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:

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 -

Customer Relationship Management Special Interest Group

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Customer Relationship Management Forum

Recent User Comments

    			 
             Al-nashir Bandali - Bristol
  	       
  		     Customer Relationship Management History
  	  		 "I'm studying marketing and have been tasked with writing a historical perspective / literature overview on customer relationship management

Does anyone have any thoughts on which key authors I should include in the paper apart from the ones mentioned in this article?"
  			   
    	  		 1

    			 
             Joy Pitoy - Indonesia
  	       
  		     Customer Intimacy > WHY?
  	  		 "Why there should be such an intimacy in the relationship with the Customer today?"
  			   
    	  		 1

    			 
             Nestor Ugbeh - Nigeria
  	       
  		     Customer Relations
  	  		 "Customer Relationship Management is very wholistic and depends largely on good CRM policy formulated based on inputs from and R&D, sales, marketing,IT,logistics, etc.if CRM policy is formulated and implemented well it promotes brand image and so reduces advertising costs.This is because your customers can do the talk for you as well."
  			   
    	  		 0

    			 
             Nnadita Mandary - Mauritius
  	       
  		     CRM and E-Government
  	  		 "How do you think can CRM be integrated with e-government?
Boosting government's reputation through CRM and e-government -- how can this be achieved?"
  			   
    	  		 0

    			 
  			   Monika. Sainy - India
  	       
  		     Role of CRM in Rural & Urban Consumers in India
  	  		 "What is the role of CRM in rural & urban consumers in India?"
  			   
    	  		 -1

Best User Comments

    			   
    			     Valerie - USA
  	         
  				   CRM Tools
  				   "Check out the 1to1 fieldbook by Peppers and Rogers - its a good guide for basics."
    			   
        	  		 7

    			   
    			     Greg G - US
  	         
  				   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 cast over good relationships. Things like profit, time, technology, egos, and poor social skills seem to get in the way of having good relationships. At least that's the way I see it to be in Corporate America."
    			   
        	  		 3

    			   
                 De Vleeschouwer - Belgium
  	         
  				   Monopolistic Customer Relationship Management
  				   "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 advantages may consist of oppressing the customer by disorganizing systematically the dialog in order to maintain abusive power control. The receipt is:  multiplicity of contact persons (changed at each contact), no manager in charge of the whole customer's problem, no empowerment except  towards leading the call to a dead end, personnel trained and skilled to absorb and to deny customers legitimate demands while pretending to help, access to responsible (?) management made hard or impossible, ... 
In this case, the problem is not the way the system works, but the finality of it."
    			   
        	  		 1

    			   
    			     Light - India
  	         
  				   Future of Customer Relationship Management
  				   "What will CRM evolve to in the future? Is there some kind of growth direction?"
    			   
        	  		 0

    			   
    			     Ashwini - India / Delhi
  	         
  				   More CRM Strengths / Benefits
  				   "CRM also helps to generate additional revenue from the business on a continuous basis without much additional investment."
    			   
        	  		 0

    			   
    			     willem - Netherlands
  	         
  				   CRM & cultural theories
  				   "To what extent are all theories on intercultural communication applicable when your customers come from all over the world, in other words, from other countries than your own so one would have to consider the different cultural values and moral rules. This might be especially important to the customer approach and intimacy. It is widely known that collective cultures are much more intimate than individualistic cultures. This of course has also a consequence to the business communication. My question therefore is, how many theories are to be considered when dealing with this?"
    			   
        	  		 0

    			   
    			     Stella - Ghana
  	         
  				   Managing Customer Complaints
  				   "How can CRM agents manage recurrent and repeat complaints from their customers in the best way to ensure one does not loose this customer to a competitor?

A customer's issue may have been resolved upon complaint, but what happens when the problem reoccurs more than twice and a customer begins to loose trust and interest in your service..?"
    			   
        	  		 0

    			   
    			     Enrique Zamora - 506
  	         
  				   CRM Collection?
  				   "We need to do something with CRM in Collection, yes, in Collection. Do you know how big the market is?. I haven`t seen articles related with Collection and how to manage CRM?."
    			   
        	  		 0

    			   
    			     Dalida - Kazakhstan
  	         
  				   CRM in Banking Sector
  				   "Hi, I would like to know CRM elements in banking. What kind of CRM tools are banks implementing? Why?"
    			   
        	  		 -1

    			   
    			     Mochia john - Ghana
  	         
  				   Customer Relations
  				   "It is an indisputable fact that customers form an integral part of every business. Without customers entering into a business, it becomes useless. Many businesses in Ghana have forgotten about this very important fact. Customers are not given the necessary satisfaction. I think businesses should be very careful about the way customers are treated and handled. Businesses should make it a point to train their employees on how to relate to customers in this era of global business and removal of access to the market centres in Africa. It is a hard time for business in Africa living up to international standards with regards to customer care. This will go a long way to help us cope with the competition being posed by foreign industries who use customer relations as a major tool."
    			   
        	  		 -5

    			   
    			     Curtis - USA
  	         
  				   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 software / systems, etc. Who can share this?"
    			   
        	  		 -5

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                      └► Samar Elkhouly (Egypt)
                      
                    CRM Evaluation and Implementation
                    "Adrian Payne "Achieving Excellence in Customer Management"

Francis Buttle "Customer Relationship Management, Concepts and Tools"

Paul Greenberg "CRM at the Speed of Light""

	└► Renu Sharma (India)	Reason for Customer Intimacy	"This valuable intimacy would act as a differentiator."
	└► Tanmoy Dutta (India)	Why CRM?	"Today the products are becoming commodities. To differentiate it from its competitors, it has become very important to feel the pulse of the customer and customize it accordingly. For that one needs to have a close relation with the customers."

└► Castle (UK)	CRM	"I agree with Greg. Most of us don't even have time to communicate with colleagues sitting next t us ( except by emai!). Performance Targets mean interface time with individual client is strictly rationed. CRM seems only applicable at the initial stage of relationships , and before renewals of contracts . That is my experience of many businesses here!"
└► Anna (UK)	CRM	"I agree with you Castle when it comes to big organizations. However, SMEs seem to rely more on nurturing relationships and positive word-of-mouth and the working climate is much more pleasant. :)"
└► zhaojin (UK)	CRM	"I think Customer Relations is just one of a few important aspects one organisation needs to consider, after all, every business's ultimate aim is to make a profit. If your org does well in making profit even without a good CRM system, I think that's fine; you must have other attractive qualities that your clients look for. Just that don't forget about customers, don't forget about CRM, although it's suggested that almost every for-profit org should have CRM technologies and culture."
└► Rechad Nazir (Mauritius)	CRN	"Customer satisfaction goes primarily through the frontliners. Look after your employees and they look and after your customers. Focus first and foremost on frontliners give them the best tools, attitudes, knowhow and self esteem to care after your customers."

                       
                        └► Akintunde Isreal (Nigeria)
                        
                      CRM Benefits
                      "Customer relation management enables the organization to capture both financial and non financial data to promote and smoothen the functional biz relationship."

                       
                        └► Toon Van Gastel (The Netherlands)
                        
                      CRM in Banking
                      "I think banks are and always were at the frontier of CRM. Private banking and the use of e.g. Siebel CRM systems are examples. Banks can afford to break the "privacy barrier" in regard to customer knowledge, something that for other commercial organizations might be a big roadblock in the success of CRM (Jill Dyché CRM handbook). However a lot of CRM opportunities are wide open for the bank sector, with a relatively high life time value ratio with their customers, their seem to fail in converting customer knowledge into customer insight and services that derive from that."

                       
                        └► Shiaka Kawa (Sierra Leone)
                        
                      Customer Relations
                      "Customer relationship management  requires basic training particularly for frontline staff.  Aspects of CR must be introduced at secondary schools and tech-vocs.  
In this age of intense globalisation and competition, our staff need to be well prepared in meeting and handling customers"

└► Jan W. Rietdijk (Netherlands)	CRM maturity	"I have developed a model based on a questionaire. It shows the maturity on diverse aspects like motivation, behaviour, management, embedding, direction."
└► Will (Australia)	CRM maturity eval ...	"Hello Jan I think you need to ask a different question. You'd need to evaluate the maturity of the organisation as a customer-centred marketing organisation. Evaluating "crm culture" is akin to evaluation the organisation "publicity culture" -- The kinds of ad they do doesn't really help unless you have the marketing framwork they are using. Good luck, /w."
└► Renjith (India)	Communication	"I think communication is the best way to lead others within an enterprise. The communication will help a manager become a good leader."