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Customer Relationship Management

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Technology has helped fuel the growth of CRM strategies. The evolution of CRM is moving forward with e - business evolutions. eCRM is the new strategy of customer relationship management in the Internet era. This paper addresses the basics of CRM and what is eCRM, explains the relationship between technology and eCRM and introduces the 4 principles of eCRM.


The growing waves of merger and acquisition in the international business arena, coupled with broader use of e вЂ" technologies, have contributed to increase in the scale of business relationships and also to exponential increase in customer data. It is obvious that who is able to use the data pro вЂ" actively, can make a dramatic difference. To exploit business opportunities, more and more companies are rapidly implementing integrated Customer Relationship Management (CRM) systems to make their business processes more customer вЂ" focused.

CRM is nothing but the evolution of the business processes. Moreover the definition of CRM will evolve and change over time. It will encompass new components with economy development.

Basics of Customer Relationship Management (CRM)

Defining CRM

CRM stands for Customer Relationship Management. It has been defined in a variety of different ways. For some, CRM is a way to identify, acquire, and retain customers. For others, it is a way of automating the front office functions of sales, marketing, and customer service. For some vendors, whatever their current product may be, that is CRM.

This diversity of definitions is a result of differences in perspectives. The first is based on a business perspective of increasing competition that is driving companies to focus on their customers. The second is based on the relatively new phenomenon of the integration of previously separate applications such as Sales Force Automation and Customer Service Support into Enterprise Applications. The third is a result of software vendors repositioning their information technology products and services under the CRM umbrella, to take advantage of the fast growth of the CRM market.

What is CRM? "CRM is a comprehensive approach which provides seamless integration of every area of business that touches the customer вЂ" namely marketing, sales, customer service and field support вЂ" through the integration of people, process and technology, taking advantage of the revolutionary impact of the information technology. CRM creates a mutually beneficial relationship with your customers. It is fundamentally cross-functional, customer вЂ" focused business strategy"(Fulk& Whang, 2000).

CRM is in fact about creating value for customers. (Cash, 1999) CRM itself is not a technology, even though technology is required to enable CRM. Technology makes it possible to integrate the large volumes of customer information that are required for CRM, and to efficiently transform this information into useful knowledge. Technology also enables a company to interact with its customers in ways that provide value to the customer, as well as makes it easier for the customer to do business with them. However, leveraging this customer knowledge to make better business decisions and to be responsive to customers remains the responsibility of individual managers and workers at all levels within the company.

Components of CRM


Customer acquisition SFA (sales вЂ" force automation) and marketing

Customer retention Data warehousing and analytical tools; customer service: call center and contact center

Increasing customer value Marketing automation and campaign management for cross вЂ" selling and up вЂ" selling; data warehousing and analytical tools

(Leon, 2001)

CRM in the Internet Era

Customer relationships become even more important in today's Internet marketplace. The Internet has enabled a dramatic reduction in the cost of transactions and interactions among people and businesses, which in return has created a new set of expectations among customers. (Norris, 2000) Online customers expect shorter sales cycles, personalized information, quicker resolution of service issues, and added value at each stage of the transaction. To maintain positive customer relationships, business needs to meet and exceed these expectations.

CRM, therefore, must be a well вЂ" integrated effort, using the Internet to shorten time and distance across the supply chain and to customers, creating new levels of speed and efficiency in business. Companies that do this successfully will be those that adopt CRM as a philosophy and way of doing business, rather than just as a technology that automates pieces of their business. Within Dell, for example, about 75 percent of order status transactions, and almost 50 percent of sales are enabled by the Web.

Dell is moving these transactions online because customers told us they want faster, more efficient support for routine interactions. Over the phone, these transactions cost between $3 and $10 each, but the Internet lowers the cost to zero in most cases. ( More importantly, the entire process is more efficient for customers and enables Dell to extend cost savings to them, resulting in winners all the way around.

Research shows that a positive customer experience drives more e вЂ" loyalty than traditional attributes like product selection or price, in traditional channels, you can lose customers if they walk into a physical location and are disappointed in the store appearance, have an unsatisfactory experience with a salesperson, or can't find what they want. (Halal, 2000) The Internet environment is no different: You must not only excel in your market but do so in a convenient, helpful, and reliable website.

The ultimate goal is to deepen relationships by adding convenience, efficiency, cost savings, and a wider array of services. Doing business online is about more than processing Web вЂ" based transactions. It is about using the Internet to develop, maintain and manage positive relationships with customers, partners, and suppliers. The result is long вЂ" term relationships, repeat sales, business efficiency, and increased profitability. Companies that put a strategic focus on customers and leverage the capabilities of the Internet to enhance those relationships will survive and thrive in the Internet Marketplace.




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