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Chapter 12 • Customer Relationship Management 337

dynamic experiences for the customer depending on his or her current “context” or the customer’s
3
precise physical location, time, and needs, as shown earlier in the Disney case.
Companies that have realized the tactical value of CRM (i.e., reducing costs, improving
process and communication, and managing customers) are discovering that CRM can also yield
4
strategic value for a corporation. According to Montgomery Research, Inc., there is a shift in CRM
focus from cost reduction to building brand loyalty and growth. The information collected and
analyzed in a CRM program can be used to create a unique branded experience for each client. The
theory is, if you can create a unique and meaningful experience for your customer, they will remain
5
loyal to your brand, which will, in turn, increase sales. A study by Gartner Research predicts
double-digit increases, between 9 and 11 percent, in CRM software sales until the next decade.

Types of CRM
Various criteria can be used to categorize CRM systems. From a functionality perspective
there are two types of CRMs: one related to customer service or support and the other to sales
force automation. From a business strategy perspective, CRM systems can be categorized by
three complementary perspectives, as shown in Table 12-1. Finally, from an implementation
perspective, CRM systems can be operational, analytical, and collaborative. 6

OPERATIONAL CRM Operational CRM systems provide front- and back-end support for
sales and marketing, administrative personnel, or customer service processes. They improve

TABLE 12-1 Business Strategy Perspective of CRM 7
Business
•promotes customer-centric approach
•customer segmenting
•one-on-one marketing
•increase customer retention
Technology
•foster close customer relationship
•analyze customer information
•coherent view of customer
Customer
•increased interaction opportunity
•increase customer loyalty
•better “word-of-mouth” advertising

3 Prahalad, C. K., and Ramaswamy, V. (2004). The Future of Competition: Co-Creating Unique Value with Customers.
Cambridge, MA: Harvard Business School Press.
4 The CRM Evolution Continues. (2006). From Relationship Management to Experience Management, Montgomery
Research Inc., San Francisco, CA. www.crmproject.com/documents.asp?d_ID=3780
5 Flinders, K. (September 18, 2006). Gartner Predicts Steady Rise in CRM Market. MicroScope, 6.
6 Shahnam, E. The Customer Relationship Management Ecosystem. Application Delivery Strategies Delta 724.
www.metagroup.com/communities/crm/ads724.htm (accessed November 17, 2003).
7 Teo, T., Devadoss, P., and Pan, S. (2006). Towards a Holistic Perspective of CRM implementation: A Case Study of HDB,
Singapore. Decision Support Systems, 42, 1613–1627.