In a highly competitive market place, the company that has the best understanding of its customers will be able to respond more quickly to changing circumstances. Today, customers are increasingly becoming more sophisticated in their buying behavior. The perspective of customers is changing from a simple notion of perceived value of a product or service, to the values provided in the context of business relationship. This article attempts to explain Customer Relationship Management (CRM) practices, the framework of CRM and how it is emerging as a New Age Mantra.

In this era of globalization, when there are so many companies offering very similar and substitute products to the customer, is there anything at all that can ensure the loyalty of the capricious customer? It may seem facile to state the obvious, i.e., the importance of retaining one's customers. Paradoxically enough, for all the posturing and lip service paid to relationship building, companies only tend to wake up when things start going wrong. By then, it is often too late. However, to some extent, companies have now begun to increasingly realize that without customers, products don't sell and revenues don't materialize. This, combined with the often quoted factoid that it costs a company six times more to sell a product to a new customer than it does to sell to an existing one, makes companies understand that the cost of acquiring a new customer is very high. It therefore makes better sense to retain the existing customers by securing their loyalty (Dyche, 2002).

Customer loyalty can be built through the process of regular interaction. But what actually is loyalty? It is definitely not just repurchase. According to one view, loyalty is like a ladder; where the closer the customer gets to you, the higher up the ladder he climbs. Repurchasing is just the lowest rung of this ladder. Loyalty has multiple dimensions. As customers get closer to a company, they begin to tell others that doing business with this company is beneficial and worthwhile. When they do that, they bring in more revenues, they reduce the cost of serving them and the company will be able to retain them.

But retention is not every thing in CRM. Companies must ask themselves: Who are my most profitable customers? The Pareto principle, also known as the 80/20 rule, implies that in the marketing context, 80% of one's profits would come from 20% of the customers. This means that a small group of customers make a substantial contribution to the company's bottom line. As businesses become more consumer-driven, it is important to ensure that the company does not lose this group of customers and find various strategies for delivering greater value by building and nurturing relationships. Once the company builds an enduring relationship with its c, the customers themselves would also tell the company what they want. Recognizing, respecting, rewarding and managing this relationship becomes a business philosophy, which is termed as "Customer Relationship Management".

CRM refers to all activities associated with both "relational exchanges" and "transactional exchanges". It is an integrated effort to establish, maintain and grow the relationship, and to continuously strengthen this relationship through interactive, individualized and value-added contacts, leading to a mutual exchange and fulfillment of promises over a period of time.

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