Critically appraise the success of Customer Relationship Management (CRM) systems. Use client organisations or CRM systems of your own choice to illustrate your answer.
CRM systems is the hottest trend in the business world today. CRM, if done in the right way can be advantageous for the companies. The purpose of this essay is to demonstrate the use and effects of CRM in business-to-business domain. In order to do so, the concept of CRM and its systems will be revised. The issues will then be identified to distinguish whether or not, by implementing customer relationship management systems, companies have been successful.
The concepts of mass production and mass marketing, first created during the Industrial revolution are being replaced by new ideas in which customer relationships are the central business issues. Companies today are concerned with increasing customer value through analysis of the customer lifecycle.
The old model of “design-build-sell” (product oriented view) has been replaced by “ sell-build-redesign” (customer oriented view). (Noori and Salimi,2005, pg. 226)
Customers are demanding different relationships with suppliers than the traditional sales model. Hence new technological advancement such as databases enables businesses to know who the customers are and their purchase behaviour etc. (Xu et al, 2002, pg. 442)
The ability to understand and manage a close relationship with their customers is every business or organisation’s ultimate goal and the challenge. Customer relationship management (CRM) helps deliver customer centric relationships. Companies, wanting to be successful, should use customer’s information appropriately in order to build and maintain the relationship.
The study and practice of customer relationship management (CRM) has experienced tremendous growth over the past decade in business and academic field. Authors like Reichheld and Sasser (1990); Blattberg and Deighton, 1996, Filiatrault and Lapierre 1997, emphasised the importance of customer retention rather than acquisition, businesses are trying to build up long term customer relationship. (Wilson, Daniel & McDonald, 2002, pg. 193)
The popularity of building long term relationship or customer retention has lead to the concept of customer relationship management. Some argue CRM as a synonym for relationship marketing however some argue it is a different concept where information technology (IT) is used in order to implement the strategies of relationship marketing. (Wilson, Daniel & McDonald, 2002, pg. 194)
An overview of CRM:
According to Mckie, 2000, cited in Bull, 2003, pg. 593, CRM is a highly fragmented environment and has come to mean different things to different people. As mentioned above, for some CRM evolved from business processes such as relationship marketing and the increased emphasis is placed upon improved customer retention through the effective management of customer relationships. (Bull, 2003, pg. 593)
The idea of relationship marketing within CRM is fairly strong. The origins of CRM can be traced back to the management concept of relationship marketing with Levitt 1983, being one of the first to propose a systematic approach for the development of buyer-seller relationships. (Gebert, Geib, Kolbe & Brenner, 2003, pg. 3) This is the reason why relationship marketing and CRM are often used interchangeably in the academic community.(Parvatiyar and Sheth, 2001 cited in Payne & Frow, 2005, pg 167)
Another view of CRM is that it is technologically orientated. Sandoe et al cited in Bull, 2003 established that advances in databases technologies such as data warehousing and data mining, are crucial to the functionality and effectiveness of CRM systems. (Bull, 2002, pg. 593). The example being, Fingerhut has four million names of repeat customers, each with up to 1, 000 attributes, stored in a data warehouse that can hold 4.5 trillion bytes (Davenport et al,...
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Noori, B., Salimi, M.H. (2005). “ A decision-support system for business-to-business marketing”. Journal of Business & Industrial Marketing, pp. 226-236
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Rigby, D.K. (2002). “Avoid the Four Perils of CRM”. Harvard Business Review, Feb, pp. 101-109
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Xu, Y., Yen, D.C., Lin, B., Chou, D.C. (2002). “Adapting customer relationship management technology”. Industrial Management & Data Systems, Vol. 102, No. 8, pp 442-452
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