CRM is the core business strategy that integrates internal processesand functions, and external networks, to create and deliver value totargeted customers at a profit. It is grounded on high quality customer-related data and enabled by information technology.
CRM is a ‘core business strategy’ that aims to ‘create and deliver valueto targeted customers at a profit ’. This clearly denotes that CRM is not just about IT. CRM ‘integrates internal processes and functions’. Thatis, it allows departments within businesses to dissolve the silo wallsthat separate them. Access to ‘customer-related data’ allows selling,marketing and service functions to be aware of each other’s interactionswith customers. Furthermore, back-office functions such as operationsand finance can learn from and contribute to customer-related data.Access to customer-related data allows members of a business’s ‘externalnetwork’ – suppliers, partners, distributors – to align their efforts withthose of the focal company. Underpinning this core business strategy isIT: software applications and hardware.Historically, most companies were located close to the markets theyserved, and knew their customers intimately. Very often there would be face-to-face, even day-to-day, interaction with customers whereknowledge of customer requirements and preferences grew. However, ascompanies have grown larger they have become more remote from thecustomers they serve. The remoteness is not only geographic; it may also be cultural. Even some of the most widely admired American companieshave not always understood the markets they served. Disney’sdevelopment of a theme park near the French capital, Paris, was not aninitial success because they failed to deliver to the value expectations ofEuropean customers. For example, Disney failed to offer visitors alcoholonsite. Europeans, however, are accustomed to enjoying a glass or twoof wine with their food.Geographic and cultural remoteness, together with business ownerand management separation from customer contact, means that many,even small, companies do not have the intuitive knowledge andunderstanding of their customers so often found in micro-businesses, suchas neighbourhood stores and hairdressing salons. This has given rise todemand for better customer-related data, a cornerstone of effective CRM.Our definition has a strong for-profit sense. If the not-for-profitcommunity were to replace the words business, customers and profitwith appropriate equivalents, such as organization, clients and objectives,it would apply equally well in that context.In sum, we take the view that CRM is a technology-enabled approachto management of the customer interface. Most CRM initiatives expect tohave impact on the costs-to-serve and revenues streams from customers.The use of technology also changes the customer’s experience oftransacting and communicating with a supplier. For that reason, thecustomer’s perspective on CRM is an important consideration in this book. CRM influences customer experience, and that is of fundamentalstrategic significance.