Blog Detail
Introduction
• CRM is an information industry term for methodologies, software and usually Internet
capabilities that help an enterprise manage customer relationships in an organized way.
• CRM is the process of managing all aspects of interaction a company has with its
customers, including prospecting, sales and service. CRM applications attempt to provide
insight into and improve the company/customer relationship by combining all these views of
customer interaction into one picture.
• CRM is an integrated approach to identifying, acquiring and retaining customers. By
enabling organizations to manage and coordinate customer interactions across multiple
channels, departments, lines of business and geographies, CRM helps organizations
maximize the value of every customer interaction and drive superior corporate performance.
• CRM is an integrated information system that is used to plan, schedule and control the
pre-sales and post-sales activities in an organization. CRM embraces all aspects of dealing
with prospects and customers, including the call centre, sales force, marketing, technical
support and field service. The primary goal of CRM is to improve long-term growth and
profitability through a better understanding of customer behaviour. CRM aims to provide
more effective feedback and improved integration to better gauge the return on investment
(ROI) in these areas.
• CRM is a business strategy that maximizes profitability, revenue and customer satisfaction
by organizing around customer segments, fostering behaviour that satisfies customers, and
implementing customer-centric processes.
Type of CRM & Dominant characteristic
Strategic - Strategic CRM is a core customer-centric business strategy that aims at winning
and keeping profitable customers.
Operational - Operational CRM focuses on the automation of customer-facing processes
such as selling, marketing and customer service.
Analytical - Analytical CRM is the process through which organizations transform
customer-related data into actionable insight for either strategic or tactical
purposes.
Diving deep…
STRATEGIC CRM
Strategic CRM is focused upon the development of a customer-centric business culture
dedicated to winning and keeping customers by creating and delivering value better than
competitors. The culture is reflected in leadership behaviours, the design of formal systems
of the company, and the myths and stories that are created within the firm. In a customer-
centric culture you would expect resources to be allocated where they would best enhance
customer value, reward systems to promote employee behaviours that enhance customer
satisfaction and retention, and customer information to be collected, shared and applied
across the business. The heroes of customer-centric businesses deliver outstanding value or
service to customers. Many businesses claim to be customer-centric, customer-led,
customer- focused or customer-oriented but few are. Indeed there can be very few
companies of any size that do not claim that they are on a mission to satisfy customer
requirements profitably. Customer-centricity competes with other business logics. Kotler
identifies three other major business orientations: product, production and selling.
• Product-oriented businesses believe that customers choose products with the best
quality, performance, design or features. These are often highly innovative and
entrepreneurial firms. Many new business start-ups are product-oriented. In these firms it is
common for the customer’s voice to be missing when important marketing, selling or service
decisions are made. Little or no customer research is conducted. Management makes
assumptions about what customers want and/or provides visionary leadership for the
market. Perhaps the most iconic example of product-orientation is Apple. Apple has created
huge demand for products that customers did not know they needed, for example the iPad.
Leading fashion houses tend to be product-oriented and try to establish new fashion trends
rather than respond to consumer research about what should be next year’s look. However,
these are exceptional. Product-oriented companies often over-specify or over-engineer for
the requirements of the market, and therefore are too costly for many customers. The subset
of relatively price-insensitive customers marketers dub ‘innovators’, who are likely to respond
positively to company claims about product excellence, is a relatively small segment,
perhaps 2.5 per cent of the potential market.
• Production-oriented businesses focus on operational excellence. They seek to offer the
customers the best value for money, time and/or effort. Consequently, they strive to keep
operating costs low, and develop standardized offers and routes to market. Complexity,
customization and innovation are very costly and unappealing to production-oriented
businesses. Production-oriented firms rarely are first to market with the best new offer.
They focus their innovation on supply chain optimization and simplification. They tend to serve
customers who want ‘good-enough’, low-priced products and services. Production-oriented
businesses choose not to believe that customers have unique needs or wants. It is possible
to be highly profitable by being the lowest cost business player, for example Wal-Mart. There
is a price and convenience segment in most markets but the majority of customers have
other requirements.
Moreover, an excessive focus on operational efficiency might make you blind to disruptive
changes just over the horizon; making cheap products that no one wants to buy is not a
sustainable strategy.
• Sales-oriented businesses make the assumption that if they invest enough in advertising,
selling, public relations (PR) and sales promotion, customers will be persuaded to buy. Very
often, a sales orientation follows a production orientation. The company produces low-cost
products and then has to promote them heavily to shift inventory – a ‘make and sell’
approach. The deal-maker and persuader is king in such firms. In markets that are growing
rapidly, such an approach can promote strong market share growth and attendant
economies of scale. Many large technology firms have promoted an emphasis on selling.
The risks of this orientation are twofold:
(1) winning large contracts is not the same thing as making money from them and (2) focus
on the immediate sale rarely allows enough slack resources to experiment and innovate to
serve emerging needs and wants not yet articulated by customers.
• A customer or market-oriented company shares a set of beliefs about putting the
customer first. It collects, disseminates and uses customer and competitive information to
develop better-value propositions for customers. A customer-centric firm is a learning firm
that constantly adapts to customer requirements and competitive conditions. There is
evidence that customer-centricity correlates strongly to business performance.
