Documente Academic
Documente Profesional
Documente Cultură
focuses the various competencies of the firm to the ‘voice’ of the customer in order to
deliver long-term superior customer value, at a profit to well identified existing and
building relationships with customers rather than focusing on the units produced and
sold. This essay will examine what defines CRM and the various elements that make
customer (VOC) will be discussed. The role IT plays within enabling and enhancing
CRM processes will be looked at in detail. The pitfalls and risks involved
the right customers’ (European Centre for Consumer Strategies, 2001). CRM
evolved from criticism of transaction based marketing, in that it was only concerned
with the initiation of transactions with customers. From this relationship marketing
management, the need for current and complex customer data was shown to play a
large role and new IT systems was seen as the key to managing this data. From this
CRM evolved, CRM is a further extension of the basic relationship marketing tools
and focuses on creating value for both customer and the supplier.
1
Customers want more than to just purchase from their suppliers. They want a speed
and ease of doing business; they want their suppliers to know what they want and
predictability can then serve as the basis for increased commitment in a relationship’
ultimately leading to higher customer retention. This also is reflected in the balance
not have to recruit as many new customers as before’ (Gummesson 2004). It was
There has been confusion over the years as to what exactly defines CRM, with some
people using the acronym for Customer Relationship Marketing. CRM has also been
organisations maximise the value of every customer interaction and drive superior
2
CRM “is business strategy that maximises profitability, revenue and customer
(Buttle, 2009:15) defines CRM as “the core business strategy that integrates internal
processes and functions, and external networks, to create and deliver value to
(Knox et al, 2003: 1) define CRM as ‘an organisation wide process, which focuses on
treating different customers differently to increase value for both customer and
organisation’
Examining the various definitions on CRM exposes the common components that
define what CRM entails. These common themes include organisation wide process,
the wide spread use of IT within CRM, delivery of value both to the customer and the
organisation, customer life cycle, customer voice. These common themes will be
IT plays a large role within many CRM projects, without IT most large scale CRM
processes would be impossible due to their complex nature. New technologies have
enabled and facilitated firms to develop CRM by identifying, sorting and storing
greater customer information than ever before. There is an assumption that the more
money a company invests in CRM IT projects the better. This is a common mistake
3
by management; building successful relationships should not solely be based upon
firm and customer. There are CRM solutions suitable to all companies that range
from low, to medium, to high-tech. Too much technology can complicate and
2007). ‘Managers should discover what they really should be doing to strengthen
(Rigby et al 2002)
At the heart of any successful CRM initiative lies the concept of value. Customer
elements, the value the customer receives, the value the company receives from its
customers and maximising the lifetime value of desirable customer segments (Knox
et al, 2003:24). Within CRM the value a customer receives can be defined as ‘the
service and the sacrifices made to experience those benefits’ (Buttle, 2009:187)
value. The company must understand the customer and create and deliver a
4
The value the organisation receives from the relationship is a function of the
around five times more to win a new customer than it does to keep an existing one.
Increasing customer retention by 5 per cent represented a net present value profit
increase from 35 per cent to 95 per cent (Knox et al, 2003:26). Maximising the
Research has shown that often companies spend a significant portion of the
al, 2003:26). A company should not necessarily aim to retain all their customers as
some will be more profitable than others. Companies should calculate the customer
life time value of the customer and use CRM processes to enhance the value
proposition to the most profitable customers, while alternatively use CRM to identify
Voice of the customer plays a large role within CRM; if a firm does not listen closely
and take heed of their customer requirements, they will lose existing loyal customers
and struggle to acquire new customers.Many companies believe they have clear
data collection and the lack of VOC tools are estimated by the National Institute of
Standards and Technology (NIST) to cost U.S. corporations nearly $100 billion a
5
A VOC process must be developed to provide information about the customer
experience across the entire life cycle to assure that the most important problems,
issues and requirements are highlighted and acted upon. Ideally, the information
should come from multiple sources - from customers, from employees and some
from internal data systems, like returns and credits. Multiple sources allow for the
biases inherent in all quality data sources. Multiple listening posts, user groups,
surveys, call centre data and other techniques should all be used in a collaborative
way to listen and learn from the voice of the customer (isixsigma.com). CRM
processes enables companies to use VOC to improve and enhance their product or
Research from the Gartner Group suggests that between 50% and 80% of all CRM
projects fail. Building and maintaining close customer relationships is not always
appropriate or practical in every market. Efforts to build these lasting and loyal
customer relations are continuously undercut but competitive and market forces,
loyal and profitable customers of an organisation are seen as attractive prospects for
While CRM can be seen as a silver bullet to fixing all customer related issues it is not
as easy as that. There are many mistake made when adopting a CRM system. The
6
underestimated. Too many managers listen to the hype and believe that CRM will
changing the organisation internally and externally will lead to failure, ‘implementing
a CRM system requires changes throughout the company or it will become yet
another costly system with little positive effect on performance’ (Gummesson 2004).
Wide ranging organisation change is required from the inside out, the entire
corporate culture needs to become customer focused before any other investment
made. A survey found that ‘87% of managers pinned failure of CRM programs on the
In conclusion, CRM has been clearly defined it is a complex subject that requires the
full backing of a company if they wish for their CRM strategy to succeed. CRM must
integrated into every facet of the business and there must be a willingness for the
company to change into a fully customer centric operation. IT plays a large role
within CRM but is not at the heart of CRM, managers must remember that it is
people not processes that build a relationship. Using CRM enhances the firm’s ability
to identify, develop and retain their most valuable customers. The company should
use all the various tool available through CRM to enhance value to the customer and
the value received from the customer. The benefits of having a well implemented
CRM system can outweigh the costs ‘loyal customers become less price sensitive
whose system have failed in the past should learn from their mistakes as ‘companies
do recover from their failures’ (Rigby et al 2002). CRM will be at the heart of most
7
companies that wish to retain and mange successful customer relations into the
future.
8
Bibliography and Reference
Butterworth-Heinemann.
European Centre for customer Strategies (2001) Waiting for the customer
management revolution.
Marketplace, Butterworth-Heinemann.
Rigby et al (2002) “Avoid the Four Perils of CRM”, published in: Harvard Business
Review
John Goodman and Bruce Hayes, A Robust VOC Process to Drive Better Six Sigma
Results, http://www.isixsigma.com/index.php?
option=com_k2&view=item&id=848:&Itemid=192