Customer Relationship

Management (CRM)
In 1876 the English novelist, George Eliot, wrote that, “Of
a truth, knowledge is power.” Now, over a century later,
that observation still holds true. Knowledge gives us, as
individuals, the power to grow, to better ourselves, and
to succeed in our endeavours.
In the business world also, knowledge is power. As with
individuals, knowledge is what enables businesses to
grow and to succeed. Contained within every business
is a wealth of knowledge about its policies and
practices, and about the industry that it serves. A
business uses this knowledge to sell and support the
products and services that it offers.

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 What is CRM?
CRM has been defined in a variety of different ways:

• A way to identify, acquire, and retain customers

• A way of automating the front office functions of sales,
marketing, and customer service
• For some vendors, whatever their current product may be,
that is CRM!

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 CRM Perspectives
This diversity of definitions is a result of differences in
perspectives:
• The first is based on a business perspective of increasing
competition that is driving companies to focus on their
customers.
• The second is based on the relatively new phenomenon of
the integration of previously separate applications such as
Sales Force Automation and Customer Service Support
into Enterprise Applications.
• The third is a result of software vendors re-positioning
their information technology products and services under
the CRM umbrella, to take advantage of the fast growth of
the CRM market.

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 CRM Definition
CRM is a technology-enabled business strategy whereby
companies leverage increased customer knowledge to
build profitable relationships, based on optimising value
delivered to and realized from their customers.

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 Business Priorities
In the May 2000 issue of CIO Canada, it was reported that a
study by Andersen Consulting showed that business
leaders' top priorities were:
• attracting new customers (cited by 86 per cent of
respondents)
• enhancing productivity (84 per cent)
• reducing costs (81 per cent)
• improving customer service (77 per cent)
• securing access to new markets (60 per cent)

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 CRM is about creating
value for customers.
• CRM itself is a not a technology, even though technology is required
to enable CRM.
• Technology makes it possible to integrate the large volumes of
customer information that are required for CRM, and to efficiently
transform this information into useful knowledge.
• Technology also enables a company to interact with its customers in
ways that provide value to the customer, as well as make it easier for
the customer to do business with them.
• However, leveraging this customer knowledge to make better business
decisions and to be responsive to customers, remains the responsibility
of individual managers and workers at all levels within the company.

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 Fundamental Concepts
CRM is based on a number of concepts about today's
marketplace:

• Changing Customer Expectations;

• The Nature of the Customer Relationship; and
• The Difference between Loyalty and Captivity

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Changing Customer Expectations
Following a CRM strategy is about evolving a business along a number of
dimensions:
• From being focused on making and selling products to sensing
customer needs and responding with targeted product and service
offerings. This should be reflected in "Knowing your customer" and
"Increasing value-add" components of the strategy.
• From mass marketing (e.g. TV) to marketing to segments of one (e.g.
through personalized Web portals). This should be reflected in a
"Customer interaction" component of the strategy.
• From business-centric interactions designed for the business's
efficiency and convenience to customer-centric interactions designed
for the customer's efficiency and convenience. This is another aspect
of "Customer interaction".

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 Outcome: Increased Customer
Knowledge
A key dimension of customer knowledge is profitability, since the
underlying premise is that the ultimate objective is increased profits.
In addition to customer profitability, other knowledge that is needed
relates to providing increased value to the targeted segments of
profitable and potentially profitable customers:
• what kinds of relationship will add value, e.g. loyalty programs;
• what is the value perception of the customer segments and how can the
value be enhanced by marketing, e.g. Coke and Nike;
• what products and services, and what mode of delivery, have value,
e.g. stock market alerts via a Web-enabled cell phone;
• what were customers' responses to marketing and sales campaigns?

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