Customer Relationship Management: Targeting UK Manufacturing CompaniesLiterature Review Customer Relationship Management (CRM) is a process or methodology used to learn more about customers' needs and behaviors in order to develop stronger relationships with them (ASQ Sigma Forum, 2005). CRM is a cross-functional process for achieving a continuing dialogue with customers, across all their contact and access points, with personalized treatment of the most valuable customers (Jain and Singh, 2002), to increase customer retention and the effectiveness of marketing initiatives. The most salient feature of the above definition is that customer relationship management is treated as an organizational process (Grönroos 1990; Parvatiyar and Sheth 2000).
The objective is increasing the rate of retention and the efficiency of marketing programs in recognition of the profit rewards (Reinartz and Kumar 2000). The intent is to integrate information from diverse sources such as direct sales, telesales, websites, customer service, resellers and channel partners, to arrive at a coherent picture of the customer and to be able to better serve that customer. The one-to-one or personalized marketing approach emphasizes that different customers be treated differently (Peppers and Rogers 1997).
The rationale is that customers vary in their future economic value and that superior returns are realized by allocating resources toward the retention and growth of the most valuable customers. The definition also includes the objective of increasing the rate of retention and the efficiency of marketing programs in recognition of the profit rewards (Kalwani and Narayandas 1995; Reichheld 1996; Reinartz and Kumar 2000; Schmittlein, et al. , 1987). Another ingredient of customer relationship management is trackable, timely and comprehensive information, obtained through an on-going dialogue with each customer (Day and van den Bulte, 2002).
Successful CRM depends on how well the firm elicits and manages the sharing of this information, and then converts it into knowledge that can be used to change how the organization collectively behaves toward the customer. The capability to manage such information is, in principle, facilitated by the availability of data-base management tools, customer information systems, and sales automation software that have come to be identified with CRM in all too many applications. The intent is to better organize customer-relevant data so sales staff can close deals faster, customer service can be streamlined, and communications can be personalized. The organizational configuration provides the context in which the customer information and knowledge flows are embedded, activated and used.
Salient aspects include organizational structure, incentives and rewards, resource commitments, and the activities and processes that enable personalized solutions. The appropriate configuration is firstly a consequence of viewing the customer relating capability as implemented through an organizational process (Srivastava et al 1999). Effective management of this process requires multi-functional teams working together to meet the needs of distinct customer groups.
This is more likely to be achieved when the organization is structured around customer groups, rather than vertical functional hierarchies that impede the sharing of information and alignment of purpose. Competitive Strategy A strategy specifies how a business intends to compete in the markets it chooses to serve. This also provides a central theme for guiding and coordinating core processes and functional activities – and thus gives meaning and direction to the firm’s use of its customer relating capability. The choice of strategy carries through to the allocation of resources and the coordination of functional activities, dictates which capabilities must be distinctive versus merely on par, and prescribes performance metrics and goals.
Our primary interest is whether the management of customer relationships for long-run advantage is the main thrust of the strategy or only a subordinate priority. This, we expect, determines how engaged the key implementers are with CRM and how willing they are to carry it through. Such commitment is based on collective confidence that the strategy is sound and the organization is able to implement it.
This confidence will be undermined by hesitant and intermittent support by the leadership. A second dimension of interest is the motivation or rationale for pursuing a customer relating strategy. If the motivation is defensive, with the intent of imitating or catching up to competitors the objective is limited to avoiding a disadvantage. But if the motivation is primarily offensive, the objective is to offer customers a value proposition the competition can’t equal, and the there is a much better chance that the organization will indeed enjoy a positional advantage.