Customer Relationship Management

Realizing a customer intimacy strategy, fostering customer-satisfying behaviors and implementing customer-centric processes. Explanation of Customer Relationship Management.

Customer Relationship Management - overviewWhat is Customer Relationship Management? Description

Customer Relationship Management can be defined in a number of ways. Some people stress the significance of information technology in CRM, some argue it means a customer-centric organization, some believe CRM is a functional (marketing) strategy, others emphasize that CRM is primarily a business strategy. We agree with Peelen (Customer Relationship Management, 2006) that the definition by Gartner Group (2004) is attractive: CRM is an IT-enabled business strategy, the outcomes of which optimize profitability, revenue and customer satisfaction by organizing around customer segments, fostering customer-satisfying behaviors and implementing customer-centric processes.

 

CRM is a business strategy and is more than a functional strategy. It touches the organization as a whole: marketing, sales, IT, logistics, finance, production, R&D, HR, management, etcetera. If we thus define CRM, it is immediately clear that implementing full-size CRM is a daunting challenge.

 

Creating profitable and very efficient (client-facing) processes is not enough. For true Customer Relationship Management a customer intimacy strategy, a relation marketing philosophy rather than a transaction marketing philosophy, as well as a client-orientation of the whole organization are required.
 

Origin of Customer Relationship Management. History

The 1980s saw the emergence of Direct Marketing, heavily relying on client databases. Christan Grönroos and Evert Gummesson of the 'Nordic School' and Theodore Levitt deserve a special mentioning in this article. They were the first to describe Relation Marketing versus transaction marketing. Also they defined the characteristics of relation-centric organizations and they provided the corresponding marketing tools. In 1995, Treacy and Wiersema (1995) described their three Value Disciplines. Customer Intimacy was one of them. As a result, CRM transformed in the 1990s from a web based contact management and information tool, to a customer oriented strategy.

 

Usage of Customer Relationship Management. Applications

  • Companies that want to realize a customer intimacy strategy.
  • Companies that want to accomplish a customer friendly image.

Steps in Customer Relationship Management. Process

The following things make up the main elements to create a customer relation oriented organization:

  1. Strong customer-oriented leadership.
  2. The mission to be a relation-oriented organization aimed at long-term interaction.
  3. The corporate purpose is aimed at the customer.
  4. The main strategy is to win by customer intimacy.
  5. Company values and employee values focus on caring for customers.
  6. Behavioral standards reflect customer empathy and the wish to build long-term relationships and commitment.
  7. A relation-oriented organizational culture.
  8. An organization that is putting customer contacts in the center. Compare: Co-Creation, Business Process Reengineering.
  9. People: empathic communication skills, caring for customers.
  10. Systems that can help to connect and manage hard values with soft values, such as the Value Profit Chain and the Balanced Scorecard.

Strengths of Customer Relationship Management. Benefits

  • Strong relations with clients offer a degree of protection against actions of competitors.
  • Loyal customers can be more profitable. Winning new customers is expensive, satisfied customers may buy more, happy customers can bring additional customers, etc.

Limitations of Customer Relationship Management. Disadvantages

  • Implementing CRM in a holistic way is no sinecure.
  • Making large CRM investments profitable is difficult.
  • Achieving a Sustainable Competitive Advantage with CRM is even more difficult.

Assumptions of Customer Relationship Management. Conditions

  • If we are good to customers, they will be good to us.
  • Changing from the current strategic discipline towards a customer intimate discipline is possible.

Assessing client satisfaction levels

Two techniques to assess the actual level of customer happiness are the Customer Satisfaction Model and SERVQUAL for services companies.

 

Book: Ed Peelen - Customer Relationship Management -

Book: Heskett, Sasser and Schlesinger - The Service Profit Chain -

 

Customer Relationship Management Special Interest Group


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Customer Relationship Management Forum

Recent User Comments
willem - Netherlands CRM & cultural theories "To what extent are all theories on intercultural communication applicable when your customers come from all over the world, in other words, from other countries than your own so one would have to consider the different cultural values and moral rules. This might be especially important to the customer approach and intimacy. It is widely known that collective cultures are much more intimate than individualistic cultures. This of course has also a consequence to the business communication. My question therefore is, how many theories are to be considered when dealing with this?"    0
Stella - Ghana Managing Customer Complaints "How can CRM agents manage recurrent and repeat complaints from their customers in the best way to ensure one does not loose this customer to a competitor?
A customer's issue may have been resolved upon complaint, but what happens when the problem reoccurs more than twice and a customer begins to loose trust and interest in your service..?"		    0
Greg G - US Business Relations in Corporate America "I dont think many people in business nowadays really know how to have a good "relationship". Let alone with their Customers. In today's marketplace, there are too many distractions and priorities that cast over good relationships. Things like profit, time, technology, egos, and poor social skills seem to get in the way of having good relationships. At least that's the way I see it to be in Corporate America."    2
 - Ghana Customer Relations "It is an indisputable fact that customers form an integral part of every business. Without customers entering into a business, it becomes useless. Many businesses in Ghana have forgotten about this very important fact. Customers are not given the necessary satisfaction. I think businesses should be very careful about the way customers are treated and handled. Businesses should make it a point to train their employees on how to relate to customers in this era of global business and removal of access to the market centres in Africa. It is a hard time for business in Africa living up to international standards with regards to customer care. This will go a long way to help us cope with the competition being posed by foreign industries who use customer relations as a major tool."    -4
 - 506 CRM Collection? "We need to do something with CRM in Collection, yes, in Collection. Do you know how big the market is?. I haven`t seen articles related with Collection and how to manage CRM?."    0
Best User Comments
Valerie - USA CRM Tools "Check out the 1to1 fieldbook by Peppers and Rogers - its a good guide for basics."    8
Curtis - USA Tool to assess CRM maturity? "Hi, I am looking for a good tool to assess the level of CRM maturity of a medium-size (for profit) organization. It has to deal with CRM strategy, CRM culture, organization, marketing, various CRM software / systems, etc. Who can share this?"    -8

Customer Relationship Management Education & Events



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Compare with Customer Relationship Management: Relation Marketing  |  Value Disciplines  |  Multi Channel Marketing  |  Analytical CRM  |  Operational CRM  |  Customer Satisfaction Model  |  SERVQUAL  |  Co-Creation

 

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  ●  (UK) CRM "I agree with Greg. Most of us don't even have time to communicate with colleagues sitting next t us ( except by emai!). Performance Targets mean interface time with individual client is strictly rationed. CRM seems only applicable at the initial stage of relationships , and before renewals of contracts . That is my experience of many businesses here!"
  ● Anna (UK) CRM "I agree with you Castle when it comes to big organizations. However, SMEs seem to rely more on nurturing relationships and positive word-of-mouth and the working climate is much more pleasant. :)"

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  ● Shiaka Kawa (Sierra Leone) Customer Relations "Customer relationship management requires basic training particularly for frontline staff. Aspects of CR must be introduced at secondary schools and tech-vocs. In this age of intense globalisation and competition, our staff need to be well prepared in meeting and handling customers"

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  ● Jan W. Rietdijk (Netherlands) CRM maturity "I have developed a model based on a questionaire. It shows the maturity on diverse aspects like motivation, behaviour, management, embedding, direction."
  ● Will (Australia) CRM maturity eval ... "Hello Jan I think you need to ask a different question. You'd need to evaluate the maturity of the organisation as a customer-centred marketing organisation. Evaluating "crm culture" is akin to evaluation the organisation "publicity culture" -- The kinds of ad they do doesn't really help unless you have the marketing framwork they are using. Good luck, /w."
  ● Renjith (India) Communication "I think communication is the best way to lead others within an enterprise. The communication will help a manager become a good leader."

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