Customer Relationship Management: Emerging Concepts, Tools and Applications
MANAGING CUSTOMER RELATIONSHIPS
3
CHAPTER 1
MANAGING CUSTOMER RELATIONSHIPS
RUTH N. BOLTON AND CRINA O. TARASI
Abstract The customer relationship management (CRM) literature recognizes the long-run value of potential and current customers. Increased revenues, profits, and shareholder value are the result of marketing activities directed toward developing, maintaining, and enhancing successful company–customer relationships. These activities require an in-depth understanding of the underlying sources of value that the firm both derives from customers, as well as delivers to customers. We built our review from the perspective that customers are the building blocks of a firm. In order to endure long-term success, the role of marketing in a firm is to contribute to building strong market assets, including a valuable customer portfolio. CRM is an integral part of a company’s strategy, and its input should be actively considered in decisions regarding the development of organizational capabilities, the management of value creation, and the allocation of resources. CRM principles provide a strategic and tactical focus for identifying and realizing sources of value for the customer and the firm and can guide five key organizational processes: making strategic choices that foster organizational learning, creating value for customers and the firm, managing sources of value, investing resources across functions, organizational units, and channels, and globally optimizing product and customer portfolios. For each organizational process, we identify some of the challenges facing marketing scientists and practitioners, and develop an extensive research agenda. Companies are increasingly focused on managing customer relationships, the customer asset, or customer equity. Customer relationship management (CRM) explicitly recognizes the long-run value of potential and current customers, and seeks to increase revenues, profits, and shareholder value through targeted marketing
3
CHAPTER 1
MANAGING CUSTOMER RELATIONSHIPS
RUTH N. BOLTON AND CRINA O. TARASI
Abstract The customer relationship management (CRM) literature recognizes the long-run value of potential and current customers. Increased revenues, profits, and shareholder value are the result of marketing activities directed toward developing, maintaining, and enhancing successful company–customer relationships. These activities require an in-depth understanding of the underlying sources of value that the firm both derives from customers, as well as delivers to customers. We built our review from the perspective that customers are the building blocks of a firm. In order to endure long-term success, the role of marketing in a firm is to contribute to building strong market assets, including a valuable customer portfolio. CRM is an integral part of a company’s strategy, and its input should be actively considered in decisions regarding the development of organizational capabilities, the management of value creation, and the allocation of resources. CRM principles provide a strategic and tactical focus for identifying and realizing sources of value for the customer and the firm and can guide five key organizational processes: making strategic choices that foster organizational learning, creating value for customers and the firm, managing sources of value, investing resources across functions, organizational units, and channels, and globally optimizing product and customer portfolios. For each organizational process, we identify some of the challenges facing marketing scientists and practitioners, and develop an extensive research agenda. Companies are increasingly focused on managing customer relationships, the customer asset, or customer equity. Customer relationship management (CRM) explicitly recognizes the long-run value of potential and current customers, and seeks to increase revenues, profits, and shareholder value through targeted marketing