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Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications 381

In addition to reducing costs, supply chain management systems help
increase sales. If a product is not available when a customer wants it, customers
often try to purchase it from someone else. More precise control of the supply
chain enhances the firm’s ability to have the right product available for customer
purchases at the right time.

9.3 CUSTOMER RELATIONSHIP MANAGEMENT
SYSTEMS

You’ve probably heard phrases such as “the customer is always right” or
“the customer comes first.” Today these words ring truer than ever. Because
competitive advantage based on an innovative new product or service is often
very short lived, companies are realizing that their most enduring competi-
tive strength may be their relationships with their customers. Some say that
the basis of competition has switched from who sells the most products and
services to who “owns” the customer, and that customer relationships represent
a firm’s most valuable asset.

WHAT IS CUSTOMER RELATIONSHIP MANAGEMENT?

What kinds of information would you need to build and nurture strong,
long-lasting relationships with customers? You’d want to know exactly who
your customers are, how to contact them, whether they are costly to service
and sell to, what kinds of products and services they are interested in, and how
much money they spend on your company. If you could, you’d want to make
sure you knew each of your customers well, as if you were running a small-
town store. And you’d want to make your good customers feel special.
In a small business operating in a neighborhood, it is possible for business
owners and managers to really know their customers on a personal, face-to-face
basis. But in a large business operating on a metropolitan, regional, national,
or even global basis, it is impossible to “know your customer” in this intimate
way. In these kinds of businesses there are too many customers and too many
different ways that customers interact with the firm (over the Web, the phone,
e-mail, blogs, and in person). It becomes especially difficult to integrate infor-
mation from all theses sources and to deal with the large numbers of customers.
A large business’s processes for sales, service, and marketing tend to be
highly compartmentalized, and these departments do not share much essential
customer information. Some information on a specific customer might be
stored and organized in terms of that person’s account with the company. Other
pieces of information about the same customer might be organized by products
that were purchased. There is no way to consolidate all of this information to
provide a unified view of a customer across the company.
This is where customer relationship management systems help. Customer
relationship management (CRM) systems, which we introduced in Chapter 2,
capture and integrate customer data from all over the organization, consoli-
date the data, analyze the data, and then distribute the results to various sys-
tems and customer touch points across the enterprise. A touch point (also
known as a contact point) is a method of interaction with the customer, such as
telephone, e-mail, customer service desk, conventional mail, Facebook, Twitter,
Web site, wireless device, or retail store. Well-designed CRM systems provide a

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