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
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Best Practices - Customer Relationship Management CRM Premium
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Expert Tips - Customer Relationship Management CRM Premium

Common Reasons for Failure of CRM Initiatives

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Key Challenges of a CRM Implementation for Senior Managers

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Usage (application): Implementing Customer Relationship Management

3 Types of Customer Services

According to De Vries, Kasper and Van Helsdingen (2001) three types of customer services can be distinguished:
1. PERSONAL Customized Services...
Usage (application): Understanding The Nature of Customer Services

The New Consumer and CRM

Understanding customers' satisfying behaviors is a constantly changing process that can be understood only with an attentive analysis of the ultimate ...
Usage (application): Characteristics of the New Consumer

What are the Main CRM Activities?

Customer relationship management (CRM) is the business process that provides the structure for how relationships with customers are developed and main...
Usage (application): CRM Strategy, Activities

A Closer Look Into Customer Value

It is often argued that customer value is required for staying competitive and successful as organization. But in what ways can customer value be a cr...
Usage (application): Customer Value Analysis, Strategic Marketing, Innovation Strategy

Implementing Customer Equity Management

Customer equity can be seen as the lifetime value of a companies’ existing customer base plus the expected future lifetime value of newly ac...
Usage (application): Step-by-step Guide

Customer Centricity: Success Factors for Customer Intimacy

Customer / Consumer Centricity (CC) is a frequently used concept used by companies to achieve competitive advantages. It is often believed that CC can...
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The Customer Value Scorecard

According to Behram Hansotia, the Customer Value Scorecard (CVS) is a valuable tool to help prioritize CRM opportunities. The CVS shows ...
Usage (application): Prioritizing CRM Opportunities

How to Build Customer-Centric Organizations

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How to Embed CRM Capabilites in CRM Activities?

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Usage (application): CRM Strategy, CRM Capabilities

Customer Relationship TYPES

Next time you're using the term "CRM", remember there's an R in it... The R of "Relationship".
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CRM in Financial Services

Jim Morgan, author of the article “Customer Information Management (CIM): The Key to Successful CRM in Financial Services” (Journal of Performa...
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Extreme Customer Trust as a Source of Competitive Advantage

Many companies are already highlighting the importance of trustworthiness by setting and sustaining honest prices and providing reasonable services. A...
Usage (application): Competitive Advantage, CRM, Customer Loyalty, Customer Intimacy

Resources - Customer Relationship Management CRM Premium

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This presentation elaborates on service quality, especially focusing on perceptions and expectations of consumers and the ways in which efficiently ca...
Usage (application): SERVQUAL, Service Quality Management, CRM, CEM, Customer Loyalty, Customer Satisfaction

The Impact of CRM on Financial Performance of Business

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CRM Diagram

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Usage (application): 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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