Customer Relationship Management

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What 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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Information Sources Various sources of information regarding Customer Relationship Management. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops. Service Quality Models SERVQUAL, Service Quality Management, CRM, CEM, Customer Loyalty, Customer Satisfaction This presentation elaborates on service quality, especially focusing on perceptions and expectations of consumers and th (...) The Costs of DISsatisfied Customers Customer Satisfaction This presentation is about the costs of dissatisfied customers. The authors investigate the main sources of customer in (...) The Impact of CRM on Financial Performance of Business Building a Business Case for CRM Although some practical guidelines have appeared on how to design and implement customer relationship management program (...) Customer Value Management Organizational Management, Value Creation Preesentation about Customer Value Management (CVM) by J. Blanc. It includes the following sections: 1. Definition of C (...) How to Deliver Exceptional Customer Service and Client Satisfaction Customer Experience Management, Customer Satisfaction, Customer Service, CRM This presentation elaborates briefly on customer service delivery for customer experience management. The presentation i (...) Practical Communication Tips for Managers Management Skills, Leadership Skills, Management Development, Leadership Development, Situational Leadership As manager you need to combine professional expertise and experience with specific character traits, interpersonal and c (...) Fundamental Customer Centricity Understanding what Customer Centricity Really is About Professor Ranjay Gulati gives his vision on what Customer Centricity is about: aligning your firm in a fundamental way a (...) The 2 Worlds of Marketing and Sales Making Sales and Marketing Work Together, Understanding the Differences Funny explanation of Marketing and Sales by contrasting and comparing them with short sketches. (...) The Importance of a Long Term Focus on the Customer Interview Ohmae on the Need for a Long-term Customer Focus Ohmae explains the importance of the fundamental belief that all actions of a company need to be good for all concerned, (...) CRM Diagram Customer Relationship Management Download and edit this 12manage PowerPoint graphic for limited personal, educational and business use. Republishing in (...)

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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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