Customer Relationship Management

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

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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 CRM Forum (24 topics) Help
  Advanced Customer-Oriented Strategy: Customer Advocacy  - The development of the Internet has resulted in more powerful consumers than before. The Internet facilitates the gathering of up to date information about products and services before making a purchase decision. They are now able to verify or...      
  CRM in a Non-profit Context  - Besides using CRM in profit-oriented companies, CRM can also be of importance in non-profit organizations. Buttle gives two examples of non-profit organizations that successfully implemented CRM:
1. Salvation Army: the management o...
     
  The CRM-paradox by Nguyen  - Recently, the CRM-paradox has been put forward by Nguyen, meaning the following: in CRM it is very common to treat certain customer groups differently from others, since various consumers have different needs and wants.
Clearly, there are severa...
     
  CRM: What Forms a Strong Customer Relationship?  - Of course a vital relationship between customer and company is critical for CRM to be efficient. But what forms a strong relationship? The answer on this question is not always clear. Nguyen and Mutum mention f...      
  Framework for Monitoring Customer Service  - Dear all, please let me know what is an approproate framework for monitoring customer service.
Thank you in advance for your help. Miragha....
     
  CRM Practices in FMCG Sector  - Do FMCG companies engage in using CRM? If yes, how do they go about it and what's their advantage since they are not service providing companies......      
  What is the Impact of CRM on Organizational Performance?  - What is the impact of CRM on organisational performance?
What are the bases of measurement and what other factors can be considered. Thank you....
     
  Theories of Customer Relationship Management (CRM)  - What are the main theories within customer relationship management (CRM)? If I said Justice Theory is one CRM theory, is this true? What about Relationship Marketing Theory?...      
  Healthcare CRM Models?  - Hi, I'm looking for healthcare CRM frameworks or models. What are the main Healthcare CRM Concepts? Thanks for your ideas......      
  CRM in University Set Up  - What kind of CRM tools are universities implementing?...      
  Relationship with Company or with Employees?  - Can a business customer relationship be said to exist between:
- a company and its customers
or is the relationship really between:
- a company's EMPLOYEES and the customers of the firm?...
     
  6 Markets Model (Payne, 1995)  - Hi, can someone explain the 6 markets model which is Internal, Supplier, Referral, Recruitment, Influence and Customer market?...      
  Why Customer Relationship Management? What Makes CRM Viable?  - What makes CRM a viable option is the cost dynamics
- The cost of getting a new customer is 4 times the cost of retaining an existing customer.
- 80% of a firm's business comes from 20% of the customers.
Hence the firm should ch...
     
  Customer Relationship Management History  - I'm studying marketing and have been tasked with writing a historical perspective / literature overview on customer relationship management
Does anyone have any thoughts on which key authors I should include in the paper apart from the ones ment...
     
  Customer Intimacy > WHY?  - Why there should be such an intimacy in the relationship with the Customer today?...      
  CRM and E-Government  - How do you think can CRM be integrated with e-government? Boosting government's reputation through CRM and e-government -- how can this be achieved?...      
  Role of CRM in Rural & Urban Consumers in India  - What is the role of CRM in rural & urban consumers in India?...      
  Future of Customer Relationship Management  - What will CRM evolve to in the future? Is there some kind of growth direction?...      
  Monopolistic Customer Relationship Management  - Based on a personal on-going experience with a Belgian consortium of energy with mixed public and private ownership, the Customer Relationship Management of a firm that benefits from monopolistic advantages may consist of oppressing the customer by d...      
  More CRM Strengths / Benefits  - CRM also helps to generate additional revenue from the business on a continuous basis without much additional investment....      

See 4 more topics



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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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