Customer Relationship Management
Customer Relationship Management (CRM) is a relatively new concept that brings a
focus on customer relationships to the forefront of business operations.
CRM can be defined as
“the combination of marketing efforts, business practices and technology that allows the firm to
understand its customers from multiple perspectives” (Chang & Ku, 2009, p. 329).
technology is useful in managing customer relationships, CRM is not simply a function of the IT
Instead, it is “an enterprise-wide set of practices” (Chen, Yen, Li & Chung, 2009, p.
284) that must be embraced by every department in order to achieve full potential. “CRM takes
advantage of information technology (IT), and gains greater insights into customer needs,
behaviors and expectations by developing and maintaining interactive one-on-one relationships
with them” (Chen, Yen, Li & Chung, 2009, p. 283).
These relationships are vital in today’s
increasingly competitive business world.
“Customers have come to expect that they will be dealt
with in a meaningful and personalized fashion” (Wood, 2009, p. 93).
Organizations that do not
maintain good relationships with their customers run the risk of losing those customers to
The text defines customer relationship management as “systems that are designed to
collect and interpret customer-based data” (Meredith & Shafer, 2007).
Research on the topic
provides nearly identical definitions and descriptions of the term.
Both the text and additional
research stress that CRM is not solely a technology function, but rather “CRM practices take full
advantage of technological innovations that enable the collection of necessary data to determine
the economics of customer acquisition, customer retention and lifetime value” (Chen, et. al.,
2009, p. 285).
Thus, while “there are many technical components of CRM, it is actually a
The text and further research demonstrate that implementation of CRM results in loyal
customers and financial savings. Understanding what customers need can provide a business
with a competitive edge over their competitors.
Additionally, the retention of customers is
important, as “attracting a new customer costs as much as five times more than keeping an
existing one” (Chen, et. al., 2009, p. 286).
Particularly in turbulent economic times, this can
potentially keep a business afloat.
The article, “Customer Relationship Management—A New Method of Targeting the 21
Century Consumers” discusses the emergence of Customer Relationship Management (CRM)
and its importance to the way business is conducted.
The authors define CRM as “a combination
of policies, processes, and strategies implemented by an organization to unify its customer