of competitors, Energy companies are bound to attract customers by providing excellent service. Online billing and meter reading, complemetary discount are just a few of them. Energy Company can essentially enhance customer service by business process reengineering. It is not enough for upper level of management to deliver but good amount of support from all level of employees need to demonstrate. It is observed that the energy companies lose their customers due to different reasons. The main reasons are not being competitive in price and level of accuracy in the bills as estimated bills are the biggest problem prevailing in energy industry in current times if these factors are taken in to serious consideration complaints can be reduced drastically
7 and hence this company will get higher ranking in terms of customer service and price and will be more favourable for the customers. Experts of energy companies estimate that poor service is the major reason for customers leaving their energy supplier so that energy companies should adopt customer relationship building approaches such as responding to complaints fast. Energy Company can get a competitive advantage with the help of CRM by becoming low-cost players in the market and achieving operational efficiency and maintaining customer loyalty. The ability to predict the volatile market and customers changing preference as few consumers are least concern for the price or service but more aware about green electricity products that customers are likely to purchase over a period of time. Importantly implementation of Customer relationship management will drive to enhance customer satisfaction leading to business growth. CRM helps organisations to motivate customers to remain loyal. There are several CRM issues such as, effectiveness and challenges draw attention of the energy industry. Having understood the importance of CRM in which companies have benefited they need continuously invest in the customer relationship activities. Customer Relationship Marketing is a practice that encompasses not only marketing related activities but also all activity directed toward establishing, developing, and maintaining successful customer relationships. The focus of customer relationship marketing is on developing long standing relationships and better corporate performance through customer loyalty and lower customer churn. If we take precise meaning of Customer Relationship Management as its name refers the primary focal is placed on the customer satisfaction and customer care by knowing their needs. The key issue is to maximise customer value over time by increasing customer loyalty towards company. If a company starts developing better relation with the customers, it also improves overall business processes and boosts the profits, generally CRM is much more effective and automated method which is used to improve and connect all areas of business to concentrate on generating strong customer relationships. All factors are connected with each other to improve, save and acquire business to customer relationships. The common areas of b