Customer Relationship Management (CRM)

Overview of CRM

Burnett (2001) stated that CRM is a “Concept/Management discipline concerned with how organizations can increase retention of their most profitable customers, while reducing cost and increasing the value of interactions, thereby maximizing profits” (p. 253). CRM is very useful since it allows a corporation to have a holistic view of the customer, and the customer to have a holistic view of the corporation, (Burnett, 2001).

To have a more comprehensive view of CRM, it is crucial to understand that it comprises strategic objectives, critical success factors and CRM tools and software as exemplified in Figure 1. The strategic objectives and critical success factors will be elaborated on in the sections that follow.

Figure 1 - A holistic view of CRM, Source: (“Customer Relationship Management,” n.d.).

Objectives of CRM

Burnett (2001) identified five main objectives of a CRM system:

1)      Increased sales revenues

·        A reasonable increase is ten percent /annum/rep during the first three years of the project

2)      Increased win rates

·        A reasonable increase is five percent /annum during the first three years of the project

·        Win rates aid in early withdrawals from bad deals

3)      Increased margins

·        A reasonable increase is one percent/deal during the first three years of the project

                                              i.     Results from knowing your customers better, providing a value-sell and discounting price less

4)      Improved customer satisfaction ratings

·        A reasonable increase of three percent/year during the first three years of the project

                                                i.      Results from the company being more responsive to customer needs

5)      Decreased general sales and marketing administrative costs

·        A reasonable decrease of ten percent/year during the first three years of the project

                                            i.      Results from the target customers being identified, and not wasting much time and money

Critical success factors of CRM

There are numerous success factors that are involved with implementing a CRM system.

Table 1 is a tabularized format of the critical success factors of a CRM system:

Table 1 - Critical success factors of CRM, source: (Burnett, 2001), (p. 259)