What I value from Customer Relationship Management顧客關係管理 is the support that can enhance customer relationships. The future belongs to that M.L.M. company, that network companv, that direct sales company which works on Customer relationship enhanement.

We always manage things, we manage data and we manage computers. As salesmen how do we use this data from the back office ? We salesmen are the front office, we are the front line, so how do we use the output from the data management people?

Direct Sales is all about building and enhancing relationships. which goes well beyond managing them. When you go to a retailer you have a relationship, you go to a chemist and you have a relationship; now if you go to the net u have relationships too !

If I visit a customer as a salesperson I should be able to offer him higher level of satisfactions. If I cannot do that and enhance my relationship then I will no longer be in business, as there is no value addition.

The greatest challenge is to use Customer Relationship Management顧客關係管理 to improve performance, after all it is the tool that direct sales triggered. Today it has become the foundation of internet marketing. You can e mail to potential customers and you can really communicate with customers and book orders on the net.

Let me give some examples of how Internet is making a dramatic change in the marketing scenario.

First the theory part.

Over 50 years ago, Ronaldo stated that the “total transaction costs” must keep on coming down over a period of time. By transaction costs he meant the total costs - the cost of production, the cost of procurement and selling. These should continuously decline if a business was to succeed. To this end he recommended that the business should be integrated from the raw material stage to finished products.
A vertically integrated company was the answer to reducing costs. There are lower costs when you deal with an internal manufacturing facility, and the output of one factory can become the material for the final product assembly / manufacturing unit. You get more reductions when your sales organisation is directly getting stocks from the factory.

How relevant is this theory today ? Can we keep on lowering transaction costs by integration only?

We have mega trans national Corporations in today’s market place and the cost of manufacturing keeps on gone down while the quality of the product has become very standardised. We can get toothpaste of the same quality at the same price from different manufacturers so where is the opportunity to reduce transaction costs and where does core competence lie?

In this product scenario there are hardly any differences in cost or quality so it is marketing and One to One selling that becomes the core competence. Therefore you can even plan to divest those functions which are not part of the core competence required to increase the satisfaction levels of customers.

If our core competence is in personal selling -----then let us concentrate on selling ! We can always procure the product to what we believe will improve customer satisfaction and build better relationships.

Quoted from http://www.hkdsa.org.hk/symposium/2003/akhil.pdf