Customer Relationship Management

Customer Relationship Management
While CRM is important for physical products as well as services, it is particularly criti­cal for what are called contractual services where the contract or subscription must be renewed on a periodic basis. Examples of contractual services are health club member­ships, cable TV and cellular phone contracts, etc. What makes these different is that once dropped, it is very difficult to get the customer back. The customer will have switched to another service supplier or dropped the service entirely. If it is the former, it takes a complete subscription cycle to have the opportunity to get the customer back. However, unlike the purchase decision for most services, the decision about renewing is known and visible to the service supplier. This is clearly an advantage since the company can time its renewal communications precisely ..
It is crucial not to wait until the end of the subscription cycle to make the benefits of the service tangible to the customer. In addition, research has shown that customers form expectations about how much they will use a contractual service and make the renewal decision based upon a comparison of the expected to the actual. If the actual is less than expected, the probability of renewal decreases. It is thus incumbent upon the contractual service provider to perform two activities during the subscription cycle:
Remind the customer continuously about the benefits of the service. For example, in the context of a health club, ensure that the staff comment positively to the client about the benefits of working out.
Track the customer's usage and develop a system to remind the customer to use the service if usage level is low. For example, low usage of a cellular phone would predict the high likelihood of non-renewal. As a result, the service provider could develop special programs of discounts or new features to encourage additional usage.