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334 Chapter 12 • Customer Relationship Management

people, process, and systems, rather than just a narrowly defined IT application. Investments in
CRM technology that are technology driven have not been very profitable. In 2003, Gartner
Group published a report stating that 75 percent of all CRM initiatives fail overall. Another
report from Forrester Research also indicated that CRM spending was more than $13 billion in
2005, with less than half of all purchasers of CRM satisfied that their CRM systems achieved the
business benefits they had expected. “Achieving positive ROI for CRM initiatives has often been
a difficult task,” said Bruce Culbert, cofounder and executive director of BPT Partners. 1
This chapter will provide an overview of CRM systems, their evolution, and the types of
CRM. In addition, it will discuss the customer relationship function and processes, the CRM
technology, and the implementation life cycle of CRM. The chapter will conclude with the impli-
cations of CRM technology on management.

WHAT IS CRM?
When the term customer relationship management is mentioned, it automatically brings to mind
such well-known software vendors as Siebel and Salesforce.com. In fact, CRM is much more than
the software utilized to store, analyze, and manage customer relationships. A true CRM integrates
corporate strategy, business methodology, and technology to accomplish a myriad of goals for
companies that want to operate in a customer-driven environment. For example, Pal Mickey inte-
grates with Disney’s customer-driven strategy by providing real-time interaction with the customer
and being responsive to their needs for quick information. It also solves the problem during peak
loads when Disney employees cannot provide quick and accurate information. CRM as a concept
is as old as business itself. No business can survive without understanding its customers and having
a positive relationship with them. CRM provides support for the front-end customer facing func-
tionality (e.g., marketing, sales, and customer service), which are usually not available in tradition-
al ERP systems. Even though the ERP system focus is more on providing systems support for em-
ployees and business partners of an organization, the CRM system focus is on supporting the
requirements of customers and clients of the organization. As seen in the Disney case, CRM’s role
is to improve the customer experience, thereby increasing revenues of the organization.

CRM Evolution
In the 1980s and through the mid-1990s, companies started using IT to automate customer
processes with discrete customer-centric applications (e.g., sales force automation (SFA) for man-
aging prospects and sales activities, customer center support systems for complaint management,
and marketing automation for advertising campaigns and customer segmentation). In the late
1990s, companies began to take a full 360-degree view of a customer, as shown in Figure 12-1,
and they started integrating these discrete systems into what is now known as CRM.
CRM began in response to a changing market environment as mass marketing gave way to
focused segment marketing and finally to target marketing an individual. Mass marketing
techniques presented one message to a wide and varied base and relied upon the notion that the
more frequently you presented messages to the consumer, the greater odds you have of piquing
the interest of a new or existing customer. As media proliferated and multiplied, mass marketing
proved expensive, and measuring return on advertising dollars was ambiguous at best.

1 RWD Technologies and BPT. (October 7, 2005). Partners Align Forces to Revolutionize Return on Investment in the
CRM Industry. CRM Today. www.crm2day.com/news/printnews.php?id=115828 (accessed November 2005).