Role of Digital Technology in Customer Relationship Management to Enhance Customer Retention

Assessing the Role of Digital Technology in Customer Relationship Management to Enhance Customer Retention
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Table of Contents Introduction. 1 Background. 1 Justification. 2 Research Gap. 2 Research Aim.. 2 Research Questions and Objectives. 2 Benefits. 3 Outline. 3 Literature Review.. 4 Introduction. 4 The Concept of Customer Relationship Management (CRM) 4 Digital Technologies in CRM... 5 a.     Social media. 6 b.     E-commerce. 6 Customer Retention in Business. 7 a.     Service Quality. 7 b.     Satisfaction. 8 Summary and Conclusion. 8 Methodology. 9 Introduction. 9 Research Design. 9 Setting. 10 Participants. 10 Materials. 10 Data Collection/ Procedure. 11 Data Analysis. 11 Limitations. 12 Potential Significance. 12 Anticipated Challenges. 12 References. 13 Assessing the Role of Digital Technology in Customer Relationship Management to Enhance Customer Retention Introduction Background Customer Relationship Management (CRM) has become an essential aspect of business due to the increasing competition in different industries. CRM is defined as a set of strategies, processes and software that can be implemented together to enhance the relationship between the business and its clients (Prakash, 2020). In terms of software, CRM complements existing information by enabling the analysis of big data obtained from years of customer interactions to provide actionable points. Furthermore, using software also improves workflows and efficiency by better understanding customer needs and thus adapting to them. On the other hand, business processes in CRM are enhanced through the appropriate structuring of relationships and communication. Processes are essential because they set a precedent for how customers expect to be treated and served when visiting the business (Buttle & Maklan, 2019). More so, return clients are considered an important part of the business since strengthening such relationships improves brand loyalty. However, companies invest more in attracting new clients as opposed to nurturing existing ones hence affecting longstanding relationships. Consequently, in a business environment, CRM is essential since it enhances customer retention, boosts cost-efficiency in marketing, and reduces competitive pressure on the firm. By understanding how customer relationships affect the business environment, companies can align their priorities since this can ultimately affect profitability (Santouridis & Veraki, 2017). Therefore, customer retention plays a significant role in determining a business's overall performance since returning customers are considered important in pushing the brand. Justification             Customer Relationship Management is a strategic aspect of any business that consistently deals with clients daily, either virtually or physically. As a result, understanding its influence on the business environment provides a pathway for creating value not only for the customer but also for the business. This will ultimately lead to increased financial performance for the firm and enhanced customer satisfaction. Research Gap From the literature review discussed later in the paper, information on the effect of the integration of digital technology is primarily concentrated in the service industry, such as banks, with little effort directed towards the retail industry. More so, the effectiveness of CRM components such as social media and e-commerce on the retail industry has not been adequately determined. This study, therefore, seeks to fill this knowledge gap and assist retail stores to better formulate their CRM strategies involving digital technologies to suit them better and enhance customer retention rates. Research Aim             This research aims to add critical information concerning digital technology use in customer relationship management to improve customer retention rates. Research Questions and Objectives In this study, the main research question will be:

1. How can firms use digital technologies in customer relationship management to improve their customer connection?

More so, the research objectives will be:

1. To identify the digital technologies in customer relationship management that are adopted in Trader Joe’s.
2. To assess the effect of digital technologies in customer relationship management on customer retention at Trader Joe’s.

Benefits             CRM is considered an important field in all industries hence expounding on the available literature will significantly benefit them. As a result, this study will be necessary for a majority of firms that require practical information on how they can leverage CRM to enhance retention rates of customers. Outline This research proposal is structured to include the introduction section giving the background for the study, followed by the literature review providing empirical evidence and the methodology section, which will cover how the study will be conducted. Literature Review Introduction Customer Relationship Management (CRM) is considered an essential aspect of a business that allows them to identify critical areas to meet the needs and demands of its audiences. Employing such systems provides a relatively cost-efficient method of dealing with large client bases through gathering information on various consumer experiences. This provides a basis for the generation of customized solutions that not only benefit the clients but also provide avenues for improved operational and financial performance. As a result, businesses are thus able to maintain connections with existing customers while also increasing the chances of potential customers engaging with the business. This section will involve the review of empirical data to identify trends and practices in different firms that employ the use of CRM. This will then be compared and contrasted to identify the potential gaps, which will then be finalized in the conclusion. The scope of the review will be limited to the use of technological aspects of CRM, with specific reference to the use of social media. The Concept of Customer Relationship Management (CRM) The management of relationships with customers in business is generally known as Customer Relationship Management (CRM). CRM refers to the process in which business manage their interactions with different customers, which typically involves data analysis (Prakash, 2020). The development of professional CRM since the 1970s has experienced several upgrades, with newer CRM strategies employing the use of business intelligence systems, which connect to communication software (Hargrave, 2021). The types of relationship management with customers include strategic, operational, analytical and collaborative actions. According to Bolton (1998), high customer satisfaction can increase customer usage frequency and loyalty and reduce the possibility of customer churn. This suggests that every 5% increase in customer retention increases lifetime customer profits by an average of 50%. Apart from that, it is notable that Amazon has achieved great success with its customer proposition (Wei, 2005). Therefore, customer relationship management actually aims to improve customer satisfaction because it has an important impact on the economic performance of a business. Digital Technologies in CRM The aspect of digital technology in CRM has become essential with the development of digital tools and the internet. Applications and infrastructure have evolved to develop complex CRM systems that are currently used to manage digital interactions with current and potential customers. From such interactions, data can be collected from the entire customer lifecycle, including marketing and sales platforms, digital commerce, and customer service interactions (Santouridis, 2017). In social CRM, it is vital to use social media to engage customers and understand customer preferences. As young people prefer practical social networking sites, companies can use these social media to attract potential customers' attention to their brands, products and services, building customer relationships to increase demand. Further, the use of e-commerce to support businesses has brought services closer to customers, hence the need for CRM to foster these virtual relationships. Using such digital technologies provides leeway for businesses to increase their customer base by leveraging their limitless geographical reach to attract new customers and improve services for existing ones. The focus on this research will be on two digital CRM tools; social media and e-commerce.     a.      Social media  Social media has provided a direct access route to customers through interaction on the internet. This enables consumers to relay feedback to businesses which can then reply and develop communications. According to Medjani and Barnes (2021), the use of Social CRM (SCRM) technologies has empowered businesses to develop strong relationships with customers hence improving overall performance. More so, their study revealed that using technology such as social media helps to develop capabilities and engagement that are crucial in improving relationships (Medjani & Barnes, 2021). Apart from that, Kang and Kim (2017) further highlight the effect of online CRM tactics on social media on customer perception and business decisions. From their findings, the decision to patronage a particular brand was highly correlated with the perceived information on social media, including interactions, service quality and available information. Consequently, social media was determined to be a powerful tool that increased customer retention. b.      E-commerce  The advent of technology has evolved significantly over the years into newer and more effective ones capable of taking over monotonous actions. These include technologies such as Augmented Reality (AR), the Internet of Things (IoT), virtual assistants and chatbots that leverage Artificial Intelligence (AI). These can transform the experiences of consumers who can get targeting information online with the help of these tools (Hoyer et al., 2021). This is particularly important in the ecommerce space due to the need for tailored suggestions that make the work of skimming through hundreds of pages online in the search for specific items more accessible. This technology has been extensively used in the banking sector, with direct linkages to various e-commerce sites to perform seamless payments. Results from a study by Egala et al. (2021) show a direct effect between satisfaction with the use of digital banking services and customer retention decisions. This is mainly based on aspects such as the ease of use, the security of the system and its overall reliability. Customer Retention in Business Customer retention is considered an activity undertaken by an organization to reduce instances of defection by the client to competitors. The customer retention process involves the entire chain beginning from the first point of contact and continuing throughout the lifetime of the engagement. Therefore, such relationships are strongly related to the ability of a business to serve its existing clients and develop a strong brand reputation that sells to new clients. As a result, this builds brand loyalty that sets the business apart from its competitors in a particular marketplace. According to Bloemer and Kasper (2014), there is a direct link between the level of customer satisfaction and ...