Role Of Customer Relationship Management (CRM) In Tesco UK

Abstract

Describe about the Role of Customer Relationship Management (CRM) In Tesco UK?

The research identifies the role of CRM in Tesco. It investigates the usage of e-business in CRM. The various obstacles that arise as a result of lack of CRM practices have been discussed. The ways in which CRM practices increases the sales and profit margin of Tesco has been discussed. The various schemes used by Tesco in developing the CRM strategies have been discussed by Tesco. The researcher has been able to arrive at the conclusion by conducting a survey involving the customers, employees and manager and quantitative analysis of the response.

Customer relationship management is one of the key factor via which the organization can successfully enforce its strategies and ensure the loyalty of the customers and increase the retention so that the sale of the company can increase and there will be considerable increase in the repeat purchase. According to Fairhurst  ( 2000) , customer relationship management will be implemented in the organization if the shopkeepers put effort to know the customer’s at a personal level and assist them in making their choices(Hassan and Parvez, 2013). Tesco is the leading retail sector in UK. It is important for Tesco to have a CRM program in their organization to increase the sale and increase the repeat purchase amidst the tough competition from other retail giants (Jones and Saundry, 2011); (Tesco.com, 2015).

Tesco is the leading retail organization in UK. It receives tough competition from other retail organizations like Sainsbury and Aldi. Thus in order to retain and increase the market share it is important for Tesco to ensure that the customers are satisfied with the product and service of Tesco (Smith and Marsden, 2004). Thus in the present scenario of tough competition, CRM becomes mandatory.

1. To identify the role of customer relationship management in the success of the organization.
2. To identify the benefits of CRM and e-business for the organizations.
3. To identify and analyze the CRM activities of Tesco.

1. What is the role of customer relationship management in the success of the organization?
2. How the company uses CRM and e-business for its own benefit?
3. What are the CRM activities of Tesco?
4. How successfully Tesco follows the CRM policies?

The retail industry is the largest private industry in the world. It is one of the largest sectors in UK.  The contribution of the retail sector in seen in GDP of  UK. Customer relationship management is an emerging tool that helps the managers to maintain their presence in the dynamic environment (Anderson and Kerr, 2002). The retail companies are targeting the consumers across various segments which vary among the low, middle and the high income earners. Thus it is important to practice CRM in the retail organization to retain the share of the market (Verhoef, 2003). This will help the organization analyze the choice and preference of the customers (Payne and Frow, 2005). Tesco is a leading retail chain in UK. It receives tremendous threat from other retail giants Sainsbury, Aldi etc. Thus in this context it is important to analyze the CRM practices of Tesco.

The theoretical aspects behind the role of CRM implementation of Tesco will be identified.

Customer Relationship Management

CRM is the tool via which the company maintains the relationship with the customers. The CRM is done via the information system (Winer, 2015). The information system will store the major information of the customers like the details, preferences and processing of the sales order and automation of the sales force. According to Finnegan and Willcocks (2007) , the process of managing the customers is large for an organization like Tesco, thus it is important for the organization to develop CRM in order to integrate the vast field and bring it to a single platform(Azad and Ahmadi, 2015).

1. Introduction

Customer Relationship Management – Recent Trends

Retailers depend on the application of the policy frameworks related to CRM for ensuring the success of the organization (Buttler, 2015). The CRM activities tend to strengthen the existing position and generate the demand in order to exploit the market opportunities. The investment of the companies in customer relationship management has increased significantly over the recent years (Raab, Goddard, Gargeya and Ajami, 2015). Retail companies realize that the customer satisfaction is a way of generation of revenue. These are pre-requisite for the success of the organization (Coltman, 2007). Organizations aim at reducing the operational cost of the organization so that they can maximize their profitability through the solidification of the customer loyalty (Frow and Payne, 2009).

Loyalty schemes

The loyalty schemes provide rewards to the customers (Minazzi, n.d.). They are offered discounts and other benefits on purchase. These schemes increase the engagement of the customers with the organization (Knox and Denison, 2000). Since there is competitiveness of price in the grocery segment in UK the perception of the customers can be known by offering them with the loyalty cards. It will increase the association of the customers with the organization (Smith, Sparks, Hart and Tzokas, 2003).

E-business

E-Business has been used by the large retail organizations and other large organizations to streamline their business process which will increase the productivity and the efficiency(Zhu and Kraemer, 2005). The communication with the customers, vendors and partners are maintained by using internet (Hammervoll, 2009). Internet is being used largely on a commercial basis. MIS is used by the retail organizations in order to simplify their process of working. Online transaction makes the process of working in the organization simpler and the customers can buy a product with minimum standing time (Warrington, Abgrab and Caldwell, 2000).

The research methodology will design the structure of the research. It is the way by which the researcher defines the problem of the research, approach of the research and designs the overall structure of the research for the purpose of data collection. According to Saunders et al ( 2007) , it is the systemic collection and interpretation of the information so that the clear purpose of the research can be achieved(Kothari, 2004). The research is mostly based on primary data. In the present research the researcher has chosen the philosophy of positivism, deductive approach, design of the research is descriptive in nature and the researcher has used primary data collection procedure (Berg, 2001). In the present research, the researcher has used quantitative method for analyzing the data (‘Essentials of research design and methodology’, 2006).

Ethical consideration

Ethical issues has to be considered in order to proceed with the research is a systematic manner. The researcher has followed the ethical guidelines in order to proceed with the research. The data has been used by the researcher for commercial purpose only. The valuable information gathered from the research has been kept confidential. The researcher has used appropriate style of referencing in the present research.

Principal Activities	Week 1	Week 2	Week 3	Week 4	Week 5	Week 6	Week 7
Research topic selection and scope analysis
Identification of the sources for secondary data
Literature Review
Description of Research Methodology
Preparation of survey questions
Collection of primary data
Data analysis
Comparison of findings
Conclusion and recommendation
Final submission

1.1 Research Problem

The study of the research identifies the role of customer relationship management in Tesco (UK). The benefits of CRM practices for the success of the organization have been identified.

The process of data collection has been primary and secondary in nature. But the researcher has emphasized on the primary data collection process in the present research. The research topic is based on the role of customer relationship management in Tesco. The customers will be able to best describe the role of CRM in their repeat purchase. For this purpose primary data has been collected. The primary data has been collected directly from the respondents which will make the research more valid and reliable (Jha, 2008).

 The primary data has been collected by means of sampling. For this purpose it was crucial to select the appropriate candidates for the survey. The researcher has used non probability method of sampling for this purpose. The sample size is 50. Out of the 50 candidates only 80% of the respondents replied to the survey. Thus the response of 40 candidates has been analyzed. This will help to arrive at the desired conclusion.

The ethical issues has been considered while collection the response. The response collected in the survey was used for commercial purpose only. The candidates were not asked any additional questions.

Quantitative Analysis

Empirical Results

Question 1

Do you think Tesco will be able to retain the customers after implementation of effective CRM in their organization?

Response	Number of Respondents	Frequency percentage
Strongly Agree	19	47.5
Agree	15	37.5
Neutral	3	7.5
Disagree	2	5
Strongly disagree	1	2.5

Question 2

How will CRM practice help to generate profitability for Tesco?

Response	Number of Respondents	Frequency of Response
It increases the sales of the organization	16	40
It increases the retention rate of the organization	13	32.5
It increases the reputation of the organization	11	27.5

Question 3

What are the benefits of e-business in the organization?

Response	Number of Respondents	Frequency of Response
It integrates the entire business process of the organization	17	42.5
It increases the efficiency of the organization	12	30
It addresses to the customer queries quickly	11	27.5

 

Question 4

What are the benefits of e-business in the organization?

Response	Number of Respondents	Frequency of Response
It integrates the entire business process of the organization	17	42.5
It increases the efficiency of the organization	12	30
It addresses to the customer queries quickly	11	27.5

Quantitative Analysis

Question 1

Do you think Tesco will be able to retain the customers after implementation of effective CRM in their organization?

The manager, employees and customers were asked whether Tesco has been possible in retaining the customers after implementing the CRM practices in the organization. To this the 47.5 % respondents out of 40 candidates replied that they strongly agree that the rate of retention has increased to a considerable extent. 37.5% of the respondents said that they agree to the fact , whereas 7.5% of the candidates did not express any view regarding the topic.5% of the respondents said that they do not agree that the retention rate has increased and 2.5% of the respondents strongly disagreed to the fact.

The survey shows that the people associated with Tesco agree to the fact that CRM practices increases the retention rate of customers. The ultimate aim of the retail organizations in Tesco is to increase their market share. This will be possible by developing ways in which the service to the customers can be enhanced. CRM is the potential way to retain the customers. Tesco receives tough completion from other retail organizations like Sainsbury and Aldi. Amidst this tough competition it becomes necessary for Tesco to constantly innovate their strategy to serve the customers (Rowley, 2005). This will increase the customer’s base and the customers will refer to other customers. It will also help to acquire new customers apart from the existing ones. It is important for Tesco to gain the loyalty of the customers which will help them to increase their market share (Goldenberg, 2003). The customers will be eager to participate in the brands. It is easier for a big organization like Tesco to acquire customers but it becomes difficult for Tesco to retain those customers due to presence of alternatives. Thus it needs to formulate new ways of customer relationship management (Ralph and Searby, 2004).

1.2 Aims and Objectives

Question 2

How will CRM practice help to generate profitability for Tesco?

The response gathered from the manager of Tesco, employees and customer show that 40% of them said that it will increase the sales of the organization.32.5% of the employees respondent said that it will increase the rate of retention of the organization. On the other hand 11% of the employees said that it will increase the reputation of the organization.

The response gathered from the candidates focuses that CRM will be able to increase the sales of the organization and enhance the profitability. It will be able to increase the retention rate and the market share of the organization will increase. However with the increase in sales effective CRM strategies will increase the reputation of the organization. CRM has become an essential aspect of the modern organization. Organizations operating in the today’s business environment receive tough challenges and competition. Thus it becomes necessary for the organization to implement CRM strategies to enhance the profit margin. It aims to satisfy the mutually satisfying goals between the organization and the customers (Langerak and Verhoef, 2003). The rapport with the customers is maintained via CRM. The customers get a positive feeling from the organization and the customers. The benefit of CRM is mutual. The organization is able to increase its profitability and survive and grow and the customers want good service and they become loyal customers of the organization. Thus the CRM strategies of Tesco has been successful enough in increasing the profitability of Tesco. The strategies of CRM shift the focus of the company from the product to the customers (ROH, AHN and HAN, 2005).  The customers are given maximum attention. This will increase the value creation for the customers. The organization is able to streamline the various offers that is required by the customers and emphasize on those products that receive most attention from the customers. Tesco is able to highlight its competencies by effective CRM practices.

Question 3

What are the benefits of e-business in the organization?

The combined response of the manager, employees and the customers show that 42.5% of them said that e-business integrates the business process of the organization. 30% of the employees said that e-business increases the efficiency of the organization and 27.5% of them said that via e-business Tesco is able to address to the customer problems quickly.

It is evident from the response of the customers that e-business integrates the business process of the organization. It has increased the efficiency of the organization and Tesco has been able to respond to the queries of the customers quickly. This has increased the trust amongst the customers and they can rely on Tesco. The market share of Tesco has also enhanced.

The chance to diminish expenses of creation by lessening overheads – for instance, not having a retail outlet in an occupied high road area with high leases, decreasing stock expenses and so forth. The chance to expand deals The chance to get to new markets over the globe The opportunity to target business fragments all the more adequately. It gives more precise data and enhances client administration experience. It enhances the effectiveness of the store network It enhances worker inspiration through more adaptable working systems. It Permits every minute of every day access to the company’s items and administrations. It gives accommodation and solace to clients. With the mix of electronic frameworks in operations both at stock control levels, database and checkout levels, Tesco propelled the Tesco loyalty card which permitted clients to acquire focuses from each buy they made (Croteau and Li, 2003). This included a short enlistment of the client’s name, telephone number and location subtle elements and the issuance of an individual card yet this additionally implied that the organization now had a database of steadfast clients and each time these cards were utilized by a client, Tesco could tell what had been obtained keeping in mind the end goal to ascertain the focuses however all the while, the organization could make expectations about specific merchandise and things and they could likewise send in offers and coupons to clients in view of what they thought every individual client would be keen on, either in light of a past buy or taking into account another item(Rowley and Haynes, 2005). This significantly permitted clients who had the loyalty card to identify with Tesco on a very nearly individual shopping knowledge; however the basic figure here was the utilization of this specific e-business application amongst others.

1.3 Research Questions

Question 4

How successful Tesco has been in implementing CRM in the organization?

The combined response gathered from the employees, manager and customers of Tesco show that according to 32.5% of them Tesco has been very successful in implementing CRM. According to 30% of the respondents Tesco was successful. According to 30% of the respondents Tesco was moderately successful and according to 7.5% of the respondents Tesco was not successful in implementing CRM.

From the response gathered from the candidates it can be said that Tesco has been successful in implementing the CRM practices in their organization. The success of the business has been possible to increase the loyalty of the customers. The market share of Tesco has increased and it has been able to increase its profit margin. Tesco is known for its customer relationship management strategies. It has been able to increase the profit margin of the organization. It has been able to face the tough competition from the other large retail giants. Tesco has been able to rise to the leadership position by implementing the innovative strategies of CRM. This has increased the demand from the customers. The core success of the business has been possible via the CRM strategies. The overall sales of the organization have increased. The market share of the company has been increasing as it is values the customers. Maximizing the value of the customers has been the main reason behind the success of Tesco.

6. Conclusion

Linking with the objectives

1. To identify the role of customer relationship management in the success of the organization.

From the response gathered from the survey it is evident that Tesco has been able to increase the market share by implementing innovate CRM practices in the organization. The CRM strategies of Tesco have been successful for increasing the market share of the company. It receives tough competition from other retail organizations in UK like Sainsbury and Aldi. But it has been successful in maintaining its position by effective strategies of CRM.

1. To identify the benefits of CRM and e-business for the organizations.

The survey showed that CRM has positive impact on the growth of the organization. The increase as a result of the effective CRM practices in Tesco. The rate of retention of Tesco has increased over the past years as it has been constantly innovating its strategy of CRM. The e-business strategies of CRM have been effective in keep personal information of the customers. The choice and preferences of the customers can be known by effective CRM strategies. This has been able to increase the growth of the Tesco. The good will of the company has increased over the years and it has been able to maintain a strong base of customers.

1. To identify and analyze the CRM activities of Tesco.

The CRM activities of Tesco are innovative. Tesco has been maintaining a database of customers. The customers are provided with loyalty cards which offer special discounts to the customers. This enhances the association of the customers with Tesco. They get good products at affordable prices. The choice and preferences of the customers are saved in the database of Tesco. The customer service employees at the floor of Tesco work hard to analyze the need of the customers and they value their customers.

1.4 Background of the study

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