2010.10.07.

CRM Customer
Relationship Management
Bianka Parragh, Phd

buda University
Keleti Kroly Faculty of Business and Management
Institute of Enterprise Management

Approaches of Customer Relationship

Management
The origins of CRM
The rise of CRM
The role of CRM
Types of CRM

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RE-INVENTING CRM

In the late 1990s and early year of the 21th century, CRM was
offered up as the next wave of marketing. The tools and
techniques that would make traditional marketing obsolete. The
automated approaches that would make customer relationships
automatic and would enable the marketing organization to shell
anything to anyone they chose. CRM was the single solution that
would solve every marketing problem. Simply install the software,
plug in the customer data and sit back and watch the profils roll in.
But it wasnt that simple. It wasnt that easy. And, it simply didnt
work that way. Millions of dollars anp pounds and yen and Euros
were spent on CRM systems, software and structures but, not
enough seemed to come back.

The five important things are about

the books approach to CRM
1.Strategic, not more tactics. CRM is a business decision, made by
business managers to achieve business goals. So, most of all, this
approach to CRM is strategic.
2. Customers, not companies. Paynes approach puts the company
and the customer in perspective. If there is no benefits to the customer,
there can be no benefit to the company. CRM is reciprocal process.
3. Process, not software. The found is something the organization
does, not something the IT group or the marketing department, does or
the customer service group does. Process is the key to CRM.
4.Outcomes, not inputs. The focus in on outcomes. What is
supposed to happen as a result of the implementation of a CRM
approach.
5.Long-term, not short-term, views. Payne describes CRM through
a long-term, brand-building and shareholder value view. It allows the
organization to focus on customers, not just activities or immediate
actions.

2010.10.07.

The Benefits of Customer Relationship Management

(CRM)

1. Better customer service

2. Increased work capacity
3. More success for your company

A strategic framework for CRM

Customer Relationship Management, or CRM, is increasingly
found at the top of corporate agendas. Companies large and
small across variety of sectors are embracing CRM as a major
element of corporate strategy.
CRM, also more recently called customer management, is a
business approach, that seeks to create, develop and enhance
relationships with carefully targeted customers in order to
improve customer value and corporate profitability and thereby
maximize shareholder value.
CRM unites the potential of new technologies and new marketing
thinking to deliver profitable, long-term relationships.
CRM represents a renewed perspective of managing customer
relationships based on relationship marketing principles; the key
differenc being that today these principles are applied in context
of unprecedented technological innovation and market
transformation.

2010.10.07.

The origins of CRM

Transaction Marketing

Relationship Marketing

In the 1950s: Marketing mix 4P

(product, price, promotion, place)
Lead to increased demand for the companys offer.
In the 1990s: The marketplaces was vastly different from that of
the 1950s.
(greater customer choice, convinience existed,
globalization of markets, new sources of competition
innovative business thinking and actions)
Philip Kotler Northwestern University
Integrated approach: managing the competing interest of
customers, staff, shareholders and other stakeholders.

The trasition to relationship marketing

Emphasis on
all market
domains and
customer
relition

Emphasis on
customer
relation

Relationship
marketing

Transactional
Marketing
Functionally
based
marketing

Cross-functionally
based
marketing

2010.10.07.

The key principles of relationship marketing

The three
marketing:

distinguishing

characteristics

of

relationship

An emphasis on retention of profitable customers

Maximizing the lifetime value of a customer is a fundamental goal of
relationship marketing. Loyal customers represent the goodwill earned by
the brand. Loyal customers referring new customers and redicing
acquisition costs.
An emphasis on multiple markets
The model identifies six key groups, or market domains, that contribute
to an organizations effectiveness in the marketplace. They are customer
markets, influencer (including shareholder) markets, recruitment
markets, referrak markets, internal markets, and supplier/alliance
markets.
An emphasis on a cross-functional approach to marketing
To succeed in managing the multiple marketing stakeholders effectively,
marketing must be cross-functional. The concept and the philosophy of
marketing extend across the business enterprise. Everyone within the
business must understand that they perform a role in serving custmers,
be they internal or external customers.

The rise of CRM

The emergence of CRM as a management approach is a
consequence of a number of important trends.
These include:
The shift in business focus from transactional marketing to
relationship marketing.
The realization that customers are a business asset and not simply a
commercial audience.
The transition in structuring organizations, on a strategic basis, from
functions to processes.
The recognition of the benefits of using information proactively rather
than solely reactively.
The greater utilization of technology in managing and maximizing the
value of information.
The acceptance of the need for trade-off between delivering and
extracting customer value.
The development of one-to-one marketing approaches.

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Marketing on the basis of relationships

Marketing on the basis of relationships concetrates
attention on building customer value in order to retain
customers. By building on existing investment, in terms
of product development and customer acquisition costs,
firms can generate potentially higher revenue and profit
at lower cost. Marketing on the basis of transactions, by
contrast, involves greater financial outlay and risk.
The prominence given to customer service encourages
customer contact and customer involvement. As a
result, firms can learn more about customers needs
and build this knowledge into future product and service
delivery.

Viewing customers as a business assets

The relationships with customers can be selectively
managed and further developed to improve customer
retention and profitability.
CRM stresses indentifying the most profitable
customers and building relationships with them that
increase the value of this business asset over time.

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Organizing in terms of processes

Processoriented firms firms retain their functional
excellence in marketing, manufacturing and so on, but
recognize that processes are what deliver value to the
customer as well as to the supplier. A process is
essentially any discret activity, or set of activities, that
adds value to an input. In the modern marketplace,
customers rarely seek an isolated product; they also
want immediate delivery, guaranteed warranty and
ongoing service support.
The product or service offer is has therefore become
multifaceted. Process integration and cross-functional
collaboration are defining strengths of CRM.

From reactive to proactive use of

information
Customer service operations and, in particular, call
centres, often focus mainly on reactive relationship
with customers.
BUT
Experience has shown, however, that carefully
designed proactive customer care initiatives can be
much more effective and rewarding. Proactive
customer support operation do not wait for complaints
to be registered but actively seek to uncover and
remedy customer dissatisfaction.

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Deploying IT to maximize the value of

information
Firms ability to exploit the value of information relies
heavily on the existence of the supportive IT
environment.
IT components of CRM systems:
1. Data repository (that enables the organization to
collect the complete set of information on
customers)
2. Applications (that enable value-adding interactions
with customers, often across different channels in
order to meet their needs.

Balancing the value trade-off

Creating an appropriate balance beetwen the value
delivered to customers and the value received in return
and recognizing how this may need to change for
different customer segments, is an essential element of
CRM.
Optimizing the value trade-off means marrying the
aforementioned principles of relationship marketing
with current marketing trend.

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Developing one-to-one marketing

One-to-one marketing is a form of marketing in wich
dialoge occurs directly between a company and
individual customers or groups of customers with
similar needs. Many B2B organizations with large
customers customers practise one-to-one marketing
through key account management strategies. Smaller
customers may be dealt with in a more impersonal way
through call centre or mail order strategies.
The unique capabilities of the Internet allow marketers
to capture the anonymous behaviour necessary to be
able to answer the question:

What does each customer want?

The role of CRM and varying definitions of CRM

Organizations often view CRM from a limited
perspective or adopt CRM on a fragmented basis.
The lack of clarity about CRM is evident in CRM
terminology.
CRM is an e-commerce application.
Data-driven marketing.
CRM is a business strategy combined with technology
to effectively manage the complete customer life-cycle.
A term for methodologies, technologies and ecommerce capabilities used by companies to manage
customer relationships.
It involves using existing customer information to
improve company profitability and customer service.

2010.10.07.

What is Customer Relationship Management (CRM)?

Customer relationship management (CRM) is a business strategy

that uses technology to implement strategies aimed at helping
companies acquire new customers, sell more to existing customers,
analyze the the effectiveness of marketing activities, and provide
better service to increase customer retention. CRM software
provides greater access to customer information via a centralized
database.

CRM?
The definition of CRM has a signifficant impact on how
CRM is accepted and practised by the entire
organization. CRM is not simply an IT solution to the
problem of getting the right customer base and growing
it. CRM is much more. It involves a profound synthesis
of strategic visions, a corporate understanding of the
nature of customer within multi-channel environment,
the utilization of the appropriate information
management and CRM applications and high quality
operations, fulfilment and service. CRM emphasizes
that managing customer relationships is a complex and
ongoing process and a response to and reflection of a
rapidly changing marketing environment.

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2010.10.07.

Relationship marketing, CRM and customer

managament a hierarchy

Strategic management of
relationships with all relevant
stakeholders
Strategic mamagement of
relationships with customers;
involving appropriate use of
technology
Implementation and tactical
management of customer
interactions

RELATIONSHIP MARKETING

CUSTOMER RELATIONSHIP
MARKETING

CUSTOMER MANAGEMENT

Types of CRM I.
Operational CRM - The automation of business processes
with front-office customer contact points. These areas
include sales automation, marketing automation and
customer service automation. Operational CRM has been a
major area of enterprise expenditure as companies develop
call centres or adopt sales force automation systems.
Analytical CRM This involves the capture, storage,
organization, analysis, interpretation and use of data created
from the operational side of the business.
Collaborative CRM This involves the use of
collaborative services and infrastructure to make interaction
between a company and its multiple channels possible. This
enables interaction between customers, the enterprise and
its employees.

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2010.10.07.

Types of CRM II.

Together, the three components of CRM support and
feed into each other. Succesful CRM, which results in a
superior customer experience, requires integration of all
three of these component parts.
Collaborative CRM enables customers to contact the
enterprise through a range of different channels.
Operational CRM facilitates the customer contacts with
the organization and subsequent processing and
fulfilment of their requirements. Analytical CRM enables
the right customers to be targeted with
appropriateoffers and permits personalization and the
one-to-one marketing to be undertaken throughsuperior
customer knowledge.

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