Reference: HANDBOOK OF CRM: ACHIEVING EXCELLENCE IN CUSTOMER MANAGEMENT (2006) BY ADRIAN PAYNE
Customer relationship management has got the importance in less than a decade as a major topic. The customer relationship management or customer management is not so old topic to study as it came into use in late 1990’s. We can say that the main idea behind CRM is relationship marketing which is mainly based on the mutual values between suppliers and customers, and this relationship marketing started since the start of commerce and business.
However what has changed over the past decade is a series of significant trends that collectively shape the opportunity better to serve customers through INFORMATION-ENABLED RELATIONSHIP MARKETING or CRM.
Varying definitions of CRM:
The deficiency in of clarity about CRM is evident in CRM terminology. CRM is often used as ‘relationship marketing’ (RM), ‘customer relationship marketing’ (CRM), ‘enterprise relationship marketing’ (ERM), technology enabled relationship marketing’ (TERM), ‘customer managed relationships’ (CMR), ‘customer management’ (CM). It is also known to be as an explicit IT solution such as a data warehouse or a precise application such as sales force automation. The definitions of CRM used by various authors and authorities vary greatly. “CRM is a business strategy combined with technology to effectively manage the complete customer life-cycle”. “A term for methodologies, technologies and e-commerce capabilities used by the companies to manage customer relationships”. “CRM is an e-commerce application”. “A comprehensive strategy and process of acquiring and partnering with selective customers to create superior value for the company and the customer.” “CRM can be viewed as an application of one-to-one marketing and relationship marketing, responding to an individual customer based on what the customer tells and what else the business knows about the customer.” “A management approach that enables organizations to identify, attract and increase retention of profitable customers by managing relationships with them”. “Data –driven marketing”.
Fig: A hierarchy of RM, CRM and CM.
A definition of CRM:
Atul Parvatiyar and Jagdish Sheth have given a point that for any up-and-coming discipline of management, there should be an acceptable definition that covers all the aspects of understanding and knowledge because its beneficial for the organization as well as it has to deal with customers according to some defined rules. So, they defined CRM as: “CRM is a strategic approach concerned with creating improved shareholder value through the development of appropriate relationships with key customers and customer segments. CRM unites the potential of IT and relationship marketing strategies to deliver profitable, long-term relationships. Importantly CRM provides enhanced opportunities to use data and information both to understand customers and implement relationship marketing strategies better. This requires a cross-functional integration of people, operations, processes and marketing capabilities that is enabled through information, technology and applications.”
There are a number of factors that have impacted organizations’ ability to build more sustained relationships, especially for those businesses with a large customer base. The main ones include:
• The increasing power of computers.
• The decreasing cost of computers, in real terms.
• The increased storage capacity of computers.
• The significant reduction in the cost of storage of a MB of data.
• The availability of increasingly sophisticated tools to undertake data analysis, data mining and data visualization.
• The rise of…