Is customer relation management useful for one-time-customer based business?
Pham Trinh Phuong Khanh
What is CRM?
Customer relation management means to establish, develop, maintain and optimize long-term mutually valuable relationships between consumers and organizations (CRM 2002). It is the core practice to bring in customer loyalty and retention. In short, in order to develop steadily and grow profits, CRM is always a must for every company (Gordon, 1998).
However, there are some service providers whose target belongs to the one-time-customer category, which refers to consumers who only use the service once (or twice it depends) in their life time (Abrams 2003). Driving lesson school is one great example. Now let’s list out what would make you repeat your driving lesson again.
- I failed the driving license test.
CRM leads to WOM
I got a chance to interview Mr. Van Trung Tu, who is the principal of one of the best driving schools in Ho Chi Minh city named Tien Bo, which was established since 1991 (http://laixetienbo.com.vn/index.html). The school has been delivering driving courses to more than thousands people. He openly shared that “It is tough and risky running a one-time-consumer based business, however I still manage to establish a firm customer relation”. His intention is not to create customer’s retention, but to maintain the reputation of being a high quality service provider. By doing so, Word of Mouth becomes his weapon in generating sales for the business.
To generate WOM, which results from the satisfaction of consumers, company still has to do best in 3 essences of CRM (Client Management course slide, 2013):
- Attracting the right customers: primary target are people who come from middle or upper class – whose friends and acquaintances also belong to that society via various channels.
- Provide excellent service quality: Tien Bo driving school ensures that teachers are frequently tested, class quality is above the standard, various types of vehicles are available for learning process… Research has shown that better quality results in more WOM circulating in target publics (Lovett et al. 2013)
- Enhance customer value through value-adding services: the school actually has discount for students who re-take their class, provide extra hours for slow acquisition drivers. Those actions show that the company genuinely cares for their customers’ benefit and the delightful service experience.
By doing all of the above, Tien Bo school ensures the school’s brand stays on the top of mind in the Brand awareness pyramid, therefore even though it does not help to repeat customers’ purchase, it does help in WOM process, when the experienced ones recommendation brings new customers to business.
CRM is not always about customers
Mr. Tu also revealed that “Customer relationship management in one-time-customer based business is not always about dealing with customers, it is also about dealing with other key partners as well that can earn benefits, whether it is tangible or intangible”.
As I investigated more on what he said, I found out that CRM is also about establishing and maintaining B2B relationship (Leech 2004). To attract customers, Tien Bo school allows car retailers to advertise products in their school. In return, the school name will be delivered to the visitors to their car showroom. Tien Bo school has numerous corporation contract with taxi corp and transportation company to deliver lessons to their employees. Another “underground” B2B relationship is with the policemen. Since Tien Bo school usually organize long distance practice, it needs to lobby the police so the driving lesson will not be disturbed half-way from HCMC to other provinces, adding to the quality of the driving lesson and the satisfaction of consumers. By cooperating with other businesses, the school can have more people coming to take lessons.
To sum up, CRM is beneficial to every business, even though we are talking about one-time-customers or B2B relationship. They are also an incredible approach to new customers, even though there is no repeat purchase, but surely there is consumer’s loyalty. One-time-customer based business can survive if applying CRM in a right way.
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CRM (2002), CRM, (UK)
CRM 2013, Client Management course, Powerpoint slides, RMIT University Vietnam SGS
Baran, R, & Galka, R 2013, CRM : The Foundation Of Contemporary Marketing Strategy, Hoboken: Taylor and Francis
Gordon, I 1998, Relationship Marketing, Toronto: John Wiley and Sons
Leech, C, Pergamon Flexible, L, Allen, M, & Chartered Management Institute (Great, B 2004, Creating A Customer Focus, Amsterdam: Elsevier
LOVETT, M, PERES, R, & SHACHAR, R 2013, ‘On Brands and Word of Mouth’, Journal Of Marketing Research (JMR), 50, 4, pp. 427-444