Chapter 1

Customer Relationship
Management: an Overview

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Chapter Objectives
§ Reinforce some marketing basic concepts.
§ Define CRM and related concepts and
understand how such concepts are linked to
marketing orientation.
§ Appreciate the importance of CRM.
§ Understand the fundamentals of relationships
and the various types of supplier-customer
relationship.
§ Understand the different types of CRM and CRM
models.
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Basics & Preface
§ The marketing concept.
§ The most fundamental asset is customer
§ The progress of marketing concept.
§ Product, sales, marketing, and societal
marketing.

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Defining CRM
§ CRM: how your business interacts with your
customers.
§ Can be understood as (philosophy, strategy, and
technology).
§ The goal is to convert buyer from being
prospective (MAD) to true partner.
§ Converting relationships with customers from
transactional to integrative.

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Key concepts related to CRM
§ Customer Loyalty.
§ Customer lifetime value (CLV): the profitability
and benefits that can be gained from loyal
customer over extended period of time.
§ Service dominant logic: implies that true
competitiveness can be achieved through
serving markets.
§ Market segmentation & targeting.

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The Importance of CRM
v Develop superior services and products that
meet your customers’ identified needs.
v Enhance marketing towards the most profitable
customers to improve your bottom line.
v Improve efficiency by providing support and
services to customers online.

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v Anticipate future business needs based on data
on historic sale and service trends.
v Increase your customer base as you develop
new ways to engage in business online

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Analyzing the phrase “CRM”
§ The “C” in CRM can have a narrow definition or
a wide one.
§ Customers can include your suppliers, your
partners, your employees “internal customer” and
your investors (financial publics).
§ Each of these “customer groups” has different
needs that have to be managed.
§ The focus will be on markets (consumer & non-
consumer) more particularly on business market.

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§ “R” Relationship: suggests sort of intermittent/
continual interaction between two or more
entities involving interchange over extended
period of time.
§ Conditions of the relationship:
§ Two parties at least- influence.
§ Continuity must present in the interaction- the
influence occurs over extended period
§ The effect of the interaction depends on the
actual events and subjective approach to these
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events
Types of Relationships
§ Primary relationships: long-term relationship-
based on emotional ties / mutual obligations/
commitment, not restricted by rules governing
contact, and the partner can not easily be
replaced by another (social relationships).
§ Secondary relationships: relatively short-term,
less interpersonal, less emotions and social ties,
governed by rules and etiquette, player can be
easily replaced (Customer-supplier relationships in
very early stages).

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Customer-supplier relationship
§ Practically, some relationships (b2b / b2c) are in
transitional area.
§ Initial secondary relationships with your favorite
stores evolve overtime resulting in a kind of
primary relationship.
§ Generally, the more the service the greater the
tendency towards primary relationships.
§ Feeling attracted to and comfortable with
coffeeshop (physical & social environment)

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Supplier-customer Relationship
§ Aspects to define and asses relationships
include: interaction, trust, & commitment.
§ May present at a variety of levels depending on
the following criteria:

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Ø Whether or not the transaction is completed (prospect
to customer).
Ø Whether or not we form long-term orientation (customer
to client).
ØTo what extent the relationship is felt (recognized ) by
both (client-supporter).
Ø To what extent actively seek to further enhance the
relationship (a movement from ambassador to partner).
§ Other aspects to define relationships may include (type
of interaction “cooperation vs. competition,
independence vs. interdependence, task vs. social
orientation of interaction, along with trust, &
commitment.
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Slide 1.14

Figure 1.1 Pyramid of relationships

Peelen, Customer Relationship Management Powerpoints on the web, 2nd edition © Pearson Education Limited 2014
Customer Relationship Management
(CRM) Strategies
§ CRM: identifying and grouping customers to best
acquire, retain, and grow customers.
§ Customer acquisition strategy: plan to obtain
new customers
§ Customer retention strategy: plan designed to
keep customers
§ Growth strategy: plan designed to increase
sales to the same customers

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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
The Nature of B2B Relationships

Transactional § Buyer-seller relationship can adversarial when

either party views the situation from a purely
Relationships economic perspective

Facilitative § Trust and cooperation between buyers and sellers

Relationships is better and can create value for both parties

§ Deepest relationship, where selling firm becomes

Integrative the buyer’s sole source supplier
Relationships § Buyers and sellers trust one another and cooperate
to reduce costs and advance their mutual goals

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Types of CRM
§ Strategic CRM is focused on the development of
a customer-centric business culture.
§ Operational CRM: automating and improving
customer-facing business processes.
§ Analytical CRM: capturing, storing, extracting,
interpreting, and distributing customer-related
data to enhance both customer and company
value.
§ Collaborative CRM: applying technology across
organizational boundaries with a view to
optimizing company, partner and customer value
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CRM models- IDIC Model
§ Four actions to build closer one-to-one
relationships with customers:
Ø Identify who your customers are and build a
deep understanding of them
Ø Differentiate your customers to identify which
customers have most value now and in the
future.

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Ø Interact with customers to ensure that you
understand customer expectations and their
relationships with other suppliers or brands.
Ø Customize the offer and communications to
ensure that the expectations of customers are
met.

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CRM models- Five-process Model
§ Five core processes in CRM:
ü Strategy development process
ü Value creation process
ü Multichannel integration process
ü Performance assessment process
ü Information management process.

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