CRM and Relationship Marketing
CRM has its roots in relationship marketing.
Relationship marketing is a philosophy and
orientation towards customer retention and CRM
is regarded as the practical implementation of
relationship marketing (Christopher
In other words CRM is technologi
cal infrastructure, both hardware
and software, to manage large
quantity of customer data. But Relationship marke
ting is a way of doing business. So, it is not a
surprising fact that many CRM projects fails to
deliver the return on investment, because of the
inability to understand the business needs. So, CRM is
just an enabler of Relationship marketing.
So we should not assume that more technology leads to a more effective CRM Program (Batterly 2003).
Dark side of Relationship marketing
But there are certain inherent drawbacks
in the concept and its application.
Dissent among loyal customers
Despite the hype about the benefits, Long-term
relationship and preferential treatment to most
profitable customers have many inherent drawb
acks. Company’s preoccupation with its so-called
best customers should not hurt the feelings of
other loyal and revenue generating customers.
(Fourneier, Dobscha and Glen Mick 1998) So,
loyal customers might get punished, when the
company does not declare him/her as valued customer and before his eyes other customers are given privileged treatment.
Company is viewed as enemies and not allies
Consumers typically view companies as enemies,
not allies. So, when the company advances with
a relationship marketing programmes; the custom
ers respond by arming themselves to fight back.
High levels of interaction, familiarity, and experien
ce can foster a belief that they can no longer
objectively evaluate one another (Moorma
n, Zaltman, and Despande (1992)
Souring relationships over time
Partners in long term relationshi
p may develop a “What have you
done for me latterly?” attitude,
which paradoxically makes them more sensitive to
short-term cost and be
nefits (Gruen, T.W..,
J.O. Summers and F. Acito 2000). Also a partner ma
y come to suspect that his/her trust is been
taken advantage of, there by souring their rela
tionship (Grayson and Ambler 1999). A study has
found that breakups between advertising agencies ar
e often driven by clients believing that as the
relationship progresses, the agency is going stale (Doyle et al, 1980). Part VI – Consumer Markets & Marketing
International Marketing Conference on Marketing & Society, 8-10 April, 2007, IIMK 455
Failure of CRM Initiatives
Software vendors such as Oracle, SAP, PeopleSoft, Clarify, SAS, and Siebel are now offering ready to use CRM applications to organizati
ons. (Injazz J. Chen and Karen Popovich 2003).
Many CRM software vendors lure organizations
with promises of omnipotent applications, till
date there is no software available in market
that gives cent percent solutions (Hackney 2000).
CRM technology is expensive, ranging from $500,
000 to $800,000 or more for a system-wide
application. The promise of CRM is appealing,
but in practice it turns out to be perilous and
nearly 55% of CRM initiatives fail, due to lack
of acceptance inside the company (Rigby et al.,
2002). So, relationship marketing and CRM initiativ
es may involve substantial capital investment
with no guarantee of return
Marketing practitioners while embr
acing relationship paradigm have to alter the company culture to be customer-centric. This can be a major ch
allenge because of the long-term supremacy of the
product superiority view strongly advocated over
a period of time. To produce a consistent
customer experience, companies should adopt
a company-wide customer centric culture.
Customer-focused cultures can be fashioned though
considerable investment and time is needed
Still many companies find it difficult to accept...
Please join StudyMode to read the full document