Overview of CRM
CRM refers to a business philosophy and strategy supported by the information technology, formulated to improve the nature of human interactions between businesses and customers. The concept of CRM is a continuous and strategic initiative demanding a dynamic strategy for managing customer relationships. According to Hornstein Associates, CRM refers to the provision of customer care services as a distinct product holding reward while generating a happy set of customers through the retention.
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Customer relationship management (CRM) entails various methods and technological orientations by firms in managing customer relationships. The concept proposes that information related to the existing and potential customers is analyzed properly with a view to providing relevant information for business decision-making. The adoption of automated CRM processes is applied to generate automated personalized marketing based on the information stored in the organization’s database.
The concept of customer relationship management has come a long way in the context of business. Most companies have remained focused on the notion of sustainable CRM with a view of attracting and retaining value customers. The current forms of customer relationship and marketing strategies have continued to evolve from the traditional forms that emphasized the creation of advertisements and other promotional strategies to appeal to the target market.
Today, focus has been placed on the capacities of information technology (IT) to produce value for firms and customers. The modern CRM has seen tremendous growth with the advent of high-tech technology that has consumed the market and the business environment. The need for a more advanced CRM has evolved from the ordinary CRM to yield eCRM.
Although the strategic approach between the two is similar, the notion of eCRM differs largely from the historical CRM. eCRM concerns the inclusion and application of electronic technology that includes database-driven business software, Business intelligence (BI), and web-based systems to the concept of CRM strategies (Anderson & Kerr, 2002).
The significance of Customer Relationship Management to businesses
Relying on the in-depth review of the market studies and orientation, the notions of relationship marketing and IT infrastructure literature propose that the adoption of CRM technology correlates positively with the creation, development, and retention of customer relationship. Since its advent, the concept of CRM has generated numerous advantages to those firms implementing its philosophies (Anderson & Kerr, 2002). The strategic implementation of CRM has inherent benefits accruing to both businesses and customers.
Today, most firms have moved steadfast to embrace the strategic CRM to benefit from its advantages. The significance of CRM cuts across various businesses facets. In this, discussion demonstrates the role of CRM in promoting the values of businesses strategies of increased sales volumes, and the customer share.
Businesses have utilized the principles of CRM to provide strategic expectations of the customers with an aim of identifying, exploring, and using CRM to control the value proposition with an aim of improving customer satisfaction (Anderson & Kerr, 2002). According to numerous studies, CRM has served to justify the role of IS systems in designing approaches that bring value to both customers and organizations.
The CRM systems help firms to properly identify and segment customers before they are incorporated into the customer stratum of the business. The system can be defining in offering a business with a rare opportunity to secure high-end customers as well as middle-end customers that matter to the performance of businesses through increased profitability.
Traditional methods used to attract customers in order to have them as a part of the customer base has continued to demonstrate inefficiencies. To help solve this challenge, CRM promises a cheap and faster way of recognizing customer needs and reacting toward bringing them on board with a view to solve their unresolved needs. On the other hand, CRM serves to provide a user-friendly mechanism for registering customer complaints (Reynolds, 2002).
The significance of CRM systems remains the most critical element that helps organizations to facilitate customer complaints and resolutions. To ensure that firms render their best in respect of offering impartial and differentiated services to its customers, CRM provides a better option for designing mechanisms for proper decision-making for resolving customer problems within the desired time.
Therefore, CRM helps organizations to acquire strategic positions that comply with the principles of Just-in-time (JIT) where customer problems are coordinated and solved quickly (Reynolds, 2002).
Historical evolution of the Concept
The recent advances in technology, evident proliferation of the Internet, and the movement toward the promotion of one-to-one marketing approaches, customer relationship management (CRM) have emerged as a key focus in business marketing (Palmatier, Gopalakrishna, & Houston, 2006).
The concept has ridden on the prediction and belief that: (a) strong customer relationships are imperative facilitators of customer loyalty that lead to the profitability of firms; (b) information technology plays an important role in building strong customer relationships. In addition, CRM technological development continues to expand at a phenomenal rate (D’Atri & Saccà, 2010).
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There has been a growing importance of market orientation, and relationship marketing, especially as an effective business orientation (D’Atri & Saccà, 2010). The rapid explosion of the Internet, e-commerce, and customer-tailored service offering, coupled with increased customer expectation for improved and customized service has generated the need for a customer support system that can address the ever-increasing demands within the mainstream business world (Anderson & Kerr, 2002).
With the rapid development of the Internet, e-commerce and self-service customer support, there are increased expectations from customers for improved, personalized service and immediacy. This has prompted marketing practitioners to use technology to capture and use customer information in order to better meet customer demands (D’Atri & Saccà, 2010).
Studies have found that customer relationships remain one of the most critical components that underpin the success of an organization. Therefore, in the course of provision of services and products, businesses have come to appreciate the superiority of customer relationships to transactional exchange in creating a strong, sustainable, and competitive advantage over their immediate competitors (D’Atri & Saccà, 2010).
The growth of the impacts of globalization and mass customization has led to an increased emphasis on IT in offering relevant applications that support business-to-business and business- to-customer.
Challenges facing the implementation of CRM in businesses
Although the implementation of CRM systems has had far-reaching influence on the performance of businesses, its application continues to face significant challenges. These challenges range from internal and external forces that tend to disorient a firm’s application of CRM with a view of benefiting from its advantages.
Studies indicate that firms that are exceptionally poor in terms of performance have applied strategic CRM within their operations. Further, most researchers have suggested that the inability of CRM to produce the intended value to the business is because businesses that have failed show inconsistency in the process of delivering the projections (Reynolds, 2002).
These results are attributed to factors such as poor or lack of proper customer orientation, improper IT practices, people management, and choice of relevant technologies that conform to the needs of the business. On the other hand, the application of CRM systems has led to a skeptical set of customers holding negative beliefs about the philosophies of the system and that CRM may not stay to assist business to generate and maintain customer relationships as initially thought of by the underlying organization.
Ethical issues in the use of Customer Relationship Management Systems (CRMS)
The use of CRM systems has led to focus on ethical issues due to its application. Therefore, the application of CRM systems have contributed to the growth of issues considered to be great to the performance of the business while relating to the society. The information flow, collection, use and storage have emerged as critical in CRM usage.
Traditionally, the extensive information about the customers was limited compared to the era of CRM. The use of technology in sustaining customer relationships continues to generate varied reactions about security of customer information (Reynolds, 2002).
Technology when put into wrong use has the vulnerability of destroying the objectivity. Thus, organizations implementing CRM must remain vigilant about the confidentiality and security of business information.
The other issue that rages firms that apply CRM is the reduced employment opportunities where organizations cut down on the staff costs through automation of customer care services. Although the application of CRM has served to safeguard firms against increased staff costs, issues of reduced employment opportunities remain rampant (Reynolds, 2002).
Anderson, K, & Kerr, C. (2002). Customer relationship management. New York, NY: McGraw-Hill Professional.
D’Atri, A., & Saccà, D. (2010). Information Systems: People, Organizations, Institutions, and Technologies: ItAIS: The Italian Association for Information Systems. New York, NY: Springer.
Palmatier, R. W, Houston, P. M., & Gopalakrisna, S. (2006). Returns on business-to- business Relationship Marketing Investments: Strategies for Leveraging Profits. Marketing Sciences, 25 (5): 477-493.
Reynolds, J. (2002). A practical guide to CRM: building more profitable customer relationships. Berkeley, CA: Focal Press.