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 -

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Customer Relationship Management CRM Special Interest Group

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Common Reasons for Failure of CRM Initiatives

Implementation of CRM Initiatives

Key Challenges of a CRM Implementation for Senior Managers

Implementing Customer Relationship Management

3 Types of Customer Services

Understanding The Nature of Customer Services

The New Consumer and CRM

Characteristics of the New Consumer

What are the Main CRM Activities?

CRM Strategy, Activities

A Closer Look Into Customer Value

Customer Value Analysis, Strategic Marketing, Innovation Strategy

Implementing Customer Equity Management

Step-by-step Guide

Customer Centricity: Success Factors for Customer Intimacy

Value Disciplines, Customer Strategy, Customer Intimacy, Customer-oriented, CRM

The Customer Value Scorecard

Prioritizing CRM Opportunities

How to Build Customer-Centric Organizations

Holistic CRM

How to Embed CRM Capabilites in CRM Activities?

CRM Strategy, CRM Capabilities

Customer Relationship TYPES

CRM, Relation Marketing, Branding

CRM in Financial Services

Implementing CRM

Six Steps for Integrating Social Media Into your Organization

Social Media Integration, Using Social Media, Social Media for Business

The Actual Relationship Between Cross-buying and Consumer Loyalty

Customer Loyalty, Consumer Loyalty, Cross-Selling, Cross-Buying, Sales Management, Account Management

Extreme Customer Trust as a Source of Competitive Advantage

Competitive Advantage, CRM, Customer Loyalty, Customer Intimacy

Resources - Customer Relationship Management CRM Premium
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Service Quality Models

SERVQUAL, Service Quality Management, CRM, CEM, Customer Loyalty, Customer Satisfaction

The Impact of CRM on Financial Performance of Business

Building a Business Case for CRM

The Costs of DISsatisfied Customers

Customer Satisfaction

How to Deliver Exceptional Customer Service and Client Satisfaction

Customer Experience Management, Customer Satisfaction, Customer Service, CRM

Customer Value Management

Organizational Management, Value Creation

Practical Communication Tips for Managers

Management Skills, Leadership Skills, Management Development, Leadership Development, Situational Leadership

Fundamental Customer Centricity

Understanding what Customer Centricity Really is About

The 2 Worlds of Marketing and Sales

Making Sales and Marketing Work Together, Understanding the Differences

The Importance of Noncustomers

Market Research, Customer Strategy, Innovation Strategy, CRM Pitfalls

The Importance of a Long Term Focus on the Customer

Interview Ohmae on the Need for a Long-term Customer Focus

CRM Diagram

Customer Relationship Management


Customer Relationship Management Method


Customer Relationship Management Approach


Customer Relationship Management Method


Customer Relationship Management Approach


Customer Relationship Management Method


Customer Relationship Management Approach


Customer Relationship Management Method


Customer Relationship Management Approach

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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