Customer Relationship Management definition - part I

Frequently CRM is used interchangeably with terms such as ‘relationship marketing’, ‘customer relationship marketing’, ‘customer management’, among others. One of the first definitions of ‘Relationship Marketing’ back in 1983 was that it was about attracting, maintaining and – in multi-service organizations – enhancing customer relationships.

In the traditional marketing management paradigm (the 4Ps) relationships play a secondary role. In fact, Relationship Marketing represents a move from functionally base marketing to cross-functionally based marketing. Marketing-mix is an internally producer-oriented approach while the second focuses more on developing service value through relationship development. But the challenge lies in putting all this theory in practice.

During the late 1990s industry believed that CRM was going to transform a singlechannel, product-oriented organization into a multi-channel, customer centric organization with the ability to sell to profitable and loyal customers on the back of seamlessly integrated processes and systems. CRM can provide a better management of customer data, faster sales, improve the targeting of marketing programs, but only if the organization is in fact customer oriented.

But what in reality happened between late 1990s until middle of this decade was that numerous software programs were sold, aiming to create higher levels of customer satisfaction and retention. In fact, many organizations adopted CRM as a way of increasing the efficiency of marketing actions, higher cross-selling and upselling, which is nothing more than another version of the sales-driven view of marketing. Even though organizations may be very pleased in knowing more about customers and providing to them more and more features/services, this same enthusiasm is not shared by the customers. Customer satisfaction can often be negatively affected – which is the exact opposite of the goal they expected to achieve with CRM.