Customer Relationship Management

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What is Customer Relationship Management?

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

Courses about Customer Relationship Management. Beginners Course Advanced Course Course for Experts

Forum Forum discussions about Customer Relationship Management. Relationship Between Employee Retention and Customer Relationship Management In my opinion, retention of employees plays an important role in managing relationship with customers. Organizations which have a very high employee turnover rate will typically have a very low custom... 35   4 comments Rethinking Call Centers TRADITIONAL CUSTOMER SERVICE Experiences of callers with help desks and customer service representatives are typically not positive. At the same time, customer service jobs are typically not viewed a... 9   4 comments CRM in University Set Up What kind of CRM tools are universities implementing?... 8   2 comments 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: 1. ... 7   1 comments 🔥 CRM and Project Management: a Perfect Couple? 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If yes, how do they go about it and what's the advantage of using that?... 5   1 comments 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? A customer's issue may have been resolved upo... 4   3 comments 6 Markets Model (Payne, 1995) Hi, can someone explain the 6 markets model which is Internal, Supplier, Referral, Recruitment, Influence and Customer market?... 4   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 really between: - a company's EMPLOYEES and the customers of the firm?... 4   3 comments 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 service providing companies...... 4   1 comments 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 transformati... 4   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 can you move forward to more advanced CRM approaches.... 4   1 comments 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 National Center for Education Statistics (NCES), about 59% of the first-time and ful... 3   1 comments Advanced Customer-Oriented Strategy: Customer Advocacy The development of the Internet has resulted in more powerful consumers than before. The Internet facilitates the gathering of up to date information about products and services before making a purcha... 3   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. You owe me a complimentary room upgrade for this problem for the rest of my sta... 3   1 comments 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 specific desired organizational outcomes. Geersbro and Ritter (2013) defined a six... 3   More CRM Strengths / Benefits CRM also helps to generate additional revenue from the business on a continuous basis without much additional investment.... 2   2 comments 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. You need to pay attention to any diseases. And you must look after all kinds o... 2   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... 1   2 comments 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... 0   3 comments 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?... 0   1 comments Start a new topic about Customer Relationship Management Sign up for free

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.... 24   9 comments 🥈 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 relationship? The answer on this question is not always clear. Nguyen and Mutum... 22   16 comments 🥉 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 be considered. Thank you.... 15   7 comments 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?... 11   9 comments 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 retaining an existing customer. - 80% of a firm's business comes from 20% of the custo... 9   3 comments Customer Intimacy > WHY? Why there should be such an intimacy in the relationship with the Customer today?... 8   5 comments 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... 8   10 comments 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... 6   4 comments 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... 5   6 comments

Expert Tips Advanced insights about Customer Relationship Management. Here you will find professional advices by experts. Consultancy Tips Teaching Tips Practical Implementation Tips Common Reasons for Failure of CRM Initiatives Implementation of CRM Initiatives Based on research, reasons for unsuccessful CRM initiatives are linked to following: - Launching initiatives without an... Key Challenges of a CRM Implementation for Senior Managers Implementing Customer Relationship Management In an article, Behram Hansotia describes following key challenges of a CRM implementation for senior managers: - Ensuri... 3 Types of Customer Services Understanding The Nature of Customer Services According to De Vries, Kasper and Van Helsdingen (2001) three types of customer services can be distinguished: 1. PERSO... The New Consumer and CRM Characteristics of the New Consumer Understanding customers' satisfying behaviors is a constantly changing process that can be understood only with an atten... What are the Main CRM Activities? CRM Strategy, Activities Customer relationship management (CRM) is the business process that provides the structure for how relationships with cu... A Closer Look Into Customer Value Customer Value Analysis, Strategic Marketing, Innovation Strategy 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... The Relationship Between Loyalty and Satisfaction Customer Loyalty, Brand Loyalty, Customer Satisfaction, CRM Of course there is a relationship between Satisfaction and Loyalty. Satisfaction can be seen as consistency between prio... Implementing Customer Equity Management Step-by-step Guide Customer equity can be seen as the lifetime value of a companies’ existing customer base plus the expected future lifeti... Customer Relationship TYPES CRM, Relation Marketing, Branding 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 Implementing CRM Jim Morgan, author of the article “Customer Information Management (CIM): The Key to Successful CRM in Financial Service... How to Build Customer-Centric Organizations Holistic CRM 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... How to Embed CRM Capabilites in CRM Activities? CRM Strategy, CRM Capabilities CRM is a cross-functional organizational process that focuses on establishing, maintaining, and enhancing long-term rela... The Actual Relationship Between Cross-buying and Consumer Loyalty Customer Loyalty, Consumer Loyalty, Cross-Selling, Cross-Buying, Sales Management, Account Management There has been an ongoing discussion as to whether cross-buying (buying goods from various categories) is the consequenc... The Three Stage Model of Service Consumption (Service Encounter) Consumption Behavior, Service Marketing, Strategic Marketing Management According to the three-stage model of service consumption, consumers go through 3 stages of service encounter namely; th... Extreme Customer Trust as a Source of Competitive Advantage Competitive Advantage, CRM, Customer Loyalty, Customer Intimacy Many companies are already highlighting the importance of trustworthiness by setting and sustaining honest prices and pr... Six Steps for Integrating Social Media Into your Organization Social Media Integration, Using Social Media, Social Media for Business 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 Building a Business Case for CRM 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... 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... 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... 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.... 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,... 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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