Importance of Customer Relationship Management CRM & Software
Customer Relationship Management
CRM refers to the practices, strategies, and technologies applied by the industry for easily managing and communicating with their existing and potential consumers. Actually, CRM is the short form of customer relationship management. Customer relationship management focuses on improving customer services, building rapports, and increasing the sales growth. CRM collects and analyzes customer data in many ways. The data of the customers can be collected through many channels such as social media platforms, the website of the company, live chat, direct marketing, telephone, and so on. Many renowned companies all over the world are using CRM software to maintain their customers as well as regulating business properly.
The example of the five companies executing customer relationship management(CRM) in business–Apple CRM, Coca-Cola CRM, Amazon CRM, Activision CRM, and Tesco CRM.
Importance of Customer Relationship Management
The five important customer relationship management (CRM) are customer gratification, improved effectiveness, conduct marketing campaigns, attract customers, and increased growth. An effective relationship with customers improves the company’s sales growth.
1. Customer gratification
No business can exist without customers; therefore, customer satisfaction is an important factor to increase sales growth. The company always try to satisfy their customers as if they return to buy more products or services. Paying attention to customer satisfaction is part of corporate branding, so every industry uses the CRM strategy for both company and customer mutual benefit. For example, a contact management tool helps the company to implement the CRM strategy properly. Contact management software enables the company to track the conversation between customers and company employees. Therefore, customers feel that they are a significant person in the industry as the company records the conversations. Finally, customers will be amused by the communication service offered by the company, and they will be willing to buy more products and services.
2. Improve Effectiveness
The CRM tool assists the company to regulate hassle-free communication with effectiveness. It gives a great opportunity for the industry to respond quickly when customers query to know something. It yields effective communication between the company and clients and produces customer satisfaction. CRM can keep a record for the marketing campaign to lead the industry to take further decisions in the future.
3. Marketing Campaign
CRM software plays an important role in the marketing campaign purpose. It makes easy the way of conducting sales campaigns to target audiences. This software can design a way of targeting potential customers by using a special tool. The target audience segmentation process can be driven by CRM software that accurately yields an effective campaign. However, demographic, geographic psychographic segmentation is the most significant market segmentation technique to divide people into an identical subgroup.
4. Attract Potential Customers
The CRM software allows the company to track the detailed information of the existing customers. This software can also identify loyal clients of the company so that industries can easily reward loyal customers. So, it will keep satisfied the current customers and persuade new customers to buy products or services. CRM software can identify the gap in the industry that needs to be fulfilled for customer satisfaction. It can explore why the customer is not interested in buying the products or services so that the company can fill the gap to persuade customers to buy them.
5. Increase the Sales Growth
Based on the discussion, it is clear that CRM software helps the company to sell more products and services to the customers by satisfying them. The company will be benefited automatically when increasing the sales growth.
Types of CRM Software
CRM software has become one of the most popular tools in the global business market to collect more clients than competitors. The company increases use CRM software currently to cope with the digital era. He also said that the industry uses many types of CRM tools based on business policy.
Five Types of CRM software are Operational CRM, Analytical CRM, Collaborative CRM, Campaign management CRM, as well as Strategic CRM.
1. Operational CRM
This type of software helps the customer sales and marketing department of the industry to give better service to existing and potential customers. This tool also can be used in marketing automation, service automation, and sales automation.
For example, Mailchimp or Outreach.
2. Analytical CRM
Analytical CRM assists the company to gather data about customers including point of contact, interests, channels, and customer preference. This software tries to understand customers when operational CRM attributes them to the sales funnel. Thus, the industry can make the best business decision after collecting customers’ data through CRM tools.
For example, Zoho Analytics or Wave: Salesforce Analytics Cloud
3. Collaborative CRM
This software supports different types of the department in an industry to share customers information. Collective CRM focuses more on providing customer services while operational CRM works for marketing and selling products.
For example, Pipedrive or Copper
4. Campaign management CRM
This tool works for both analytical or operational purposes in the industry. Campaign management CRM collects customer’s information and apply into marketing and sales campaigns. The prime objective of this tool is to assist in running a campaign properly via email integration software.
For example, Active Campaign (email marketing campaigns)
5. Strategic CRM
It focuses on customers to develop the relationship between industry and client. This tool is handy for building rapport rather than short-term relationships, such as instant sales or short campaigns.
The Importance of Customer
Customer engagement – customers’ investment in or commitment to a brand and product offerings
Characteristics
Customer retention and loyalty.
Customers’ willingness to make an effort to do business with the organization.
Customers’ willingness to actively advocate for and recommend the brand and product offerings.
The Importance of Suppliers
The quality of the supply chain affects the quality that customers receive
Superior quality, consistent service, and competitive pricing are just the price of entry to get into the game.
Suppliers must continually improve and align their operations with customer needs.
Principles for Customer-Supplier Relationships
Firstly, recognition of the strategic importance of customers and suppliers.
Secondly, the development of win-win relationships between customers and suppliers.
Finally, Establishing relationships based on trust.
SRM- Supplier Relationship Management
Supplier relationship management (SRM) effectively manages and maintains a better relationship with suppliers in organizations. SRM helps to reduce the risk of miscommunication and misunderstanding between industry and supplier. To provide good service to suppliers, SRM works to increase the value of intercommunication. To achieve a competitive advantage, most reputed companies use the SRM tool to create and maintain strong and loyal relationships with suppliers.
The example of the five companies that using SRM in business: Amazon, France’s Renault, Japan’s Nissan, PepsiCo, Alcoa and so more.
5 Dimensions of Service Quality- SERVQUAL Model. Servqual Model of Service Quality Questionnaires
Five Dimensions of Service Quality
In 1985, three American marketing scholars, A Parsu Parasuraman, Valarie A. Zeithaml, and Leonard L Berry, established ten service quality dimensions based on customer evaluation. The customers evaluate the services received from organizations. Initially, the authors proposed 10 dimensions to assess service quality. Later, the authors condensed ten dimensions into five and introduced a refined SERVQUAL Model in 1988.
The ten dimensions include Reliability, Tangibles, Responsiveness, Competence, Access, Courtesy, Communication, Credibility, Security, and Understanding.
The five dimensions of service quality refer to the SERVQUAL Model of 5 key service dimensions: Reliability, Assurance, Tangibles, Empathy, and Responsiveness. The Servqual model or five service quality dimensions is also known as the Service Quality Model. The SERV-QUAL is the short form of service and quality. SERVQUAL Model is a multi-dimensional research process intended to measure the gap scores between expected and perceptions of service quality of the customers based on five dimensions.
Therefore, the five-service quality dimension model was introduced in 1988 by A Parsu Parasuraman, Valarie A. Zeithaml, and Leonard L Berry. The researchers and practitioners use the latest servqual model.
SERVQUAL Model
The Servqual model refers to the five dimensions of service quality that measure the customer’s expectations. The Servqual model classifies the elements or components of service quality known as the five critical service quality dimensions. Although the model developers initially proposed ten service quality dimensions, many experts later finalized only five dimensions of service quality: Reliability, Assurance, Tangibles, Empathy, and Responsiveness. The marketing students formed an acronym RATER from the first capital letter of every dimension or component. However, after measuring the gaps, this model recommends the most common causes of service quality problems.
Servqual Model 10 Dimensions
However, Initially, the authors of the Servqual model presented ten dimensions of service quality that are as follows: Reliability, Responsiveness, Competence, Access, Courtesy, Communication, Credibility, Security, Knowing the Customer, also, Tangibles.
Figure 1: 5 Dimensions of Service Quality- SERVQUAL Model
Dimensions of Service Quality
The 5 Dimensions of Service Quality are
Reliability
Assurance
Tangibles
Empathy
Responsiveness.
1. Reliability in the Servqual Model
Reliability is an essential dimension of the Servqual model that confirms the capacity to provide services exactly, on time, and credibly. It means the ability of a service provider to deliver services consistently and accurately, meeting customers’ expectations every time. Consistency is critical for providing assistance or products to customers on time with error-free conditions. You have to respect the commitment to give your service on time accurately as you promised to them.
For example, Hotel Global Assistant prides itself on reliable and consistent service to its guests. One aspect of reliability is the hotel’s commitment to ensuring that rooms are ready for check-in at the designated time, without any delays or errors.
Guests arriving at Hotel Global Assistant expect to be able to check into their rooms promptly upon arrival, based on their reservation. The hotel’s front desk staff ensures that rooms are prepared well in advance, following a standardized process for cleaning, maintenance, and inspection.
Upon arrival, guests are greeted warmly by the front desk staff, who efficiently handle the check-in process. The staff members verify the guests’ reservations, assign rooms according to their preferences, and provide them with keys promptly.
Throughout their stay, guests experience consistent and reliable service from the hotel staff. Housekeeping maintains the cleanliness and orderliness of the rooms, ensuring that amenities are replenished and any issues are promptly addressed. The hotel’s facilities, such as restaurants, fitness centers, and business centers, operate smoothly and reliably, meeting guests’ needs and expectations.
2. Assurance in Servqual Model
Assurance means creating trust and credibility for the customers. It depends on the employee’s technical knowledge, practical communication skills, courtesy, credibility, competency, and professionalism. Therefore, these skills will help the organization gain customer trust and credibility.
The assurance dimension combines four factors: Competence, Courtesy, Credibility, and Security. Firstly, competence means having the requisite skills and knowledge. Secondly, courtesy refers to contact staff’s politeness, respect, consideration, and friendliness. Thirdly, credibility is the staff’s trustworthiness, believability, and honesty. Finally, security means freedom from danger, risk, or doubt.
Example of Assurance Dimension in Servqual Model
The employee shows competence, courtesy, credibility, and security to the customers while servicing them.
Assurance Example in Retail Banking Services
In the context of retail banking services, the Assurance dimension of the SERVQUAL model plays a crucial role in building customer trust and confidence. Let’s consider a scenario where a customer visits a bank branch to inquire about opening a new savings account:
Competence:
The customer approaches a bank representative and expresses interest in opening a savings account. The representative demonstrates competence by thoroughly explaining the different types of accounts available, their features, and the associated benefits. They are knowledgeable about the bank’s products and services, providing accurate information to help the customer make an informed decision.
Courtesy:
The bank representative maintains a courteous and respectful demeanor throughout the interaction. They greet the customer warmly, listen attentively to their needs and preferences, and address any questions or concerns with patience and empathy. The customer feels valued and respected, contributing to a positive service experience.
Credibility:
The bank has established a reputation for reliability and integrity in the community. The representative reinforces this credibility by providing transparent information about account fees, interest rates, and terms and conditions. They assure the customer that the bank is committed to upholding ethical standards and safeguarding their financial interests, thereby earning their trust and confidence.
Security:
As the customer considers opening a new account, they express concerns about the security of their funds and personal information. The bank representative assures the customer that the bank employs robust security measures to protect against fraud, identity theft, and unauthorized access to accounts. They explain the various security features, such as encryption protocols, multi-factor authentication, and fraud monitoring systems, to reassure the customer of the bank’s commitment to safeguarding their assets and privacy.
In this example, the Assurance dimension of the SERVQUAL model is exemplified through the bank’s focus on competence, courtesy, credibility, and security in delivering retail banking services
3. Tangibles in the Servqual Model
Tangibles represent the physical facilities, employees’ appearance, equipment, machines, communication materials, and information systems. It focuses on facilitating materials and physical facilities.
This dimension assesses the extent to which these tangible elements convey professionalism, competence, and attention to detail, influencing customers’ perceptions of service quality. For example, the organization maintains a clean environment, and staff follows the appropriate dress code.
The example of tangibles in the SERVQUAL model
1. Physical Facilities: Physical facilities refer to the organization’s environment where the service is delivered. It includes the infrastructural context of the company such as buildings, furniture, decoration, location, and amenities. For example, a meeting room, reception, office location, and well-decoration enhance tangible aspects of the service.
2. Equipment and Tools: Tangibles also encompasses using equipment and tools by the organization to deliver the service. It includes computers, PoS (Point of Sale) machines, ICT, and other resources necessary for ensuring better service. For instance, in a Bank, Electronic Payment Systems, cash Deposit Machines (CDM), Fraud Detection, High-Speed Wifi, and ATM adjacent to a bank are tangible factors that impact customer perceptions.
3. Personnel Appearance: The personal appearance of tangibles in the SERVQUAL model indicates employees’ education, attire, hygiene, status, moral character, social position, and trustworthiness. It promotes corporate branding by enhancing tangible. For instance, a well-dressed waiter, cleanliness of the attire, and the behavior of the receptionist influence customers’ perceptions of service quality.
4. Communication Materials: Communication materials are a crucial element of tangibles in the servqual model. It includes communication channels such as social media platforms, banners, brochures, websites, and other promotional materials. For example, a travel agency’s website should be user-friendly, accessible, and concise with information about ticket and hotel costs, and travel guidelines.
Accessibility and Convenience: Tangibles also include factors of convenience and ease of access for clients. The factors are parking facilities, male and female-separated washrooms, features for disabled people, and free wifi for guests. For example, a banking company that offers ample parking, separate washrooms for females,s and wheelchair ramps enhances the tangible aspects of the customer experience.
4. Empathy in the Servqual Model
Empathy refers to the service provider’s ability to understand and address the needs and concerns of customers in a caring and personalized manner. It means focusing on the customers attentively to ensure caring and distinguishing service. It is also a great process to satisfy customers psychologically and increase confidence, trust, and loyalty. The company might lose its customers due to the lack of empathy among the employees; therefore, they need to ensure compassion.
Additionally, empathy is a combination of the following factors:
Access (physical and social) – (For example, approachable and ease of contact).
Communication – (For instance, keeping customers informed in a language they understand and listening to them).
Understanding the customer – ( For example, trying to get to know customers and their specific needs).
Example of Empathy in Servqual Model
For example, a customer contacts a telecommunications company’s customer service department to report an issue with their internet connection. The customer explains that they are working from home and urgently need a stable internet connection to complete an important project. The customer service representative, demonstrating empathy, responds with understanding and concern for the customer’s situation.
Instead of simply acknowledging the issue and providing generic troubleshooting steps, the representative actively listens to the customer’s concerns and expresses empathy for the inconvenience caused by the internet outage. They reassure the customer that they understand the importance of reliable internet access, especially for remote work, and assure them that resolving the issue is a top priority.
The representative goes a step further by offering personalized assistance tailored to the customer’s needs. They provide detailed guidance on troubleshooting steps specific to the customer’s internet setup and offer to escalate the issue to technical support for further investigation. Additionally, they proactively offer to follow up with the customer to ensure that the problem is fully resolved and offer compensation for any inconvenience caused.
Through their empathetic response, the customer service representative demonstrates a genuine understanding of the customer’s situation, instilling trust and confidence in the company’s commitment to customer satisfaction.
5. Responsiveness in the Servqual Model
Responsiveness refers to the eagerness to assist customers with respect and provide quick service to satisfy them. This dimension focuses on the two essential factors, including willingness and promptness. So, you have to ensure that the customer is getting their service quickly without delay and make the customers feel that you are very interested in helping them. Responsiveness will be defined by the length of time when customers wait for the answer or solution. In short, responsiveness solves the customer problem as soon as possible by providing expected information or replacing products. To ensure responsiveness in the service quality, the employee keeps no customer in the waiting serial and replaces the product quickly before finishing the promised period.
Example of the Responsiveness Dimension
For example, a customer visits a busy restaurant during peak hours and places an order for their meal. Despite the high volume of orders, the restaurant staff demonstrated responsiveness by promptly acknowledging the customer’s order and providing an estimated wait time.
As the customer waits for their meal, they notice that their drink is running low. Before they even have a chance to flag down a server, a member of the restaurant staff proactively approaches their table to refill their drink and inquire if there’s anything else they need.
Later, when the customer’s meal takes longer than expected to arrive, the restaurant manager personally visits their table to apologize for the delay and assure them that their order is being expedited. The manager offers a complimentary appetizer as a gesture of goodwill for the inconvenience caused by the delay.
In this example, the restaurant staff demonstrates responsiveness by promptly addressing the customers’ needs and concerns throughout their dining experience.
SERVQUAL Survey Questionnaire
The Servqual survey refers to the instruments of the Servqual model. The instrument consists of 22 perception items. The researchers utilize these instruments to evaluate consumers’ thoughts and expectations regarding the quality of service. Therefore, it is also known as a servqual questionnaire for customer satisfaction. The authors of the Servqual model designed 22 perception items also 22 expectation items to set them into five dimensions of service quality. The Servqual model questionnaire assesses the gap score of the company that comes out ideally.
SERVQUAL Model Original Questionnaire
SERVQUAL Questionnaire For Customer Satisfaction
Reliability Dimension
1. Gloant-Automobile fixes faults in cars as promised.
2. They are reliable in handling faults in cars.
3. They repair cars right the first time.
4. Their employees fix car faults at the promised time.
5. The charges for services are reasonable.
Assurance Dimension
6. The apprentices of Gloant-Automobile create confidence in customers.
7. They display professionalism in handling faults in cars.
8. Their employees are always polite.
9. They have the knowledge to answer customers’ questions.
Tangibles Dimension
10. Gloant-Automobile makes use of modern equipment in repairing cars
11. They have enough parking space for their customers.
12. They provide an environment free from danger.
13. Their employees appear professional in their workplace.
Empathy Dimension
14. The apprentices of Gloant-Automobile give customers individual attention.
15. They deal with customers in a caring manner.
16. Their employees quickly apologize when they make mistakes.
17. Their employees try to understand customers’ needs.
18. Gloant-Automobile operating hours are convenient for customers.
Responsiveness Dimension
19. This company always informs customers when services will be performed.
20. They always serve customers promptly.
21. Gloant-Automobile is always willing to rectify car faults.
22. They are always ready to respond to customers.
Servqual Questionnaire Example With 22 Items
Figure 2: SERVQUAL Model Questionnaire- 22 Scales Items
Conclusion
In conclusion, the Servqual model has become popular and accepted worldwide because of improving customer service quality. It is a multi-dimensional research system representing a customer satisfaction framework to satisfy customers. Many organizations use this model to achieve goals. The private organization follows the Servqual model to ensure quality services. The 5 Gaps in Service Quality are Knowledge Gap, Policy Gap, Communication Gap, Delivery Gap, and Customer Gap.
Citation For This Article (APA 7th Edition)
Kobiruzzaman, M. M. (2024). Five Dimensions of Service Quality- Servqual Model of Service Quality. Newsmoor- Best Online Learning Platform. https://newsmoor.com/servqual-model-five-key-service-dimensions-servqual-gaps-reasons/