Customer relationship management at Electronics, Inc

Jim O'Connor, the sales manager at Electronics, Inc., a leading manufacturer of electronic equipment, had devised a strict policy for developing profitable relationships with the firm's key clients. He was convinced that the future of the firm depended on its capacity to implement a customer-oriented strategy. The program consisted of an intensive and rigorous training program with two major objectives: (1) sensitize salespeople to the importance of developing strong customer relationships; and (2) teach them the methods for developing and maintaining these relationships over time.

In spite of the training program, it became evident to Jim O'Connor that after two years, the customer loyalty rate had not significantly improved. A few divisional sales managers attributed these results to the poor quality of the training program. Others pointed to the almost impossible task of keeping customers loyal when they were constantly submitted to strong pressure from competitors.

Jim O'Connor did not find these explanations convincing, so he undertook an analysis of the relationships that every salesperson had developed with his/her clients. These proved to be illuminating. First, the sales force turnover rate had averaged 25 percent per year over the last few years. As a result, sales territories had to be adjusted frequently, and customers were constantly reassigned to new salespeople. Very few customers had dealt with the same person over an eighteen-month period.