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.

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 -

Customer Relationship Management CRM Special Interest Group Special Interest Group (1025 members)

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Resources - Customer Relationship Management CRM Service Quality Models   The Impact of CRM on Financial Performance of Business   The Costs of DISsatisfied Customers   How to Deliver Exceptional Customer Service and Client Satisfaction   Customer Value Management   Practical Communication Tips for Managers   Fundamental Customer Centricity   The 2 Worlds of Marketing and Sales   The Importance of Noncustomers   The Importance of a Long Term Focus on the Customer   CRM Diagram     News about Customer Relationship Management Method         News about Customer Relationship Management Approach         Videos about Customer Relationship Management Method         Videos about Customer Relationship Management Approach         Presentations about Customer Relationship Management Method         Presentations about Customer Relationship Management Approach         Books about Customer Relationship Management Method         Books about Customer Relationship Management Approach         More about Customer Relationship Management Method         More about Customer Relationship Management Approach       Accelerate your management career

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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