11.8 Importance of CRM

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The business environment today is highly competitive, and companies are constantly looking for ways to differentiate themselves from their competitors. CRM is a powerful tool that can help companies achieve this differentiation. By building strong relationships with customers, companies can create a competitive advantage that is difficult for competitors to replicate.

Additionally, the rise of digital technologies has made it easier for customers to access information about products and services and to interact with companies. This has led to an increase in customer expectations, and companies must now work harder to meet these expectations. CRM can help companies understand their customers’ needs and preferences and provide personalized experiences that meet or exceed these expectations.

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The pillars of CRM that have been defined from different perspectives (Zablah et al., 2004):

  1. as a process,
  2. as a strategy,
  3. as a philosophy,
  4. as a capability,
  5. and/or as a technological tool.

Table 11.8.1  below provides a description and representative conceptualization of each of the five major perspectives on CRM. Moreover, the table outlines implications for CRM success (i.e., a firm’s ability to build profitable customer relationships) that become particularly salient when CRM is defined in terms of one of the individual perspectives (Catalán-Matamoros, 2012). These pillars help build strong relationships with customers and companies.

Table 11.9.1: Dominant Perspectives on CRM

Implications for CRM success
Representative conceptualization
Strategy A customer's lifetime value determines the amount and kinds of resources that a firm invests in a particular relationship. CRM success requires that firms continually assess and prioritize customer relationships based on their relative lifetime profitability. [CRM enables companies to] invest in the customers that are (potentially) valuable for the company, but also minimize their investments in nonvaluable customers
Philosophy Customer retention (and hence profitability) is best achieved through a focus on relationship building and maintenance. CRM success requires that firms be customer-centric and driven by an understanding of customers' changing needs. CRM is not a discrete project - it is a business philosophy aimed at achieving customer centricity for the company
Technology Knowledge and interaction management technologies represent the key resources firms need to build long-term, profitable customer relationships. CRM success is primarily driven by the functionality and user acceptance of the technology firms implement in an attempt to build customer knowledge and manage interactions. CRM is the technology used to blend sales, marketing, and service information systems to build partnerships with customers.
Capability Long-term, profitable relationships result only when firms are able to continuously adapt their behaviour towards individual customers. CRM success is contingent upon a firm's possession of a set of tangible and intangible resources that afford it the flexibility to change its behaviour towards individual customers on an ongoing basis. [CRM] means being willing and able to change your behavior toward an individual customer based on what the customer tells you and what else you know about that customer.
Process Buyer and seller relationships develop over time and must evolve to perdure. CRM success is contingent upon a firm's ability to detect and respond to evolving customer needs and preferences. [CRM is concerned with] the creation and leveraging of linkages and relationships with external marketplace entities, especially channels and end users.
Source: Zablah et al., 2004. Reproduced in Advances in Customer Relationship Management (2012).

Advances in customer relationship management (pp. 1-12)” from An overview to customer relationship management by Daniel Catalán-Matamoros is licensed under a Creative Commons Attribution License, except where otherwise noted.


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