Indicator 3.07
Understand the nature of customer
relationship management to show its
contributions to a company.
Vocabulary
• Customer relationship management (CRM)
– Strategies, processes, and policies used by businesses
to build, maintain, and maximize the long-term value
of customer relationships
– Helps businesses to understand and respond to
customers’ changing needs
– Emphasizes positive, meaningful, and long-term
communication and interaction with customers
– Involves the collection of customer information to
draw conclusions about the customer’s needs and
wants as well as predict the customer’s loyalty and
value in the future
Explain goals of customer relationship
management (CRM)
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To maximize the value and effectiveness of all customer touch points
– Touch points: All the opportunities that businesses have to connect with
customers and reinforce their brand value
To provide outstanding service to customers
To maximize customer satisfaction
To attract and retain loyal customers
To cultivate and maintain positive, profitable relationships with customers
To develop individualized relationships with customers
To gather and track information about customers for use in business
decision-making
To understand customers and their needs so that these needs can be
fulfilled in a manner satisfactory to customers and businesses
To develop products that meet or exceed customer expectations
To increase business profit
To develop a competitive advantage
Describe common CRM processes
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Campaign management (usually conducted by the marketing
department)
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Targeting prospective customers
Distributing promotional materials to targeted prospects
Tracking response to promotional materials
Generating leads for sales
Sales management (sometimes divided into lead management,
offer management, and contract management)
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Recording lead information
Qualifying leads
Prioritizing leads
Contacting leads
Making sales
Describe common CRM processes
• Service management
– Providing after-sales services, such as:
• Maintenance and repair services
• Warranties and guarantees
– Retaining customers
• Complaint management
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Receiving customer complaints
Resolving customer problems
Communicating customer complaints to the organization
Retaining customers
Discuss the use of customer
information in customer relationship
management
• By gathering and organizing customer
information, a business can better determine
and fulfill its customers’ needs and wants.
• Customer information is also used to identify
the most profitable, loyal customers. After
identifying these customers, the business may
provide higher, better service to these
customers to maintain their loyalty and
increase their profitability.
Discuss the nature of customer
relationships in today’s society
• Because customers now have so many
different choices in the marketplace, they
have become more selective about whom
they do business with. When given the choice
to do business with one of two businesses
that sell nearly identical products at similar
prices, customers often choose to purchase
from the business that offers better customer
service. As a result, customers’ expectations
for customer service are higher.
Describe the role of customer experience
management (CEM) in customer
relationship management (CRM).
• The business world has become increasingly focused on the
customer versus the product.
• Many businesses have adopted customer-centric attitudes
and strategies.
– Customer-centric strategy: A plan of action used by businesses
that shifts the focus from businesses and their products to
customers and their needs
• An important component of CRM is customer experience
management (CEM).
– Customer experience management (CEM): Strategies,
processes, and policies used by businesses to meet or exceed
customer expectations for service and to provide customers
with outstanding experiences/interactions at every touch point
throughout their business transactions
Explain the impact of organizational
structure on customer relationship
management
• The organization should be structured so that
customers have “seamless,” easy interactions with the
company.
• To ensure that customers have “seamless” interactions
with the company, all customer information must be
available in one location to all employees who require
it (usually using CRM technology).
• Companies with superior customer relationship
management processes are much more likely to be
organized according to customer segment or group.
Discuss the role of corporate culture in
customer relationship management
• For customer relationship management to be
successful, it must be supported by the
corporate culture (i.e., the values, beliefs, and
encouraged behaviors in an organization).
• Senior executives must believe and
demonstrate that building and maintaining
customer relationships is a corporate priority.
Discuss the role of corporate culture in
customer relationship management
• Corporate values must be understood and
embraced by all employees.
• Employee incentives, such as prizes and
bonuses, can help ensure that employees
embrace CRM strategies and processes.
• Also, employees must be given leeway to do
what is necessary to satisfy customers.
Discuss the importance of formulating a
CRM strategy prior to implementing
CRM processes and tools.
• Each company should design a unique CRM strategy that
directly addresses its needs, organization, and customers.
• An important step in developing a CRM strategy is
identifying the objectives/goals of the CRM program (e.g.,
to increase customer retention, to improve product
offerings, etc.).
• Before implementing CRM processes and tools, each
company must determine which members of its
organization will be involved in CRM so that these
individuals can be trained.
• CRM technology and tools should be selected after
determining the company’s CRM strategy, objectives, and
program participants.
Discuss the relationship of customer
relationship management and
business process management.
• Customer relationship management and business process
management work together to satisfy customers.
• Business process management: A type of management that
focuses on the design and improvement of business
processes (including CRM processes) to make them as
efficient and effective as possible; strives to align business
processes with customers’ needs and wants
• Business process management ensures that CRM processes
meet the needs, wants, and expectations of customers,
while CRM processes can gather customer information that
can be used to ensure that business processes are designed
with the end user—the customer—in mind.
Describe the relationship of customer
relationship management and
continuous improvement.
• Continuous improvement: The activity of
regularly updating one’s processes for better
efficiency
• After developing a CRM strategy and
implementing CRM processes, continuous
improvement must occur to ensure that:
– Company values remain in line with the CRM
strategy
– CRM processes remain effective
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Explain ways in which customer
relationship management can
benefit a business
Increased customer satisfaction and loyalty
More customers and customer referrals
Reduced costs
Fewer complaints
Lower employee stress levels
Increased access to customer information (for
use in business decisionmaking)
• Long-term profitability
Vocabulary
• Informed consent
• Integrity
Describe the importance of trust in
customer/business relationships
Discuss loyalty issues in
customer/business relationships
Describe ethical issues related to the
collection of customer information
Explain situations in which
employees/departments involved in customer
relationship management may be reluctant to
share customer information with each other
Discuss ethical issues related to the sale of
customer information to third parties
Discuss the impact of poor/unethical
privacy practices on customer relationships
Vocabulary
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Client intelligence
Cross-selling
Up-selling
Relationship mapping
Personalization
Segmentation
Clustering
Explain the difference between customer
relationship management technology and
customer relationship management
Describe types of customer
relationship management tools
• CRM Applications
• Databases
• Data warehouses
Discuss customer relationship
management software approaches
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Operational
Analytical
Collaborative
Sales force automation
Explain types of data
commonly stored in a CRM system
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Contact data
Demographic data
Transactional data
Relationship data
Discuss the benefits and drawbacks
associated with CRM technology
Explain how CRM technology can be used
to create a “single view” of a customer
Explain the importance of cleansing,
standardizing, and updating data in a CRM
data warehouse