Customer Relationship

Management
 Definition and Scope of Customer
Relationship Management
• Customer Relationship Management is a
comprehensive approach for creating,
maintaining and expanding customer
relationships.
• Significance of the words used in the definitions:

(a) Comprehensive: CRM does not belong to just

sales or marketing. It is not the sole responsibility
of customer service group or an IT team; i.e. CRM
must be a way of doing business that touches all
the areas.
• (b) Approach: An approach is broadly a way of treating or
dealing with something. CRM is a way of thinking about and
dealing with the customer relationship. We can also use the
word strategy because CRM involves a clear plan. We can
also consider this from a department or area level just as a
larger organization has strategies for shareholder
management, marketing, etc. Each strategy must support
managing customer relationships. Thus CRM is strategic. To
realize this, one can make a list of key strategies, to brief
your area of responsibility. Then write down organizational
approach towards customers. Compare the CRM strategies
with other strategies. They should support each other.

• (c) Customer relationship: In today’s world where we do

business with individuals or groups with whom we may
never meet and hence much less know in person-to-person
sense. CRM is about creating the feel of comfort in this high
tech environment.
Landmarks in the History of CRM:
1960-2010

1960s Mass Production/Mass Product

1970s Mass Market

1980s Total Quality Management

1990s Customer Relationship Management (CRM)

2000s Customer Relationship Management (CRM)

2010s e-Customer Relationship Management (e-CRM)

 Transformation of Customers
o EXAMPLE- A restaurant in London, ‘Just around
the Corner’, does not list any prices on its menu.
Customers pay whatever they think a meal is
worth.
o EXAMPLE- At ‘The Holne Chase Hotel’ in
Ashburton, Devon, England, pedicures, luxury
baths and spa treatments are offered to guests
and their pets.

• This is how the businesses around the world try to

get closer to customers. The first and the
foremost requirement for effective Customer
Relationship Management is Customer
Orientation
• Consider the following story:
• A complaint was received by the Pontiac Division
of General Motors: “This is the second time I have
written to you, and I don’t blame you for not
answering me, because I sounded crazy. But, it is a
fact that we have a tradition in our family of ice
cream for dessert after dinner each night. Because
the kind of ice cream varies, so, every night, after
we have eaten, the whole family votes on which
kind of ice cream we should have, and I drive
down to the store to get it. It is also a fact that I
recently purchased a new Pontiac and, since then,
my trips to the store have created a problem.”
• “You see, every time I buy a vanilla ice cream,
when I start back from the store, my car won’t
start. If I get any other kind of ice cream, the
car starts just fine. I want you to know I am
serious about his question no matter how silly
it sounds: What is there about a Pontiac that
makes it not start when I get vanilla ice cream,
and easy to start whenever I get any other
kind?”
• The Pontiac President was understandably skeptical about the
letter, but sent an engineer to check it out any way.
• The latter was surprised to be greeted by a successful, obviously
well educated man in affine neighborhood. He had arranged to
meet the man just after dinner time, so the two hopped into the
car and drove to the ice cream store.
• It was vanilla ice cream that night, and, sure enough, after they
came back to the car, it wouldn’t start. The engineer returned for
three more nights. The first night, they got chocolate; the car
started. The second night, they got strawberry, the car started.
The third night, they ordered vanilla, the car failed to start.
• Now, the engineer being a logical man, refused to believe that this
man’s car was allergic to vanilla ice cream. He arranged, therefore,
to continue his visits for as long as it took to solve the problem.
• And, towards, this, he began to make notes. He jotted down all
sorts of data: time of day, type of fuel used, time to drive back and
forth, time taken inside the store, etc.; and, in a short time, he had
the answer.
• What does the above story tell? Customer is
always right. Customer is king. Customer
comes first. But, why? How come, today,
every business is so keen on ‘Customer
Relationship’?
• As per a report published by the American Society of
Quality and Arthur Andersen Consulting, Inc., in 1977,
customers tell eight friends about a satisfying
experience and 20 friends for a negative experience; it
is easier to influence existing customers to buy 10%
more than it is to increase the customer base by 10%;
80% of successful new product and service ideas come
from existing customers; and, repeat customers cost
1/5 less than new customers, and can substantially
increase profits.
• These facts make it very compelling on companies to
concentrate their efforts on improving customer
satisfaction, and retaining them. Thus, all types of
business need to focus on successfully developing and
effectively managing long-term relationships with
their customers.
• This is the real import of Customer Relationship
Management - a complete business strategy; a
comprehensive approach to creating, maintaining
and expanding customer relationships. Customer
Relationship Management is about making the
customer the centre of the business and
organizing all processes around him. Thus, we can
conclude that CRM is all about ‘customer
strategies’- “strategies that act as means for
making each customer more valuable to the
company.”
• CRM is not just a technology, but rather a comprehensive
approach to an organization’s philosophy in dealing with its
customers. This includes policies and processes,
front-of-house customer service, employee training,
marketing, systems and information management. Hence, it
is important that any CRM implementation considerations
stretch beyond technology, towards the broader
organizational requirements. The objectives of a CRM
strategy must consider a company’s specific situation and
its customers needs and expectations.
• The data gathered as a part of CRM must consider customer
privacy and data security. Customers want the assurance
that their data is not shared with third parties without their
consent and not accessed illegally by third parties.
Customers also want their data used by companies to
provide a benefit to them. Whether your customers are in
the store, online, or on the phone, they expect to get the
service they need promptly and efficiently. Great service
improves loyalty and grows top-line revenues.