BGS
Customer Relationship Management
Chapter 2
History and Development of CRM
Thomson Publishing 2007 All Rights Reserved
The Origins of CRM
The Origins of CRM
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Relationship marketing
Marketing research
B2B relationships
MRP, SAP, and ERP
Customer contact centers
Sales force automation
Campaign management tools
Web and channel integration
Diffusion of PCs and analytical CRM
Success of direct response marketing such as
toll-free calling and direct mail
Relational databases
Industrial and services marketing
Relationship Marketing
and Relational Databases
• Database construction is easiest for firms having
frequent and direct customer interaction
– It is most difficult for firms having infrequent and
indirect customer interaction.
– It is of intermediate difficulty for firms having
frequent but indirect customer interaction or direct but
infrequent customer interaction.
Ease or Difficulty of Database
Construction
High
Low
Interaction
Frequency
Customer
Interaction
Direct
Indirect
Level Of Difficulty
Easy
Industry
Banks, Retailers
Intermediate
Package Goods
Companies
Level Of Difficulty
Intermediate
Difficult
Industry
PC Store
Auto, Furniture
Manufacturers
CRM: Why Now?
• Advancements in computer and information
technology
• Substantial changes in the business environment
Changes in the Business Environment
Leading to Adoption of CRM
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Increasing number of high-quality products
Erosion of effectiveness of the traditional 4 P’s
Changes in the pace of life
The Internet and multichannel usage
Organizations’ Expectations
Regarding CRM
Success or Failure?????
Quantitative Benefits of CRM Using
Revenue Enhancement Metrics
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Acquisition/prospect increase
Expense per convert decrease
Renewal rate increase
Cross-sell/up-sell increase
Share of wallet increase
Service and churn decrease
Campaign cycle time decrease
Campaign conversion increase
Win-back increase
27-45 percent
30-60 percent
5-15 percent
3-25 percent
3-25 percent
30-80 percent
50-70 percent
20-50 percent
25-33 percent
Challenges in Implementing CRM
How the Many Barriers Can Be Overcome
Three Major Ways to Overcome
Barriers in Implementing CRM
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Through Communication
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Through Integration
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Adopt a CRM philosophy
Detail the benefits to all employees
Top executive support
Business strategy should drive CRM
IT and business managers must be integrated
Customer data must be integrated
Through foresight relating CRM tactics to success
factors in the industry
Overcoming Barriers
• The organization must adopt a relationship marketing
philosophy across all functional areas.
• The organization must detail and communicate the
benefits of a CRM orientation to all managers and
staff.
• Top executive support must be obtained and
maintained throughout CRM development.
Overcoming Barriers
• Business strategies must drive CRM development
rather than the other way around.
• If separate “quick-results” CRM projects are being
implemented as opposed to an all-encompassing CRM
suite, then these separate projects must be integrated
and functionally aligned.
• Include both IT and business unit managers in CRM
start-up teams.
Overcoming Barriers
• Customer data must be integrated and maintained.
• Build a business case and conduct a business analysis
before deciding on a CRM solution.
• Develop success metrics to assess the effectiveness of
your CRM efforts.
Developing CRM from a Tactical
Perspective
• A checklist for customer service success
– The importance of the customer contact center
– Put process blueprints in place
• Customer analytics
– Use your databases more effectively
– Segment and identify the value of segments
– Build customer relationships
• Product selection
Extending the Meaning of CRM?
• Should colleges only focus on students? What about
alumni, donors, and legislators?
• Companies do not forget suppliers, distributors,
manufacturers, and facilitating agencies.
• Do not forget VAPs as well as VANs.
• CRM is really PRM.
Can CRM Create 1:1
Relationships that are Truly Viable?
Point
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Consumers are faced with too
many 1:1 relationships.
Companies ask for more and
more info but give little in
return.
Customers not in a company’s
loyalty program feel like
second-class citizens.
Today’s proliferation of
products and catalogues is
mind-boggling.
Counterpoint
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Consumers can opt-in or optout as they see fit.
Not so -- look at supermarkets
and hotels.
Consumers today are savvy
enough to realize there are
different levels of service for
different levels of loyalty.
The former is not really due to
CRM, and CRM should reduce
the number of catalogues.
Questions?