Customer Relationship Management

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Summary

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.



Special Interest Group (1047 members)

Forum

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.


Start a new topic about Customer Relationship Management

 

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CRM in a Monopoly Situation
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Six Relationship Management Interaction Processes (Geersbro and Ritter) for International Relations
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Increasing Student Retention using Higher Education CRM
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Advanced Customer-Oriented Strategy: Customer Advocacy
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An Extreme CRM Case: Front Office
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More CRM Strengths / Benefits
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Customer Relationship Management Metaphor
CRM is like farming the field:
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Customer Relationship Management History
I'm studying marketing and have been tasked with writing a historical perspective / literature overview on customer relationship management
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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?
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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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Best Practices

The best, top-rated topics about Customer Relationship Management. Here you will find the most valuable ideas and practical suggestions.


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 your help. Miragha....
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CRM: What Forms a Strong Customer Relationship?
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What is the Impact of CRM on Organizational Performance?
What is the impact of CRM on organisational performance?
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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 this true? What about Relationship Marketing Theory?...
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Why Customer Relationship Management? What Makes CRM Viable?
What makes CRM a viable option is the cost dynamics
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- 80% of a firm's business comes from 20% of t...
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Social Customer Relationship Management | Social CRM
Because of the increasing popularity of social media technologies, Customer Relationship Management now gives way to a broader perspective that acknowledges the new capabilities that are a result of s...
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Customer Intimacy > WHY?
Why there should be such an intimacy in the relationship with the Customer today?...
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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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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' application but, is also becoming a guiding philosophy in the development of the strateg...
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Expert Tips

Advanced insights about Customer Relationship Management. Here you will find professional advices by experts.


Common Reasons for Failure of CRM Initiatives

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Key Challenges of a CRM Implementation for Senior Managers

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A Closer Look Into Customer Value

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It is often argued that customer value is required for staying competitive and successful as organization. But in what w...

Customer Centricity: Success Factors for Customer Intimacy

Value Disciplines, Customer Strategy, Customer Intimacy, Customer-oriented, CRM
Customer / Consumer Centricity (CC) is a frequently used concept used by companies to achieve competitive advantages. It...

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Of course there is a relationship between Satisfaction and Loyalty. Satisfaction can be seen as consistency between prio...

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Customer equity can be seen as the lifetime value of a companies’ existing customer base plus the expected future lifeti...

Customer Relationship TYPES

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Next time you're using the term "CRM", remember there's an R in it... The R of "Relationship". Actually, customers (wan...

CRM in Financial Services

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How to Build Customer-Centric Organizations

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In order to implement CRM in a holistic way and to make the customer the focal point of a company's strategy, Behram Han...

The Customer Value Scorecard

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

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In order to successfully integrate social media into your organization, six useful steps can be used. These are the foll...
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

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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...

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Management Skills, Leadership Skills, Management Development, Leadership Development, Situational Leadership
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Fundamental Customer Centricity

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The 2 Worlds of Marketing and Sales

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The Importance of a Long Term Focus on the Customer

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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


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