Customer Relationship Management

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Making sense of customer relationship
management





Software applications that automate the
marketing, selling and service functions of
the businesses.
Levels of CRM:
◦ Strategic CRM
◦ Operational CRM
◦ Analytical CRM






Winning and keeping profitable customers
Focused on the development of a customer –
centric company
Three other major business orientations:
◦ Product – centric
◦ Production centric
◦ Sales – centric



Focused on:
◦ marketing automation (market segmentation,
campaign management, event – based marketing)
◦ sales force automation (opportunity management,
contact management, proposal generation, product
configuration) and
◦ service automation (contact and call – centre
operations, web – based service, field service)





Exploiting customer data to enhance both
customer and company value
It builds on the foundation of customer
information generated from:





sales data,
financial data,
marketing data,
service data…








CRM
CRM
CRM
CRM
CRM

is database marketing
is a marketing process
is an IT issue
is about loyalty schemes
can be implemented by any company







A relationship is composed of a series of
episodes between dyadic parties over time.
Each episode is composed of a series of
interactions (making a purchase, enquiring a
product, making a sales call…)
Each episode is time bound (have a beginning
and an end) and is nameable.









Busuness relationships are made up of task

and social episodes., whereas
Task episodes are focused on a business side
of the relationship,
Social episodes are not.
Content of each episode is a range of
communicative behaviors such as speech,
actions and body language.



Five general phases through which
relationships can evolve:
1. Awareness (Each party comes to attention of the other as a



2. Exploration (Period of investigation and testing







possible exchange partner)

during

which parties explore each others’ capabilities and performance)

3. Expansion (Interdependence increases because more
transactions take place, and trust begins to develop)
4. Commitment (Increased adaptation and mutually
understood roles and goals)
5. Dissolution



1. Trust



2. Commitment

One party may trust the other’s:
 1. Benevolence: belief that one party
will act in the interests of the other,
 2. Honesty: a belief that the other
party will be credible,
 3. Competence: a belief that the other
party has the necessary expertise.






Trust emerges as parties share experiences, and
interpret and access each other motives. As they
learn more about each other, risk and doubt are
reduced.
When trust exist between parties both are
motivated to make investments in the relationship
which may be tangible (e.g. property) and
intangible (e.g. knowledge).



Calculus-based trust: it is present in early
relationship stages and related to the economic value.



Knowledge-based trust: relies on the individual
parties’ interactive history and knowledge of each other,
allowing each to make predictions about the other.



Identification-based trust: present in latter
stages of the relationship when mutual understanding is
such, that each can act as substitute for the other in
interpersonal interaction.









Arises from trust, shared values and the belief that
parties will be difficult to replace.
When customers have choice, they make
commitments only to trustworthy parties.
Evidence of commitment is found in the investments
that one party makes in the other.
Commitment is essential for successful long-term
relationship, where committed parties believes the
relationship is worth working on, to ensure that it
endures indefinitely.





The fundamental reason why companies want
to build relationships with customers is...
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