Customer Relationship Management (CRM)
What is Customer Relationship Management?
CRM is a term that is often referred to in marketing. However, there is no complete agreement upon a single definition. This is because CRM can be considered from a number of perspectives. In summary, the three perspectives are:
What you cry? What does that mean? Let’s unpack the definition. The key to the definition is long-term mutually valuable relationship. This is based upon a definition of marketing that considers marketing as a mutually satisfying system of exchanges (for example Baker 2002). So CRM is the building and maintenance of long-term customer relationships. The relationship delivers value to customers, and profits to companies. The relationship is supported (but not driven) by cutting edge IT. The business strategy is based upon the recruitment, retention and extension of products, services, solutions or experiences to customers. This is the core of CRM.
Our model is a hybrid of many other commonly cited models from a number of sources. If you are undertaking higher-level academic work you need to clarify with your tutor, the nature of his or her preferred model.
- Information Technology (IT) perspective
- The Customer Life Cycle (CLC) perspective
- Business Strategy perspective
1. CRM from the Information Technology Perspective.
From the technology perspective, companies often buy into software that will help to achieve their business goals. For many, CRM is far more than a new software package, the renaming of traditional customer services, or an IT-based customer management system to support sales people. However, IT is vital since it underpins CRM, and has the payoffs associated with modern technology, such as speed, ease of use, power and memory, and so on. Read more…
2. CRM from the Customer Life Cycle (CLC) Perspective.
The Customer Life Cycle (CLC) has obvious similarities with the Product Life Cycle (PLC). However, CLC focuses upon the creation of and delivery of lifetime value to the customer i.e. looks at the products of services that customers need throughout their lives. It is marketing orientated rather than product orientated. Essentially, CLC is a summary of the key stages in a customer’s relationship with an organisation. Read more…
3. CRM from the Business Strategy Perspective.
The Business Strategy perspective has most in common with many of the lessons and topics contained on this website, and indeed within the field of marketing itself. The diagram below shows the MarketingTeacher Model of CRM and Business Strategy. Our model contains three key phases – customer acquisition, customer retention and customer extention, and three contextual factors – marketing orientation, value creation and innovatove IT. Read more…
A commonly cited definition of CRM is that of CRM (UK) Ltd (2002), as follows:
Customer Relationship Management is the establishment, development, maintenance and optimisation of long-term mutually valuable relationships between consumers and organisations.