Customer relationship management
CHAPTER 1 INTRODUCTION
Bc of the deployment of information and communication technology, orgas become
accessible to large groups of customers - customers get to know firms and other way
round
More loyalty and advantage to competitors
Definition:
From Metagroep: CRM is positioned in the IT corner which makes customer contact
possible between employees and different departments via internet, telephone, face-to-
face; company is engaged in CRM if it ensures that customers are recognized during
contact via the internet or other channels
Other definition: CRM is referred to as a process or sequence of activities, more attention
is paid to the customer and the goal one hopes to achieve vis-a-vis the customer, want to
get to know the customers and develop a relationship rather than just closing a deal ->
get interconnected delivery channels to analyze how customers differ from one another,
customer’s reviews, recommendation for other products, therefore customers feel like
they receive special attention and care as they’re recognized as a customer and respected
Gartner’s group: CRM is IT enabled business strategy, the outcomes of which optimize
profitability, revenue and customers satisfaction by organizing around customer
segments, is more a business strategy than a process - goal is to encourage the customer
to make its future purchases from this store and to reduce the share of purchases being
made from competition
Regis McKenna: CRM targets the building of an infrastructure which may be used to
develop long-term customer supplies relationships, walls between customer and
company are smaller, costumer is a lead user and can easily access confidential
information
As company and customer move closer together, they have to anticipate to each other’s
reaction more directly, have to exercise more open and provide insight into one another’s
affair
Orgas have to work more customer-oriented as people can look into the supplier’s
kitchen and therefore directly know about mistakes, defect, etc. which should be avoided
CRM as a business strategy:
Affects the orga as a whole: marketing, IT, service, logistics, finance, production and
development, HR, management
Have to provide direction to each department that maintains contact with customers
It must build infrastructure
CRM is nowadays more friendlier and efficient as self-service has to be controlled and
defined
CRM’s goal is customer intimacy, building relationship requires both sides to get to know
each other, help, trust and make a commitment for the long term -> both parties are
capable of achieving lasting success in a competitive environment
Orga is also capable of supplying customization and can fulfil the promise of customer
intimacy
,Elements of CRM:
Realization of CRM strategy depends on number of components or competencies like
ability to create an infrastructure, so able to react in ‘real-time’
Following 4 competencies must occur in a step-by-step manner
Customer knowledge
Prospects must be identifiable as well as their profile on what they buy, how they prefer
to communicate
Databases have to be filled with correct and current data which will be transformed into
individual customer info
Infos must help firm to be better in helping customers on time, in more targeted manner
with more appropriate solutions
Relationship strategy
Orgas with a relationship strategy have a longer term success, the tell and listen more
than selling and have broader and deeper interest in the right customer
Purchase only marks the beginning of relationship in which trust and commitment must
grow
Communication
Network of communication channels has to be developed, easy as 24/7 reachable
Companies have to appear online and interact, e.g. when people look for places they
search on the internet and use their phone to communicate with the shop, then face-to-
face talk
The individual value proposition
Orgas take initiative to talk to customers and make individual propositions (Vorschlag)
Physical product, service and price are adapted to the individual circumstances
Interaction must also be on the individual side
Bad thing about customized propositions is that companies create a complexity which is
too large, has to combine large-scale aspect with flexibility ,e.g. offer another product,
but has to act above their competitor
CRM processes and systems:
System must be able to implement a relationship strategy, a dialogue to be conducted
and customization to be supplied
IT can only be left out when relationships are maintained with small number of
customers, orga is small and manageable and customer has enough value
‘legacy’ problem is when PC systems aren’t updated and system has been designed to
focus on other things
not easy to identify people when not sure who in a household bought products
systems for CRM are Internet, call centre and sales information systems for account
manager and sales personnel -> are independent of each other
dialogue will only work if front office is linked to back office - if not then a middellayer is
important which consists of several data warehouses
,Entrance, applications and success of CRM:
during Industrial Revolution, distance between customer and company grew as they build
bigger companies, only a few small shops existed like bakery etc.
customer-supplier relationships began in late 1980’s and early 1990’s as relationship
marketing became more famous as an analysis proved it remains long term but was too
expensive for some orgas
also time of bad economy which made people not being willing to spend money or trust
this type of strategy
Conclusion:
end of 1990sm CRM developed
IT systems enable orgas to interact with large groups of customers on an individual basis
and low cost
Orgas can offer customized solutions and develop therefore long term relationship
Improves orga’s operational levels
Nevertheless orgas invest too much in the creation of communication infrastructure an
orchestration of dialogue with aid of IT
CHAPTER 2 CUSTOMER-SUPPLIER RELATIONSHPS
History:
Levitt focuses on the consequences of the feelings of the salesman and buyer during the
purchase and use process
First, focus on salesman not only marketing manager
, Second, objective of transaction is to make the customer happy -> leads to future
purchases
1990 the International Marketing and Purchasing Group designed a model for
relationship marketing in business-to business markets and interaction and networking
between buyers and sellers became the subject of research of this international group
Description of customer-supplier relationships:
General
(Primary) relationship = 2 people have mutual attraction, respect, consideration,
dependency and like for each other
Secondary relationship = between customer and supplier are short-term interpersonal
relationships with a limited degree of social interaction, clear rules of etiquette and well
defined social roles
Customer-supplier relationships
Primary relationship may be with local shops like bakery
4 classifications to clarify differences between the parties involved in customer-supplier
relationships:
1. From prospect to customer: Whether or not a transaction has already been
completed
2. From customer to client: if long-term orientation is present which extends further
that one transaction
3. From supporter to ambassador: To what degree the relationship is felt by both parties
4. From ambassador to partner: to what degree both parties take an active position in
the relationship
Categories describe to what degree the following are present:
1. Cooperation or competition: competition occurs in relationship if customer plays a
number of suppliers off against one another and chooses the best offer | Cooperation
is present if both work well together to achieve that result which is the best for both
parties
2. Equal or unequal distribution of power: balanced distribution of power is a
characteristic of a close relationship, unequal distribution of power is often seen in
knowledge and skill oriented services where the customer’s fate depends upon the
expertise of the service provider
3. Dependence or independence: involves an aspect of relationships that is inversely to
the balance of power
4. A task or social-emotional orientation: are interaction between both of them task-
oriented or social interaction
5. Formal or informal form of contact
Commitment, fairness, loyalty and trust need to be considered
There are general agreements on the central roles assigned to interactions and
reciprocity etc. in the formation of relationships
Interactions and reciprocity
Reciprocity forms the basis for relationships
