CRM and Marketing

In today’s business world, there are different marketing approaches or strategies that fit to different circumstances. Marketing strategy has a range, where relationship marketing is placed at one end of it and transaction marketing is placed at the other end. In the relationship marketing approach the focus is on building relationships with customers, while in transaction marketing the focus is on creating single transactions with customers.

Companies producing consumer packed goods will probably benefit more from using a transaction marketing approach. This is mostly because they usually do not have direct contact with the customers and therefore there is no need for focusing on the customer relationship. In contrast, service companies almost always have close customer contacts and for that reason have to focus on customer interactions.

Relationship marketing is one of today’s most powerful business marketing techniques. It is an extension of 1 to 1 marketing, where you satisfy each individual customer’s needs and wants. You can make more money, save time, and deliver outstanding customer service. You gain a larger share of each customer’s business, and you benefit from their referrals.  Accountants, real estate agents and brokers, financial companies, and other businesses where building strong customer relationships really make a difference are increasingly using CRM techniques. CRM uses today’s powerful, low-cost technology to help you, work smarter.

To survive in the global market, focusing on the customer is becoming a key factor for companies big and small. It is known that it takes up to five times more money to acquire a new customer than to get an existing customer to make a new purchase. A Second aspect of CRM is that knowing the customer and his / her problem allows to acquire new customers more easily and facilitates targeted cross-selling. 

CRM is based on the based on the basic marketing belief that an organization that knows its customers like individuals. Its components may include data warehouse that store all a company’s information, customer service system, call centres, e-commerce, web marketing, operations system (that handle order entry, invoicing, payments, point of sale, inventory system, etc.) and sales systems (mobile sales communication, appointment making, routine, etc.). In practices, CRM system range from automated customer-contact system to the company- wide pooling of customer information.  The implementation of CRM needs the close cooperation between suppliers of one of the many CRM system on offer, such as Visual Elk, Avenue and Relationship Organizer, and the user. 

CRM system is capital investments that integrate strategy, marketing and IT. As such, they cut across traditional organizational structures and force the integration of activities. Implementing CRM system is no small task. And one that risks doing harm of done badly. There is no doubt that CRM can be major factor in achieving competitive advantages, according to Malcolm McDonald, but get CRM wrong and customers leave, never to return.

CRM builds especially on the principles of relationship marketing; the formal study of which goes back 20 years. CRM builds on the philosophy of relationship marketing. This emphasis on relationships, as opposed to transactions, is redefining how companies are interacting with their customers. Customer relationships have received considerable attention from both academicians and practitioners. The increasing emphasis of relationship marketing is based on the assumptions that building committed customer relationships results in greater satisfaction, loyalty, positive word of mouth, business referrals, references, and publicity. Intense competition for market share in today’s market requires managers to attend to customer retention and the how’ s or whys of a patron returning and continuing to repurchase.

CRM is a highly fragmented environment and has come to mean different things to different people. As the thought and approach to CRM is in the initial stages and not fully matured, one can find different perspectives and definitions of CRM.  CRM is the values and strategies of relationship marketing - with particular emphasis on customer relationships - turned into practical application.  CRM is an enterprise approach to understanding and influencing customer behaviour through meaningful communications in order to improve customer acquisition, customer retention, customer loyalty, and customer profitability.

From another perspective, CRM is a strategic view of how to handle customer relations from a company perspective. The strategy deals with how to establish, develop and increase customer relations from a profitability perspective. Based upon knowledge about the individual customer’s need and potential, the company develops customized strategies describing how different customers should be treated to become long-term profitable customers. The basic philosophy underlying CRM is that the basis of all marketing and management activities should be the establishment of mutually beneficial partnership relationship with customers and other partners in order to become successful and profitable.

In order to more efficiently manage customer relationships, CRM focuses on effectively turning information into intelligent business knowledge. This information can come from anywhere inside or outside the firm and this requires successful integration of multiple databases and technologies such as the Internet, call centres, sales force automation, and data warehouses.  There is no universal explanation of what CRM is, since the area is fairly new and still is developing. It is therefore important to remember that several attempts of defining CRM exist and that many companies adapt the definition to their own business and their unique needs.

CRM is a customer-centric business model that reorients firm operations around customer needs (as opposed to products, resources, or processes) in order to improve customer satisfaction, loyalty, and retention. CRM is the integration of customer focus in marketing, sales, production, logistics and accounting, i.e. in all parts of the company’s operations and structure.

The activities a business performs to identify, qualify, acquire, develop and retain increasingly loyal and profitable customers by delivering the right product or service, to the right customer, through the right channel, at the right time and the right cost. CRM integrates sales, marketing, service, enterprise resource planning and supply-chain management functions through business process automation, technology solutions, and information resources to maximize each customer contact. CRM facilitates relationships among enterprises, their customers, business partners, suppliers, and employees.

For CRM to be successful, all activities in a company need to be managed in combination to reach success.  It must be clear that CRM is not equal to market planning, since they are founded on two different marketing approaches. However, the authors add that although the information in market research is CRM, it is only a small part of the CRM that is needed in order to create profitable customer relationships.

Market planning is based upon the transactional-based point of view with market segmentation as the emphasis. Moreover, market planning still generalize and segment customers according to specific characteristics, but fail to identify individual wants and need as CRM does, i.e. the knowledge about the individual customers.