Crm Value Chain Analysis
The CRM Value Chain
Francis Buttle, PhD, FCIM
Professor of Management MGSM Macquarie University Sydney NSW 2109 Australia Tel: 02 9850 8987 Fax: 02 9850 9019 Email: francis.buttle@mq.edu.au
© Francis Buttle Not to be reproduced in whole or in part without permission
1
The meaning of those three letters, CRM, is hotly contested. For some, CRM is simply a bridge between marketing and IT: CRM is therefore an IT-enabled sales and service function. For others it’s little more than precisely targeted 1to-1 communications. But both of these views deny CRM its great potential contribution. Because CRM, at its most advanced, answers questions like ‘who should we serve?’ and ‘what should we serve to them?’ and ‘how should we serve them?’ it could, and often should, be positioned as the fundamental strategic process around which the business is organised. CRM decisions impact on marketing, certainly, but also on operations, sales, customer service, HR, R&D and finance, as well as IT. CRM is fundamentally cross-functional, customerfocussed business strategy. The CRM value chain The CRM value chain (figure 1) is a proven model which businesses can follow when developing and implementing their CRM strategies. It has been five years in development and has been piloted in a number of business-tobusiness and business-to-consumer settings, with both large companies and SMEs: IT, software, telecoms, financial services, retail, media, manufacturing, and construction. The model is grounded on strong theoretical principles and the practical requirements of business. The ultimate purpose of the CRM value chain process is to ensure that the company builds long-term mutually-beneficial relationships with its strategically-significant customers. Not all customers are strategically significant. Indeed some customers are simply too expensive to acquire and service. They buy little and infrequently; they pay late or default; they make extraordinary demands on customer service and
Francis Buttle, PhD, FCIM
Professor of Management MGSM Macquarie University Sydney NSW 2109 Australia Tel: 02 9850 8987 Fax: 02 9850 9019 Email: francis.buttle@mq.edu.au
© Francis Buttle Not to be reproduced in whole or in part without permission
1
The meaning of those three letters, CRM, is hotly contested. For some, CRM is simply a bridge between marketing and IT: CRM is therefore an IT-enabled sales and service function. For others it’s little more than precisely targeted 1to-1 communications. But both of these views deny CRM its great potential contribution. Because CRM, at its most advanced, answers questions like ‘who should we serve?’ and ‘what should we serve to them?’ and ‘how should we serve them?’ it could, and often should, be positioned as the fundamental strategic process around which the business is organised. CRM decisions impact on marketing, certainly, but also on operations, sales, customer service, HR, R&D and finance, as well as IT. CRM is fundamentally cross-functional, customerfocussed business strategy. The CRM value chain The CRM value chain (figure 1) is a proven model which businesses can follow when developing and implementing their CRM strategies. It has been five years in development and has been piloted in a number of business-tobusiness and business-to-consumer settings, with both large companies and SMEs: IT, software, telecoms, financial services, retail, media, manufacturing, and construction. The model is grounded on strong theoretical principles and the practical requirements of business. The ultimate purpose of the CRM value chain process is to ensure that the company builds long-term mutually-beneficial relationships with its strategically-significant customers. Not all customers are strategically significant. Indeed some customers are simply too expensive to acquire and service. They buy little and infrequently; they pay late or default; they make extraordinary demands on customer service and