Customer relationship management: key components for IT success
| Pages | 89-97 |
| Date | 01 March 2002 |
| Published date | 01 March 2002 |
| DOI | https://doi.org/10.1108/02635570210419636 |
| Author | Ranjit Bose |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Customer relationship management: key components
for IT success
Ranjit Bose
Associate Professor of MIS, Anderson School of Management,
University of New Mexico, Albuquerque, New Mexico, USA
What is CRM?
One of the most dynamic information
technology (IT) topics of the new millennium
is the area of customer relationship
management (CRM). At the core, CRM is an
integration of technologies and business
processes used to satisfy the needs of a
customer during any given interaction. More
specifically, CRM involves acquisition,
analysis and use of knowledge about
customers in order to sell more goods or
services and to do it more efficiently. It is
important to note that the term ``customer''
may have a very broad definition that
includes vendors, channel partners or
virtually any group or individual that
requires information from the organization.
In IT terms, CRM means an enterprise-
wide integration of technologies working
together such as data warehouse, Web site,
intranet/extranet, phone support system,
accounting, sales, marketing and production.
CRM has many similarities with enterprise
resource planning (ERP) where ERP can be
considered back-office integration and CRM
as front-office integration. A notable
difference between ERP and CRM is that ERP
can be implemented without CRM. However,
CRM usually requires access to the back-
office data that often happens through an
ERP-type integration.
CRM principally revolves around
marketing (Kotler, 1997) and begins with a
deep analysis of consumer behavior. It uses
IT to gather data, which can then be used to
develop information required to create a
more personal interaction with the customer.
In the long-term, it produces a method of
continuous analysis and refinement in order
to enhance customers' lifetime value with the
firm. Wells et al. (1999) noted, ``both
[marketing and IT] need to work together
with a high level of coordination to produce a
seamless process of interaction''. However, in
order to work effectively with marketing, IT
managers need an understanding of the
fundamental marketing motivations driving
the CRM trend.
CRM marketing
Long ago, businesses were well adapted to
managing customer relationships; the old
mom-and-pop grocery store is a good
example. Customers were greeted by name;
staff knew exactly what each customer
ordered, what things they preferred, and how
likely each customer would pay on time. As a
firm's knowledge of marketing ``advanced'',
the needs of any one customer were lost in
exchange for a more efficient trend known as
amarketing orientation (Pride and Ferrell,
1999). A notable result of the marketing
orientation is what is now coined as customer
segmentation. Segmentation is essentially
aggregating customers into groups with
similar characteristics such as demographic,
geographic or behavioral traits and
marketing to them as a group. Consequently,
each member of the segment has similar
needs and wants; however, they are not
completely uniform. The result was that
customers often received most of what they
wanted but still had to compromise on many
desires.
This method was a cost-effective way to
target groups of customers and proved to be a
strong competitive advantage. However, after
nearly five decades of use, customer
segmentation is no longer the competitive
advantage it once was and is now often
considered a minimum requirement of doing
business. In order to regain the competitive
advantage, leading firms are now ushering in
a new orientation that might be termed a
customer-centric orientation (see Figure 1).
During the 1850s, businesses could sell
almost anything they made. Consequently it
was a seller's market and businesses focused
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[89]
Industrial Management &
Data Systems
102/2 [2002] 89±97
#MCB UP Limited
[ISSN 0263-5577]
[DOI 10.1108/02635570210419636]
Keywords
Customer care, Marketing,
Systems development,
Decision support systems
Abstract
This article is directed towards
information technology (IT) and
marketing managers considering
implementation of a customer
relationship management (CRM)
solution. The goal of this article is
not to provide an all-inclusive
tutorial on CRM, but rather to
provide a high level insight of the
fundamental principles behind
CRM and critical aspects of the IT
development process. The article
begins with an IT manager's
introduction into the basic CRM
business and marketing
principles. At the heart of the
article is a proposed system
development lifecycle that
highlights the aspects unique or
critical to CRM. Finally, it
concludes with some final
thoughts for long-term success.
After reading this article, the
reader will be mindful of the major
issues needed for success and be
equipped to discuss primary
development matters with
vendors, staff and management.
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