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-related data and enabled by information technology.
CRM is a ‘core business strategy’ that aims to ‘create and deliver value to targeted customers at a profit ’. This clearly denotes that CRM is not just about IT. CRM ‘integrates internal processes and functions’. That is, it allows departments within businesses to dissolve the silo walls that separate them. Access to ‘customer-related data’ allows selling,marketing and service functions to be aware of each other’s interactions with customers. Furthermore, back-office functions such as operations and finance can learn from and contribute to customer-related data. Access to customer-related data allows members of a business’s ‘external network’ – suppliers, partners, distributors – to align their efforts with those of the focal company. Underpinning this core business strategy is IT: software applications and hardware. Historically, most companies were located close to the markets they served, and knew their customers intimately. Very often there would be face-to-face, even day-to-day, interaction with customers where knowledge of customer requirements and preferences grew. However, as companies have grown larger they have become more remote from the customers they serve. The remoteness is not only geographic; it may also be cultural. Even some of the most widely admired American companies have not always understood the markets they served. Disney’s development of a theme park near the French capital, Paris, was not an initial success because they failed to deliver to the value expectations of European customers. For example, Disney failed to offer visitors alcoholonsite. Europeans, however, are accustomed to enjoying a glass or two of wine with their food.Geographic and cultural remoteness, together with business owner and management separation from customer contact, means that many,even small, companies do not have the intuitive knowledge and understanding of their customers so often found in micro-businesses, such as neighbourhood stores and hairdressing salons. This has given rise to demand for better customer-related data, a cornerstone of effective CRM. Our definition has a strong for-profit sense. If the not-for-profit community were to replace the words business, customers and profit with 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 approach to management of the customer interface. Most CRM initiatives expect to have impact on the costs-to-serve and revenues streams from customers.The use of technology also changes the customer’s experience of transacting and communicating with a supplier. For that reason, the customer’s perspective on CRM is an important consideration in this book. CRM influences customer experience, and that is of fundamental strategic significance.