What Is CRM Really?

Afsheen Chitnis
Member

Posted 21-Mar-2004 07:04 AM
Dear Paul

Please tell me what is CRM really?! ofcourse I want to know your own definition. Wink

Thank u

Afsheen

---

Posted 26-Mar-2004 12:08 AM
My own definition in brief:

Change your customer into a relation.

---

Posted 26-Mar-2004 04:10 AM
Dear Afsheen,

I have been a CRM consultant for more than 14 years now. I have met a lot of different definitions over the years. Some to complicated to be understood. Some so simple to be useful.

Last year I defined it like this. Maybe it will work for you too ...

"In simple terms, CRM is about treating customers well while expending energy only on those who are profitable or potentially profitable!"

(Claus Due, Due & Partners, 2003)

Regards
claus@due.dk

---

Posted 26-Mar-2004 07:08 PM
I have been a CRM Manager for many years handling CRM implementations. For me I will define CRM as
"A Business Strategy, NOT a Technology, Technology is the enabler"

---

Afsheen Chitnis
Member

Posted 26-Mar-2004 10:08 PM
Dear Claus

Now that I know your CRM definition, I want to know your definition about Treating a customer well Wink

Thanks

Afsheen

---

Bob Thompson
Founder, CRMGuru.com
Member

Posted 30-Mar-2004 03:24 PM
CRM, the successful kind, anyway, is a misnomer. In our research the past several years, it's become clear that successful companies don't manage customer relationships any more than you manage the relationship with your spouse.

However, profitable and growing businesses do a good job managing the exchange of value between the enterprise and customer. We know in our personal lives that enduring relationships are full of give and take. Unfortunately, some business executives thought that buying CRM software would be a shortcut to getting (more revenue and profits) without the giving (more value for the money). Value, as customers perceive it, is what drives the loyal repeat-buying behavior we want.

In our extensive study of CRM project ROI and best practices (400+ projects) we found that customer-centric planning—starting the initiative with a clear understanding of how the customer will benefit—was the #1 predictor of success.

My definition? CRM is the management of the value exchange between the enterprise and its customers (including partners and intermediaries) such all parties benefit, leading to long-term loyal behavior along the value chain.

Bob Thompson
Founder, CRMGuru.com

---

Amitabh Srivastav
Member

Posted 01-Apr-2004 12:00 PM
Hi Afsheen

Claus and Bob's definitions are "right on the mark." I would only add the following corollary to the "value chain"—from the organization's perspective, CRM is also about creating a culture and strategy that focuses on retaining valuable (and profitable) customers for long-term competitive advantage; from the client's perspective, CRM is about letting customers define what they feel is valuable in the interaction and thereby developing long-term beneficial (and profitable) relationships.

C. K. Prahalad has co-authored a number of books and articles in the Harvard Business Review and MIT Sloan Management Review that focus on developing customer value, developing a deep understanding customer needs, developing long-term loyalties and relationships for competitive advantage, etc. The article "Co-opting Customer Competence" in the Jan-Feb 2000 HBR is particularly insightful. The article talks about building collaborative relationships and incorporate customer experiences into business models.

Regards,

Amitabh

---

Helmar
Member

Posted 09-Apr-2004 08:25 AM
To me CRM is what happens when you remove all bottlenecks and shortcomings within your organisation, while pursuing a business philosophy that is socially acceptable, responsible and sustainable.. As such my definition of CRM extends way beyond customers or CVM (which I am afraid is the latest buzzword to confuse the hell out of unsuspecting companies).

To me CRM is like love, trust and respect. It's something you benefit from when you work on the periphery rather than aiming for it directly. And as little as you can make someone love, trust and respect you, as little can you get your customers to be loyal to you. This happens when you get a number of factors right, factors that are by and large on the periphery and not in the direct vision of some desperate marketers.

The periphery I have described in detail in my Diamond CRM Model, so have a look.

Claus Due said something about "potentially profitable". The problem with that is that most companies a) don't know who would be potentially profitable, and b) they neither have the resources nor the expertise to find it out.

Furthermore, if I may..., don't forget that all your customer-oriented processes are null and void if your technology lets you down, if you don't have the right people, the right structure and support processes, and most importantly, the possibility to make it all happen without pissing off some short-term thinking investors.

If your company is trading on the stock exchange, chances are that you will never ever do proper CRM, no matter what your definition of it is. You simply cannot do for the customer what you would like to because your organisation's orientation is on making money, not satisfying customers. But that's another story altogether. Smile

—
Helmar Rudolph helps companies succeed with their CRM-related business transformation process by utilising his unique "Diamond CRM" framework.

http://www.helmar.org

---

Graham Hill
Guru
Member

Posted 16-Apr-2004 07:50 AM
Just a thought...

Reading through the responses to Chitnis' question, I can't help but think that we don't challenge accepted CRM wisdom anywhere like enough.

As most financial analysts will tell you, in today's markets, it is very hard to develop a real competitive advantage, let alone maintain it. The closest the vast majority of me-too firms are likely to get is to temporarily create a value advantage. Something that lets them extract incremental value out of their CRM capabilities, but then only for a short period of time until competitors catch up or improve upon it.

Yet we all bang on about CRM as though it was better than sliced bread (me too!). It isn't. It is just another business tool to use to create value for shareholders, stakeholders, whatever your particular bias.

Common sense (and research too!) has shown that unless you are Harley Davidson or Disney, that customers don't want to have anything that resembles a real relationship with your company. If you are a bank or a telco, they probably hate you!

The focus should be on how we use CRM to create value through more productive transactions with customers and how we integrate it with other parts of the business, so that value is not wastefully lost in internal inefficiencies. And how we can show financial markets that our CRM activities create a value advantage. This is the basis of what is now called 'value reporting'.

It's not about managing customer 'relationships', it is about trying to manage transactions over the longer-term. Sadly, often enough that is about not doing stupid things that drive your customers away. You might even say that CRM is just about doing customer-facing business basics better!

It is high time that we put CRM under the microscope and REALLY worked out how to use it to create value. Just chanting the usual CRM mantras is no longer good enough.

Answers on a postcard...

Graham Hill
Independent CRM Consultant

---

Jay Curry
Guru
Member

Posted 23-Apr-2004 05:45 AM
Just to share a compact CRM definition I picked up from a delegate as seminar I gave in Shanghai:

"Make friends, make money!"

Jay Curry
Director, Customer Marketing International
www.customermarketing.com
Founder, www.cmr4sme.com

Jay@customermarketing.com

---

Posted 23-Apr-2004 12:17 PM
... interesting ... Forest and the trees ...

---

Graham Hill
Guru
Member

Posted 26-Apr-2004 05:14 AM
JP

Also interesting; Anglo-Saxon values versus Confucian values. This ties in very closely with some of Hofstede's work on differences in national cultures!

I think the key thing in this discussion is to know what you want to achieve as your ultimate goal. For me, this is creating value from transacting with customers over the shorter and longer term. I am not in business to make real friends, although I may well do so along the way.

This then drives how I go about achieving the goal. For me, this means identifying where the most value in the business system lies, what I need to do to extract that value and then building a robust capability across the entire organisation (and its partners and customers) to do that repeatedly.

In today's business environment, this should mean understanding how customers perceive value and matching delivering value for customers with how that drives value creation for the organisation. This is the basis upon which organisations like Capital One have created enormous value from an over-subscribed business system (credit cards in their case).

I don't expect to create real (emotion-based) relationships with any but the smallest minority of customers. It isn't realistic and it isn't necessary to create value. Doing business basics better is usually all that is required.

On reflection; more a case of Forest AND the Trees. You can have your cake and eat it!

Graham Hill
Independent Management Consultant

---

Jean-Patrick (J.P.)
Member

Posted 27-Apr-2004 07:20 AM
Yes ... I am in total agreement with you Graham and I really share your point of view. Unfortunately ... I find that in a lot of companies that I have worked for, the people making the decisions seem more keen on counting the leaves than working with the hole picture (the forest). For that you also need to take that step back you have mentioned earlier to know what kind of forest I'm getting into and is this the best approach for crossing the forest. What kind of CRM is required for MY business to make those long term relationships. You can use CRM to pick out those leaves fast and easy, at the risk of loosing the forest. And after all ... loose the real cake that is on the other side! Smile

JP

---

strategicM
Member

Posted 29-Apr-2004 05:45 PM
CRM originated in the days when we always had an honest, face-to-face relationship with the customer. Since then, additional communication channels have been added that interfere with this relationship: telephone, mail, internet, et al. Today, CRM is the plan to achieve the original honest, face-to-face relationship with the customer via ALL channels. It's different for each company, but the end result is the same: a happy, engaged, and loyal customer Wink.

---

Graham Hill
Guru
Member

Posted 03-May-2004 12:32 AM
Strategic M

Research by Veronica Liljander into the nature of relationships in a car dealership setting found that only about 5% of customers typically had what one might describe as a real relationship. That is, one based upon an emotional sense of commitment. The rest had transactional relationships based-upon more mundane logical factors. And most of the real relationships were because the customers knew someone in the dealership from outside of the business setting.

And this in an industry charachterised by complex products & services that are hard to verify the quality of; which should place additional emphasis on trust in the individuals or organisation providing them!

"So what?", you say...

Well if a competent dealership with 10-20,000 customers with occasional face-to-face contacts can't develop real relationships with all but a tiny minority of its customers, what chance do most other companies have?

It's not about emulating the myth of the corner shop with a manageable number of customers with real relationships, it's about providing good quality products at reasonable prices to millions of transacting customers. It's first and foremost about about getting business basics right, so that customers are satisfied and have no real reason to go elsewhere.

Happy, engaged and loyal? Well maybe. But I wouldn't spend too much time trying to achieve them. For most companies, they are just expensive dreams.

Graham Hill
Independent CRM Consultant

---

Posted 07-May-2004 12:33 AM
I work for several car dealerships and I am looking for specific ways to introduce CRM. Is there more information from the research by Veronica Liljander that gives clues what the best aproach might be.

---

Posted 07-May-2004 06:36 AM
Can you post more information about where the complete report can be located regarding the automotive dealership research?

---

Graham Hill
Guru
Member

Posted 10-May-2004 01:48 AM
Gert-Jan, Kim

The original research was published in the Journal of Services Marketing in 2002. You can find the article on Veronica Liljander's webpage at the Hanken Svenska Handelshögskolan business school website.

http://www.shh.fi/~liljande/jsm02vlir.pdf

Although the article is from an academic journal, it is still very readable and it is easy to implement her ideas. For example, I am using the relationship types model in current CRM consulting work with a leading Japanese manufacturer in Europe.

There is also a limited amount of other research available in this area, some of it referenced in the article bibliography.

Graham Hill
Independent CRM Consultant

---

Posted 07-Jul-2005 03:34 AM
I have been conducting a research project on the customer care industry and am confused. Hopefully you can help.

Where does CRM start and finish? It seems that CRM is now accepted as a term describing the technology—but there is so much more, right through to customer experiences.

So where is the cut off point. Example, much customer interaction takes place in a retail environment where customer attitudes and decisions are measured—would you class this as part of the CRM process?

Christine

---

Gwynne Young
Managing Editor, CustomerThink
Member

Posted 08-Jul-2005 03:00 PM
[Posted for Paul Greenberg]

Hi Christine,

You are considerably less confused than you might think. When you said, "There is so much more, right through to customer experience," you hit it right on the head. CRM is a name that we gave what is now a customer strategy and an ongoing program that encompasses a business value proposition, process change, technology use and culture change among the elements that it entails. It often can extend to a company's business partners and supply chain.

Collaboration has become necessary, as the customers demand increasing control over their own experiences with the companies they choose to do business with. MY definition for CRM, which I put forth in what was my regular column in CRM Magazine in 2003 is "CRM is a philosophy and a business strategy, supported by a system and a technology, designed to improve human interactions in a business environment."

Funny you should mention retail as where the interactions and their measurements go on. That is absolutely a key part of a CRM strategy. One of my best clients is a retailer who is in the process of mapping out their customers' interactions at their stores—an interaction at a time—and weighing the importance of the interaction to the customer and finding out what the expectation was of that customer at the point of interaction. All of this is to determine what kind of experience the customer has with the company and its value to the customer in a granular way.

That is, in fact, the cutting edge of where CRM is evolving. It's moving from "Just how do you figure out the best products and services to sell to the valued customer?" to "How do you provide the tools to the customer to manage their experience with you as a business?" and "How do you define their individual value as a customer to you over time so that you can both determine what resources to apply and also plan the creation of not just satisfied or loyal customers but also advocates for the business?"

So please don't be confused. You have actually nailed it pretty well, and some of the confusion is probably caused by the fact that CRM is dynamic and constantly undergoing change and evolution as the business universe does. But its foundation is always the same: the customer's relationship to the business and how to improve it.

All the best

Paul

Paul Greenberg
Author: CRM at the Speed of Light: Essential Customer Strategies for the 21st Century, 3rd Edition (McGraw-Hill, 2004)

PGREENBLOG BLOG: www.the56group.typepad.com