IT and Software

The Complexity of Customer Relationship Management (CRM)

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The Complexity of Customer Relationship Management (CRM)

The expression customer relationship management (CRM) has only been in use since the early 1990s. Since then there have been many attempts to define the domain of CRM, a number of scholars, marketers and businesses’ experts but till now nothing in consensus. As a relatively immature business or organizational practice, a consensus has not yet emerged about what counts as CRM. Even the meaning of the three-letter acronym CRM is contested. For example, although most people would understand that CRM= CUSTOMER RELATIONSHIP MANAGEMENT, others have used the acronym to mean: CUSTOMER RELATIONSHIP MARKETING!

The information technology (IT) companies have tended to use the term CRM to describe the software applications that automate the marketing, selling and service functions of businesses. This equates CRM with technology. Although the market for CRM software is now populated with many players, it started in 1993 when Tom Siebel founded Siebel Systems Inc. Use of the term CRM can be traced back to that period. Forrester, the technology research organization, estimates that worldwide spending on CRM technologies will reach US$11 billion per annum by 2010. Others with a managerial rather than technological emphasis claim that CRM is a disciplined approach to: developing and maintaining profitable customer relationships and that technology may or may not have a role.

Some of the differences of opinion can be explained by considering that a number of different types of CRM have been identified:

1-    Strategic: Strategic CRM is a core customer-centric business strategy that aims at winning and keeping profitable customers.

2-    Operational: Operational CRM focuses on the automation of customer-facing processes such as selling, marketing and customer service.

3-    Analytical: Analytical CRM focuses on the intelligent mining of customer-related data for strategic or tactical purposes.

4-    Collaborative: Collaborative CRM applies technology across organizational boundaries with a view to optimizing company, partner and customer value.

Let us see these definitions:

CRM is an information industry term for methodologies, software and usually Internet capabilities that help an enterprise manage customer relationships in an organized way.

CRM is the process of managing all aspects of interaction  a company has with its customers, including prospecting, sales and service. CRM applications  attempt  to provide insight into and improve the company customer relationship by combining all these views of customer interaction into one picture.

CRM is an integrated approach to identifying, acquiring and retaining customers. By enabling organizations  to manage and coordinate customer interactions  across multiple  channels, departments, lines of business and geographies, CRM helps organizations  maximize the value of every customer interaction and drive superior corporate performance.

CRM is an integrated information  system that is used to plan, schedule and control the pre-sales and post-sales activities in an organization. CRM embraces all aspects of dealing with prospects and customers, including the call centre, sales-force, marketing, technical support and field service. The primary goal of CRM is to improve long-term growth and profitability  through a better understanding of customer behavior. CRM aims to provide more effective feedback and improved integration to better gauge the return on investment (ROI) in these areas.

CRM is a business strategy that maximizes profitability,  revenue and customer satisfaction by organizing around customer segments, fostering behavior that satisfies customers and implementing customer- centric processes.

Wow it is so wide! What do you thing? 

Anyway, we know that  the  expression CRM has a variety  of  meanings. Four types of CRM have been identified: strategic, operational, analytical  and collaborative. There are many misunderstandings about CRM. For example, some people wrongly equate  CRM with  loyalty  programmers,  whereas others think  of CRM as an IT issue. Although CRM is generally thought of  as a business practice,  it is also applied in  the  not-for-profit context.  A number  of  different constituencies  have an interest in CRM, including CRM consultancies, CRM software  vendors, CRM application service providers, CRM hardware  and infrastructure vendors, companies that  are implementing CRM and their customers. A number of different models of CRM have been developed.

Finally, we have looked at a different definition that underpins the subject. We can simply define CRM as: The  core business strategy  that  integrates  internal processes and  functions, and external  networks,  to  create and deliver  value to  targeted customers at a profit. It is grounded on high quality   customer-related data  and  enabled  by  information technology.

So, welcome to customer relationship management’s generation (or you prefer marketing?)

NB: For more deails please read  Francis Butte CRM book published 2009.