CRM - BASICS
Chapter -1 - A Customer Centered /Focused Organization –
Customer Relationship Management (CRM) is a tool that helps an organization to strengthen
relationships with its customers. It enables to identify the needs and expectations of customers and
fulfil them, which results in achieving a high level of customer satisfaction and retention. It is a
multifaceted system used for storing and analyzing information related to customers such as their
name, contact history, needs and preferences and repeat purchases. This information enables
organizations to take sound business decisions.
CRM also refers to a business strategy that enables organizations to better serve the needs of their
customers, improve customer service, achieve a high level of customer satisfaction – thereby
maximize customer loyalty and retention. It encompasses a number of technologies used to streamline
customer interaction which helps in finding, acquiring and retaining customers. The CRM system of
an organization integrates from all data sources to provide a holistic view of each customer in real
time. A few of the popular definitions of CRM are –
Price Waterhouse Cooper (PWC) – “A business strategy that aims to understand /appreciate, manage
and personalize the needs of the organization’s current and potential customers.”
Gartner – A business strategy designed to optimize profitability, revenue and customer retention.
Evolution of CRM –
Concept of CRM came into existence in the1980s. Later in the 1990s, it brought a revolutionary
change in the business environment. Now CRM has become strategic element in all organizational
decisions. CRM has gone through various development stages as detailed under:
Stage I – refers to first generation of CRM in organizations. In this stage, CRM was used as a
functional approach and involved only two aspects, namely Sales Force Automation (SFA) and
Customer Service and Support (CSS). SFA involves presales functions such as maintaining
customer data and generating leads. On the other hand, CSS involves after sales activities such as
customer service, help desks and field service support.
Stage II – refers to the second generation of CRM. In this stage, CRM was used to support front-
office activities and fulfill the requirements of customers.
Stage III – refers to third generation of CRM. In this stage, organizations realized the need of
integrating front-office CRM systems with back-office CRM systems.
Objectives of CRM - Implementing CRM involves high cost and efforts. This is because
organizations need to spend a large amount in purchasing an appropriate CRM system, hiring
consultants and training employees. Therefore – it is essential for an organization to establish clear
CRM objectives prior to its implementation. Main objectives of implementing a CRM system are –
Simplifying marketing and sales processes
Providing better customer service
Acquiring new customers and retaining the existing ones
, Increasing organizational efficiency and productivity
Reducing operational costs.
Benefit of CRM –
Establishing effective communication channels
Gathering information related to customers
Creating detailed profiles of individual customers
Achieving a high level of customer satisfaction.
Tracking new sales opportunities
Increasing market share and profit margins.
Enhancing customer loyalty
Fulfilling customer requirements.
Misunderstandings abut CRM –
CRM is only a database of customers
CRM is only a part of marketing department.
CRM is too technical to learn.
CRM is a promotional tool.
Barriers to CRM Implementation -
Lack of
Guidance
Employee Barriers to CRM Integration
problems Implementation Problem
Inaccurate
Data
Lack of Guidance - refers to a barrier that occurs when CRM objectives are not defined before its
implementation. This may lead to conflicts among the employees of different departments. In
such cases CRM can not be implemented properly. So it is essential to set clear objectives
helping employees to understand the purpose of implementation and taking actions suitably.
Integration Problems – occurs during collaboration of different business processes of an
organization. All the business problems cannot be solved by using a single CRM application. So
an organization needs a customized CRM application to solve its problems. In such a case, it
Chapter -1 - A Customer Centered /Focused Organization –
Customer Relationship Management (CRM) is a tool that helps an organization to strengthen
relationships with its customers. It enables to identify the needs and expectations of customers and
fulfil them, which results in achieving a high level of customer satisfaction and retention. It is a
multifaceted system used for storing and analyzing information related to customers such as their
name, contact history, needs and preferences and repeat purchases. This information enables
organizations to take sound business decisions.
CRM also refers to a business strategy that enables organizations to better serve the needs of their
customers, improve customer service, achieve a high level of customer satisfaction – thereby
maximize customer loyalty and retention. It encompasses a number of technologies used to streamline
customer interaction which helps in finding, acquiring and retaining customers. The CRM system of
an organization integrates from all data sources to provide a holistic view of each customer in real
time. A few of the popular definitions of CRM are –
Price Waterhouse Cooper (PWC) – “A business strategy that aims to understand /appreciate, manage
and personalize the needs of the organization’s current and potential customers.”
Gartner – A business strategy designed to optimize profitability, revenue and customer retention.
Evolution of CRM –
Concept of CRM came into existence in the1980s. Later in the 1990s, it brought a revolutionary
change in the business environment. Now CRM has become strategic element in all organizational
decisions. CRM has gone through various development stages as detailed under:
Stage I – refers to first generation of CRM in organizations. In this stage, CRM was used as a
functional approach and involved only two aspects, namely Sales Force Automation (SFA) and
Customer Service and Support (CSS). SFA involves presales functions such as maintaining
customer data and generating leads. On the other hand, CSS involves after sales activities such as
customer service, help desks and field service support.
Stage II – refers to the second generation of CRM. In this stage, CRM was used to support front-
office activities and fulfill the requirements of customers.
Stage III – refers to third generation of CRM. In this stage, organizations realized the need of
integrating front-office CRM systems with back-office CRM systems.
Objectives of CRM - Implementing CRM involves high cost and efforts. This is because
organizations need to spend a large amount in purchasing an appropriate CRM system, hiring
consultants and training employees. Therefore – it is essential for an organization to establish clear
CRM objectives prior to its implementation. Main objectives of implementing a CRM system are –
Simplifying marketing and sales processes
Providing better customer service
Acquiring new customers and retaining the existing ones
, Increasing organizational efficiency and productivity
Reducing operational costs.
Benefit of CRM –
Establishing effective communication channels
Gathering information related to customers
Creating detailed profiles of individual customers
Achieving a high level of customer satisfaction.
Tracking new sales opportunities
Increasing market share and profit margins.
Enhancing customer loyalty
Fulfilling customer requirements.
Misunderstandings abut CRM –
CRM is only a database of customers
CRM is only a part of marketing department.
CRM is too technical to learn.
CRM is a promotional tool.
Barriers to CRM Implementation -
Lack of
Guidance
Employee Barriers to CRM Integration
problems Implementation Problem
Inaccurate
Data
Lack of Guidance - refers to a barrier that occurs when CRM objectives are not defined before its
implementation. This may lead to conflicts among the employees of different departments. In
such cases CRM can not be implemented properly. So it is essential to set clear objectives
helping employees to understand the purpose of implementation and taking actions suitably.
Integration Problems – occurs during collaboration of different business processes of an
organization. All the business problems cannot be solved by using a single CRM application. So
an organization needs a customized CRM application to solve its problems. In such a case, it
