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:
- Strong customer-oriented leadership.
- The mission
to be a relation-oriented organization aimed at long-term interaction.
- The corporate purpose
is aimed at the customer.
- The main strategy is to win by
customer intimacy.
- Company values
and employee values focus on caring for customers.
- Behavioral standards
reflect customer empathy and the wish to build long-term relationships and
commitment.
- A relation-oriented
organizational culture.
- An organization that is putting customer contacts in the center. Compare:
Co-Creation,
Business Process Reengineering.
- People: empathic communication skills, caring
for customers.
- 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
Forum discussions about Customer Relationship Management. Below you can ask a question about this topic, share your experiences, report a new development, or explain something.
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Rethinking Call Centers
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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:
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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 differe...
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CRM in a Monopoly Situation
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 adva...
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6 Markets Model (Payne, 1995)
Hi, can someone explain the 6 markets model which is Internal, Supplier, Referral, Recruitment, Influence and Customer market?...
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Stages of Customer Service Transformation
Marketing and managing customer relations are very important in business. Many new concepts and ideas are constantly being published.
But we can broadly distinguish several stages in the transfor...
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Managing Customer Complaints
How can CRM agents manage recurrent and repeat complaints from their customers in the best way to ensure one does not lose this customer to a competitor?
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An Extreme CRM Case: Front Office
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Customer Relationship Management Metaphor
CRM is like farming the field:
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Then you input seeds, water and fertilizer.
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And you must look a...
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CRM in Government
How do you think can CRM be implemented in government sector? How can it be integrated with e-government?
Boosting government's reputation through CRM and e-government -- how can this be achieved...
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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 sof...
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The best, top-rated topics about Customer Relationship Management. Here you will find the most valuable ideas and practical suggestions.
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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...
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Advanced insights about Customer Relationship Management. Here you will find professional advices by experts.
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Various sources of information regarding Customer Relationship Management. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops.
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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...
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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...
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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...
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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...
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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...
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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...
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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...
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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....
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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,...
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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
Return to Management Hub: Communication & Skills | Marketing & Sales
| Strategy & Innovation
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