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348 Chapter 12 • Customer Relationship Management

Summary
•Customer relationship management (CRM) •A CRM system combines a wide variety
systems are an integral part of enterprise of computer and communication technol-
systems for today’s global market where ogy. They can be viewed on a continuum
many organizations are competing for the from call center technology at one end of
same customers, who in turn have easy the spectrum to knowledge management
access to market information with ubiquitous systems at the other. To be successful,
connectivity. CRM provides one-on-one rela- CRM systems should be integrated with
tionships with the consumers to improve ERP and transaction systems, company
their buying experience and to help organiza- database, data warehouse, data mining
tions compete both efficiently and effectively. software, knowledge management, con-
•CRM as a concept is as old as business. No tact management, e-mail, Web, and tele-
business can survive in a competitive envi- phony, among other systems.
ronment without keeping a customer happy. •The major components of the CRM system
The first generation of CRM was manual are market research tools, sales force
and focused on the narrow domain of sales automation software, customer service and
management. With the advent of powerful support tools, and data mining and analytics.
computers and sophisticated data analysis Although several vendors offer comprehen-
techniques, the second generation of CRMs sive off-the-shelf CRM solutions, CRM
provided a holistic view of every customer software seldom works without customiza-
interaction with the organization and tion. Each organization has unique customer
increased the customer contact points with relationship needs, and these must be inte-
multiple media channels. Today, CRMs are grated with the organization’s culture and
integrated with enterprise systems, apply business philosophy.
sophisticated data mining techniques to un- •CRM solutions exist in hosted and installed
derstand and predict customer purchasing environments. In recent years, the increasing
patterns, and provide unique real-time costs of hosting and maintaining CRM has
experiences to consumers based on their forced many companies to opt for a thin-
“context” (i.e., physical location and current client-hosted CRM solution. Such vendors as
needs), as discussed in the Disney case. NetSuite and Salesforce.com have flourished
•A wide variety of CRM systems are available with the recent surge for on-demand CRM
today. They can be categorized by functionali- solutions. Organizations must carefully eval-
ty, business strategy, and implementation pers- uate their CRM needs before deciding on
pectives. They are most popularly categorized which option is best for them.
into operational, analytical, and collaborative •CRM implementation must never focus on
CRMs. a technology solution. CRM solutions must
•The customer relationship process is com- be part of corporate strategy from the
plex and integrates several functional areas of beginning, and they must be part of the
the organization. The process can be divided enterprise system solution. CRMs cannot
into CRM delivery process, CRM support be an afterthought because they are a criti-
process, and CRM analytical process. It is cal piece of software that touches the
not possible to automate the entire value customer and allows the organization to
chain of customer relationship due to its build life-long relationships with the
knowledge intensiveness. Good customer customer. CRMs today allow organizations
relationship management requires integration to distinguish themselves from the competi-
of people, business processes, and technology tion and have a direct impact on the company
to deliver value to the customer. performance.