Though CRM has now become a term commonly used in the business, the usage in terms of the content and the context still seems far from uniform. At one end of the spectrum we could identify with CRM as a philosophy inspired by the acceptance of customer as the “King” while on the other end, one could find a software dealing with customers remotely, being marketed as CRM. Such an incongruity could possibly be seen as a direct endorsement of the ubiquitous nature of CRM to business or one could decide to see this as an attempt to generalize a tool specifically to promote market interest. This article attempts to look at this issue: without being too harsh and adopting any extreme view of this concern, I offer taxonomy of the domain so that these multiple interpretations of CRM are outlined within a convergent and consistent scheme.
CRM or Customer Relationship Management today is one of the most prominent business terminologies. A successful CRM initiative is fast becoming a necessity for firms to remain competitive. Firms have either already adopted some form of CRM or are gearing towards its adoption. Software vendors, IT and strategy consultants, implementers, business analysts, and scores of other entities are trying their best to drive their bottom line by sharing a part of this enthusiasm. It therefore becomes even more important that serious thought is given to the idea of CRM and it’s manifestations in the real world.
Essentially, CRM is a concept that looks at combining all the functions, analytics, and technologies of a firm, to ensure that the customer is the central focus at all times and the value delivered to the customer is maximized. This could be called the ConceptualCRM. The genesis of CRM conceptually, is held in the ideas of customer satisfaction, service value, and building long term customer relationships. Conceptual CRM also includes the philosophical view of adopting customer centric businesses approach. It is hardly a surprise then that academic abstraction of CRM would translate to being an enabler that allows maximum value to be created for a customer by streamlining the joint resources available to the firm and the customer, thus maximizing the bottom line for a firm.
Coming to a lower level of abstraction, at the business strategy level, CRM is a comprehensive strategy that enhances the process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer. One could call this the Strategic CRM. The basis for the strategic CRM lies in the dominant profitability and competitiveness based business paradigm. The strategic CRM also acts as the link between the CRM as a concept and CRM as a tool. CRM consultants can be commonly found to be the prime proponents of this view.
The CRM that one gets to interact with in the market through the software vendors, or the IT consultants is what could be called the Operational CRM. Operational CRM is an operational tool that increases the customer base by acquiring new customers and effectively serving the needs of the existing customers. One could even call this the transactional CRM. The operations that a CRM is expected to perform are varied. Right from tracking transactions, to developing a string of transactions across various dimensions like a customer, a product, a location, etc, and using these strings to generate future trends for markets and business processes. These elements are essentially what the operational CRM deals with.
For the purpose of developing a better understanding of these varied transactions, it is essential to explore the operational CRM more closely. The operational CRM converges the transaction recording, processing, and strategic decision support operations. It needs a three legged structure combining the technical, the functional, and the analytical components of the operations.
The Technical CRM could be seen as the hardware of the CRM. Its objective is to build & maintain the front and back end interface with the customer and the service points. Its basic components are data warehouse (customer, account, and channel and communications data). The generic requirements being flexible interfaces to operational data - data needs will change batch interfaces are usually monthly initially, but event-driven marketing may lead to need for daily or real time interfaces. The issues that face the technical CRM are media independent-integrated end point connectivity, usage rights, and resource point interactions, etc.
The Functional CRM could be seen as the front end manifestation of the interactions that the CRM is expected to enable. Use the CRM to support the marketing function for the customers by acquiring the customers, managing and enhancing the customer spend, retaining the customers. The generic requirements of this component are:
i. Support conventional direct response marketing campaigns and channels (mail, newspapers, TV, radio, inserts, door-drops, statement inserts, etc)
ii. Support event-driven campaign communications
iii. Support use of additional internal channels (such as call center, branch sales force, ATMs, internet, etc)
iv. Provide for capture of campaign budgets and to support financial analyses of campaign effectiveness
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