What is Customer Relationship Management?
As Bryan Bergeron said in his book, ‘Essentials of CRM’, Customer Relationship Management (CRM) was born around 1997 as a means of redefining the customer-company relationship through computer-based tools, meaning that every customer-company interaction can be recorded consequently giving a best customer service possible by creating a database of customer preferences.
“CRM is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high-quality customer data and enabled by IT.” (Buttle, 2004) It is a comprehensive and integrated strategy to retain and win customers by exploiting database information in order to create effective values that will enhance consumers’ loyalty as well as competitive edge to win new consumers from the competitors. The strategy must also have objective to create added value to the firm in the form of cost reduction, sales volume increase and thus profit growth.
CRM is an attempt to modify customer behavior over time and strengthen the bond between the customer and the company. “The key to CRM is identifying what creates value for the customer and then delivering it”. (Newell, 2000).
Why do companies implement CRM?
CRM software doesn’t come cheap, “a typical CRM installation costs approximately $500,000 for a midsize company and $3 million or more for large company (Bergeron 2002). The whole software and services will costs $15 million to $30 million annually (Buttle, 2004) So, why do companies want to pay this extra money? How can CRM improve their company?
CRM if developed properly can assist the company to increase the true worth econ ...