Customer Relationship Management

Knowledge Center





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


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 -


Special Interest Group - Customer Relationship Management


Special Interest Group (973 members)


Forum - Customer Relationship Management  

Discussions about Customer Relationship Management.


  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 (...)
 
 
 
 
  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 retaini (...)
 
 
 
 
  CRM in University Set Up
What kind of CRM tools are universities implementing? (...)
 
 
 
 
  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 (...)
 
 
 
 
  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 Custom (...)
 
 
 
 
  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 certa (...)
 
 
 
 
  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 (...)
 
 
 
 
  Healthcare CRM Models?
Hi, I'm looking for healthcare CRM frameworks or models. What are the main Healthcare CRM Concepts? Thanks for your idea (...)
 
 
 
 
  CRM in Military Organizations?
Hi, is CRM used in military organizations? If yes, how do they go about it and what's the advantage of using that? (...)
 
 
 
 
  6 Markets Model (Payne, 1995)
Hi, can someone explain the 6 markets model which is Internal, Supplier, Referral, Recruitment, Influence and Customer m (...)
 
 
 
 
  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 ser (...)
 
 
 
 
  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 re (...)
 
 
 
 
  Stages of Customer Service Transformation
Marketing and managing customer relations are very important in business. Many new concepts and ideas are constantly bei (...)
 
 
 
 
  Managing Customer Complaints
How can CRM agents manage recurrent and repeat complaints from their customers in the best way to ensure one does not lo (...)
 
 
 
 
  Start CRM with Fixing Fragmented Customer Service Processes
I think advancing customer service for most firms starts with unifying fragmented customer service processes. Only then (...)
 
 
 
 
  Customer Relationship Management as a Strategic Development Philosophy
Customer Relationship Management is a term that not only describes a set of software tools bundled into a 'CRM' applicat (...)
 
 
 
 
  Six Relationship Management Interaction Processes (Geersbro and Ritter) for International Relations
A business or organizational process refers to a series of connected activities that convert organizational inputs to sp (...)
 
 
 
 
  Increasing Student Retention using Higher Education CRM
The student attrition problem has become a major concern for both public and private universities. According to the Nati (...)
 
 
 
 
  Advanced Customer-Oriented Strategy: Customer Advocacy
The development of the Internet has resulted in more powerful consumers than before. The Internet facilitates the gather (...)
 
 
 
 
  An Extreme CRM Case: Front Office
A hotel guest makes a complaint at the front desk, stating: "Those enormous trees woke me up last night. I got no sleep. (...)
 
 
 
 
  More CRM Strengths / Benefits
CRM also helps to generate additional revenue from the business on a continuous basis without much additional investment (...)
 
 
 
 
  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 (...)
 
 
 
 
  Customer Relationship Management Metaphor
CRM is like farming the field: Firstly you should own some field of land. Then you input seeds, water and fertilizer. (...)
 
 
 
 
  Customer Relationship Management History
I'm studying marketing and have been tasked with writing a historical perspective / literature overview on customer rela (...)
 
 
 
 
  CRM in Government
How do you think can CRM be implemented in government sector? How can it be integrated with e-government? Boosting gove (...)
 
 
 
 

Best Practices - Customer Relationship Management

Here you find the most valuable discussions from the past.


Hot Relationship Between Employee Retention and Customer Relationship Management
In my opinion, retention of employees plays an important role in managing relationship with customers. Organizations whi (...)
 
 
 
 
  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 (...)
 
 
 
 
  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 b (...)
 
 
 
 
  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 (...)
 
 
 
 
  Rethinking Call Centers
TRADITIONAL CUSTOMER SERVICE Experiences of callers with help desks and customer service representatives are typically (...)
 
 
 
 
  Social Customer Relationship Management | Social CRM
Because of the increasing popularity of social media technologies, Customer Relationship Management now gives way to a b (...)
 
 
 
 
  Customer Intimacy > WHY?
Why there should be such an intimacy in the relationship with the Customer today? (...)
 
 
 
 

Expert Tips - Customer Relationship Management

Here you will find advices by experts.


 

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 (...)
 
 
 

The Relationship Between Loyalty and Satisfaction

Customer Loyalty, Brand Loyalty, Customer Satisfaction, CRM (...)
 
 
 

Customer Centricity: Success Factors for Customer Intimacy

Value Disciplines, Customer Strategy, Customer Intimacy, Customer-oriented, CRM (...)
 
 
 

Implementing Customer Equity Management

Step-by-step Guide (...)
 
 
 

Customer Relationship TYPES

CRM, Relation Marketing, Branding (...)
 
 
 

CRM in Financial Services

Implementing CRM (...)
 
 
 

How to Build Customer-Centric Organizations

Holistic CRM (...)
 
 
 

The Customer Value Scorecard

Prioritizing CRM Opportunities (...)
 
 
 

How to Embed CRM Capabilites in CRM Activities?

CRM Strategy, CRM Capabilities (...)
 
 
 

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 (...)
 
 
 

Six Steps for Integrating Social Media Into your Organization

Social Media Integration, Using Social Media, Social Media for Business (...)
 
 

Resources - Customer Relationship Management

Here you find powerpoint presentations, micro-learning videos and further information sources.


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 a Long Term Focus on the Customer

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

CRM Diagram

Customer Relationship Management (...)
 

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  |  Strategy


More Management Methods, Models and Theory

Special Interest Group Leader

You here? Sign up for free


 


About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2019 12manage - The Executive Fast Track. V15.2 - Last updated: 15-12-2019. All names ™ of their owners.