Shepard et al.

, (1998) Customer Relationship Management (CRM) is a combination of people,

processes and technology that seeks to understand a company's customers. It is an integrated
approach to managing relationships by focusing on customer retention and relationship
development. CRM has evolved from advances in information technology and organizational
changes in customer-centric processes. Companies that successfully implement CRM will reap the
rewards in customer loyalty and long run profitability. However, successful implementation is
elusive to many companies, mostly because they do not understand that CRM requires company-
wide, cross-functional, customer-focused business process re-engineering. Although a large
portion of CRM is technology, viewing CRM as a technology-only solution is likely to fail.
Managing a successful CRM implementation requires an integrated and balanced approach to
technology, process, and people.

Paul Gray and Jongbok Byun,(March 2001) The last several years saw the rise of Customer
Relationship Management (abbreviated CRM) as an important business approach. Its objective is
to return to the world of personal marketing. The concept itself is relatively simple. Rather than
market to a mass of people or firms, market to each customer individually. In this one-to-one
approach, information about a customer (e.g., previous purchases, needs, and wants) is used to
frame offers that are more likely to be accepted. This approach is made possible by advances in
information technology. Remember that CRM is an abbreviation for Customer Relationship
Management, not Customer Relationship Marketing. Management is a broader concept than
marketing because it covers marketing management, manufacturing management, human resource
management, service management, sales management, and research and development
management. Thus, CRM requires organizational and business level approaches – which are
customer centric – to doing business rather than a simple marketing strategy. CRM involves all of
the corporate functions (marketing, manufacturing, customer services, field sales, and field
service) required to contact customers directly or indirectly. The term “touch points” is used in
CRM to refer to the many ways in which customers and firms interact. They Explain that the
marketing operations consist of two activities: acquisition and retention of customers. In the world
of mass and target marketing, the focus was on the acquisition side. On the other hand, in the world
of relationship marketing, attention is shifted to retention. This happened mainly because of the
cost involved. In general, it is believed that “it is five to 10 times more expensive to acquire a new
customer than obtain repeat business from an existing customer.” As the needs of customers
became diversified, conventional promotions became less efficient and drove up costs.

Pareto principle (June 2006) assumes that 20 percent of a company’s customers generate 80
percent of its profits. In other words, retention of a large customer base is a major issue. The first
lesson to be drawn from the Pareto principle is that 20 percent of your customers are the key to
your business success. It pays to identify those 20 percent and make an extra effort to keep them
satisfied. CRM makes it easy to identify your most profitable 20 percent. This isn't just a matter of
the customers who buy the most. Rather it is the ones who produce the most profit. Some high-
volume customers may turn out not to be profitable at all because they are difficult to deal with or
for other reasons. Of course this doesn't imply that you should totally neglect the 80 percent of
your customers who are less profitable. But it does suggest your bottom line is better served by
putting most of your efforts into your top 20 percent of your customers. Using the analysis tools
in your CRM system you can identify your most successful marketing efforts and concentrate your
marketing dollars and efforts in those areas. This principle can help you identify the kind of new
customers you want to attract. By analyzing your top 20 percent customers and their characteristics
you can determine the kind of customers you want to go after and target your efforts accordingly.

Jeffrey Peel (2002) He attempts to redefine CRM from the basis of his own experience, which is
centered on communication with customers, opposed to the latest CRM system. In other words, he
believes that the customer defines the relationship and not the company. Peel makes his opinion
evident in his following statement, “CMR (for ‘customer managed relationship’) would be a better
acronym. In the first chapter of this book, CRM Redefining Customer Relationship Management,
the author explains that due to the increasing availability of information, customers grow more and
more independent or in other words “slippery.” He argues that the availability of information
makes the customers more educated, and as a result they become more demanding of their needs.
He explains that CRM was expected to be the solution to this issue; however, the Company’s CRM
strategies diverted from a solution oriented paradigm to a new technology market revolution in the
early stages. Through the use of market research they demonstrated that customers are more
arrogant towards companies selling a product because they are more inclined to richer and fuller
relationships with certain types of organizations that are more considering of their needs. A
redefined definition that he elucidates; “CRM is about understanding the nature of the exchange
between customer and supplier and managing it appropriately. (Peel 03)” It is by this definition
that he assesses a typical CRM practitioner’s view versus the customer’s view. His findings
indicate that interviews with large commercial organizations, next generation technologies,
consumers, and companies are constantly adopting new technologies that violate early CRM
principals. One major technology he refers to is the Automatic Call Distribution (ACD). He argues
that this technology takes away from the B2C relationship that CRM strives to maintain.
Ultimately he believes that if companies revisit and apply the four key components of a
community-focused business, namely; Knowledge, Reciprocity, Easy Communications, and Local
context, these companies would improve their CRM process. The knowledge aspect refers to the
ability of a community-focused business to be able to acquire knowledge that was difficult for
outsiders to get access of. Reciprocity is the fear of the company negatively affecting a customer
relationship, because news travels fast. Easy Communication deals can be suggested and
concluded immediately because of the relationship of the parties involved. Local Context is the
simple fact that local suppliers knows what locals want.

Adrian Payne, Handbook of CRM (2005), Customer Relationship Management, or CRM, is

increasingly found at the top of corporate agendas. Companies large and small across a variety of
sectors are embracing CRM as a major element of corporate strategy for two important reasons:
new technologies now enable companies to target chosen market segments, micro-segments or
individual customers more precisely and new marketing thinking has recognized the limitations of
traditional marketing and the potential of more customer-focused, process-based strategies. CRM,
also more recently called ‘customer management’, is a business approach that seeks to create,
develop and enhance relation- ships with carefully targeted customers in order to improve
customer value and corporate profitability and thereby maximize shareholder value. CRM is often
associated with utilizing information technology to implement relationship marketing strategies.
As such, CRM unites the potential of new technologies and new marketing thinking to deliver
profitable, long-term relationships. Although the term CRM is relatively new, the principles behind
it are not unfamiliar. Organizations have for a long time practised some form of customer
relationship management. What sets present day CRM apart is that organizations can manage one-
to-one relationships with their customers – all one thousand or one million of them. In effect, CRM
represents a renewed perspective of managing customer relationships based on relationship
marketing principles; the key difference being that today these principles are applied in context of
unprecedented technological innovation and market transformation. CRM is aimed at increasing
the acquisition and retention of profitable customers by, respectively, initiating and improving
relationships with them.

Jill Dyche, The CRM Handbook (2001), a good starter definition of customer relationship
management (CRM) is The infrastructure that enables the delineation of and increase in customer
value, and the correct mean by which to motivate valuable customers to remain loyal—indeed, to
buy again. CRM is about more than simply managing customers and monitoring their behaviors.
CRM has the potential to change a customer' relationship with a company and increase revenues
in the bargain. The most forward-thinking companies have recognized from past failures that CRM
smacks of strategy, and thus technology alone can't address high-profile issues such as new-
customer acquisition and Web-based marketing. To these companies CRM is much more than a
standalone project accounted for by a single organization, it's a business philosophy that affects
the company-at-large. (We'll see examples later of companies who practice CRM without even
using the term.) These firms have articulated their ultimate visions for CRM to communicate them
to every facet of operations. The point here is that there is not one but many visions for CRM
success. CRM promises to help companies get to know their customers well enough to understand
which ones to keep and which ones they should be willing to lose—and why—and how not to
overspend in he meantime. CRM also means automating many of the business processes and
accompanying analysis and saving precious time in the bargain. And saving money.

Harvard Business Review (2000,2004), states that it is difficult to ascertain the exact LTV of
customers, but there is evidence that significant concern over creating long-term relationships with
customers is warranted. Acquisition of customers and basic data including name, address, gender,
age, etc, is fundamental, but transaction data such as date, time, item, value, etc. at every “touch
point,” i.e., a point of interaction when the company communicates with a customer, or vice versa,
are also essential. A wide range of companies are successfully taking a pragmatic, disciplined
approach to CRM. Rather than use it to transform entire businesses, they've directed their
investments toward solving clearly defined problems within their customer relationship cycle. The
authors have distilled the experiences of these CRM leaders into four questions: Is the problem
strategic? Is the system focused on the pain point? Do we need perfect data? What's the right way
to expand an initial implementation? The questions reflect a new realism about when and how to
deploy CRM to its best advantage. Understanding that highly accurate and timely data are not
required everywhere in their businesses, CRM leaders have tailored their real-time initiatives to
those customer relationships that can be significantly enhanced by "perfect" information. After
they've succeeded with their first targeted CRM project, they can use it as a springboard for solving
additional problems. CRM is coming to resemble any other valuable management tool, and the
keys to successful implementation are also becoming familiar: strong executive and business unit
leadership, careful strategic planning, clear performance measures, and a coordinated program that
combines organizational and process changes with the application of new technology.
There’s no getting around it: A CRM program involves complicated business and technology
issues and requires significant investments of time and money. CRM is not a tool for buffing a
company’s performance at the edges; it should be applied only to processes vital to a company’s
competitiveness—those that can distance a firm from its competitors or keep a function (such as
call center response time) on par with the rest of the industry when parity counts. If the target is
not truly strategic, the organization will be hard-pressed to summon the vigor necessary to tackle
entrenched business processes or retool its organizational structure and garner expected returns.
Before spending a dime on CRM, therefore, executives need to make sure they have the right
targets in their sights.

Kristin Anderson and Carol Kerr, Customer Relationship Management (New York: McGraw-
Hill, 2002), Customer Relationship Management is a comprehensive approach for creating,
maintaining and expanding customer relationships. Customer relationship management (CRM)
can be the single strongest weapon you have as a manager to ensure that customers become and
remain loyal. That’s right! CRM is the single strongest weapon you have, even before your people.
Great employees are, and always will be, the backbone of any business. But employee performance
can be enhanced or hampered by the strategy you set and by the tools that you give employees to
get the job done. Done right, CRM is both a strategy and a tool, a weapon, if you will. In your
hands, and in the hands of your employees, CRM comes to life, keeping you and your team on
course and able to anticipate the changing land- scape of the marketplace. With CRM, loyal
customers aren’t a happy accident created when an exceptional customer service representative,
salesperson or product developer intuits and responds to a customer need. Instead, you have at
your finger- tips the ultimate advantage—customer intelligence: data turned into information and
information turned into a customer-satisfying action. Implementing CRM is a nonnegotiable in
today’s business environment. Whether your customers are internal or external, consumers or
businesses, whether they connect with you electronically or face to face, from across the globe or
across town, CRM is your ticket to success.

Gartner, Inc.'s the world‟s largest technology research and advisory firms‟ survey states that,
more than 50 percent of CRM implementations are considered failures from the company‟s point
of view. Gartner, published the statistics that the worldwide CRM license revenue has remained
strong without any significant increase. Gartner, Inc.'s tells the cost of implementing CRM is
quite high. Today, large business firms can spend between $30 and $90 million over a three-year
period on software, technology, labor, consulting services, and employee training related to CRM
initiatives. Customer relationship management (CRM) is a business strategy that optimizes
revenue and profitability while promoting customer satisfaction and loyalty. CRM technologies
enable strategy, and identify and manage customer relationships, in person or virtually. CRM
software provides functionality to companies in four segments: sales, marketing, customer service
and digital commerce. Customer relationship management (CRM) analytics collect, organize
and synthesize consumer data captured across the organization to help healthcare payers solve
customer-facing business problems through reporting tools, dashboards, portals and other
methods. It encompasses three critical business processes — marketing, sales and customer service
— and pulls data from many sources to make it available to multiple users across a payer
organization.
CRM retail Study 2004, is a survey conducted by the National Retail Federation in the United
States for its more than 100 member companies. It showed that only about 30 percent of a year‟s
respondents said that their CRM initiatives are completely meeting or exceeding their
expectations at this point. It is interesting to note that this survey also revealed that 80 percent of
the respondents were either increasing their CRM budgets or holding them at the same level as it
was in the previous year.

Bain & Company, one of the world’s leading global business consulting firms, conducted a
survey entitled “Management Tools & Trends 2005,” which showed that “CRM is now only
surpassed globally by the practice of strategic planning as the most used management tool”. By
looking at case histories of the failures as well as the successes, they found at cause a mistaken
view that CRM is a shortcut to acquiring, building, and retaining relationships with customers. It
isn't. The first step in leading a successful CRM program is to develop a robust customer strategy
based on good old-fashioned customer segmentation. Step two is to realign your organization to
support this plan. Third, provide the right tools and technology to support your customer strategy
and realigned organization. And at every step of the way ask yourself whether customer loyalty
could be better promoted by a low- or no-tech solution. CRM is a simple concept: a way of linking
the tried and tested discipline of customer segmentation to determine which customers you want
to "CR"-create relationships with-and which you want to "CM"-cost-manage. The only way you
can do this is to develop a rigorous customer strategy that separates the profitable clients with
whom you want deeper relationships from the ones you should service at low cost. The crux of
any customer relationship strategy is customer segmentation, which is why some of world's
pickiest companies have the most successful CRM programs.

Frederick F. Reichheld, Phil Schefter and Darrell K. Rigby (2002), tell that implementing
CRM is such a major project that most executives are apt to think that CRM is a software tool that
will manage customer relationship by itself. But this is a big mistake. As Rigby pointed out: “CRM
is the bundling of customer strategy and processes, supported by the relevant software, for the
purpose of improving customer loyalty and, eventually, corporate profitability.” The promise of
customer relationship management is captivating, but in practice it can be perilous. When it works,
CRM allows companies to gather customer data swiftly, identify the most valuable customers over
time, and increase customer loyalty by providing customized products and services. It also reduces
the costs of serving these customers and makes it easier to acquire similar customers down the
road. But when CRM doesn’t work—which is often—it can lead to Monster-like (and monster-
sized) debacles. Consider this: 55% of all CRM projects don’t produce results, according to
Gartner Group, a research and advisory firm. Also consider this: According to Bain’s 2001 survey
of management tools, which tracks corporate use of and satisfaction with management techniques,
CRM ranked in the bottom three for satisfaction out of 25 popular tools. In fact, according to last
year’s survey of 451 senior executives, one in every five users reported that their CRM initiatives
not only had failed to deliver profitable growth but also had damaged long-standing customer
relationships. Why do CRM initiatives fail so often? research suggests that one reason CRM
backfires is that most executives simply don’t understand what they are implementing, let alone
how much it costs or how long it will take.
Snyder (1986) studied how customers‟ loyalty to a service organization may be measured
accurately. Research addressing loyalty within the context of the service industry has traditionally
focused on the means by which loyalty may be acquired. Customer relationship management
(CRM) systems can act as a valuable resource in the snuggle to leverage a more complete range
of revenue opportunities. According to a Forrester study measuring the total economic impact of
CRM ("The Total Impact of Microsoft Dynamics CRM," May 201 1) three out of four North
American and European companies have either implemented CRM solutions or intend to do so in
the near future - and there's a reason for it. Many people think of CRM systems as a way to build
existing customer relationships, but a well-implemented CRM application can also drastically
enhance sales performance and boost revenue. By providing all customer-facing employees with
a more comprehensive view of revenue opportunities, CRM systems can equip accounting firms
with the resources they need to acquire new clients and more effectively generate the revenue that
exists within their current client base. CRM systems enable CPA firms to monitor and evaluate
sales performance, dramatically improving the firm's ability to close new business. At a macro
level, CRM systems create visibility of metrics that reveal the strengths and weaknesses of a firm's
sales program. On a more granular level, they provide detailed insights about specific territories,
teams, or even partners. This can give practice leads and executive leaders the information they
need to make informed decisions about the shape and scope of the firm's efforts to acquire new
clients.

Hennig-Thurau, T., Gwinner, K.P. and Gremler, D.D. (2002), Journal Of Service
Research,argued that the loyalty of the service customer is a multi-dimensional construction,
comprising three dimensions: behavioral loyalty, attitudinal loyalty and cognitive loyalty. A key
goal of relationship marketing theory is the iden- tification of key drivers that influence important
outcomes for the firm and a better understanding of the causal rela- tions between these drivers
and outcomes. In the market- ing literature, several different approaches have been used to identify
these variables and to learn about their impact on relational outcomes. Most of the existing
approaches focus on a single predictor variable (e.g., customer satis- faction) and investigate its
connection with relational out- comes, rather than developing multivariate models and theories.
However, a review of the existing work on the de- terminants of relationship marketing outcomes
reveals some promising conceptual models that might explain a significant amount of the success
(or failure) of relation- ships between service providers and their customers. Two of the most
promising conceptual approaches are (a) the relational benefits approach (e.g., Bendapudi and
Berry 1997; Gwinner, Gremler, and Bitner 1998; Reynolds and Beatty 1999a) and (b) the
relationship quality approach (e.g., Crosby 1991; Crosby, Evans, and Cowles 1990; Dorsch,
Swanson, and Kelley 1998; Smith 1998). The re- lational benefits approach argues that categories
of rela- tionship-oriented customer benefits exist, the fulfillment of which can predict the future
development of existing re- lationships. The relationship quality approach is based on the
assumption that customer loyalty is largely determined by a limited number of constructs reflecting
“the degree of appropriateness of a relationship” (Hennig-Thurau and Klee 1997, p. 751) from the
customer’s perspective. Thus, although relationship quality focuses on the nature of the
relationship and relational benefits focus on the receipt of utilitarian-oriented benefits, both
concepts view the fulfillment of customer needs as central for relationship success.
Kalakota and Robinson (2000) explains that CRM is an integrated sales, marketing and service
strategy that prevents „„lone showmanship‟‟ and relies on coordinated actions by servicing
customers better across the entire organization having combination of business processes and
technology. The goals of the CRM business framework include:

• Using existing relationships to grow revenue. This means preparing a comprehensive view of the
customer to maximize his or her relationship with the company through up-selling and cross-selling and,
at the same time, enhancing profitability by identifying, attracting, and attaining the best customers.
• Using integrated information for excellent service. By using customer's information to better serve his or
her needs, you save the customer time and ease any frustration. For example, customers should not have
to repeat information to various departments again and again. Customers should be surprised by how well
you know them.

• Introducing consistent, replicable, channel process and procedures. With the proliferation of customer
contact channels, many more employees are involved in sales transactions. Regardless of size or
complexity, companies must improve process and procedural consistency in account management and
selling.

Winer (2001), told that many billions of dollars have been invested in Customer Relationship
Management (CRM) packaged software. “This revolution in customer relationship management
has created a worldwide market for CRM products and services of $34 billion in 1999, a market
that is forecasted by IDC to grow to $125 billion by 2004.” The need to better understand customer
behavior and the interest of many managers to focus on those customers who can deliver long-
term profits has changed how marketers view the world. However, despite the large body of
knowledge on IS project success factors and mechanisms for achieving benefits from packaged
software, many CRM initiatives still fail to realize their intended benefits. A problem is that CRM
means different things to different people. For some, CRM means direct e-mails. For others, it is
mass customization or developing products that fit individual customers' needs. For IT consultants,
CRM translates into complicated technical jargon related to terms such as OLAP (on- line
analytical processing) and CICs (customer interaction centers). Mass marketing approaches such
as television, radio, or print advertising are useful for generating awareness and achieving other
comimunications objec- tives, but they are poorly-suited for CRM due to their impersonal nature.
More conventional approaches for targeting seleaed customers include a portfolio of direa
marketing methods such as telemarketing, direct mail, and, when the nature of the product is
suitable, direct sales. Because customers have more choices today and the targeted customers are
most valuable to the company, customer service must receive a high priority within the company.
In a general sense, any contact or "touch points" that a customer has with a firm is a customer
service encounter and has the potential either to gain repeat business and help CRM or to have the
opposite effect. The notion of customer satisfaction is being expanded to change CRM
to CEM, Customer Experience Management." The idea behind this is that with the number of
customer contact points increasing all the time, it is more critical than ever to measure the
customer's reactions to these contaas and develop immediate responses to negative experiences.
These responses could include timely apologies and special offers to compensate for unsatisfactory
service. The idea is to expand the notion of a relationship from one that is transaction-based to one
that is experiential and continuous.
Michael J.A. Berry and Gordon S. Linoff (2000), Data Mining Techniques, were of the view
that “Good customer relationship management means presenting a single image of the company
across all the many channels a customer may use to interact with the firm, and keep a single image
of the customer that is shared across the enterprise.” Across a wide spectrum of industries,
companies have come to realize that their customers are central to their business and that customer
information is one of their key assets. Once a prospect has become a customer, the goal is to
increase the customer’s value. This usually entails the following activities: Up-Selling. Having the
customer buy premium products and services. Cross-Selling. Broadening the customer
relationship, such as having customers buy CDs, plane tickets, and cars, in addition to books.
Usage Stimulation. Ensuring that the customer comes back for more, for example, by ensuring
that customers see more ads or uses their credit card for more purchases. These three activities are
very amenable to data mining, particularly predic tive modeling that can determine which
customers are the best targets for which messages. This type of predictive modeling often
determines the course of action for customers However, there is a challenge of providing customers
the right marketing messages, without inundat ing them with too many or contradictory messages.
Although telephone calls and mail solicitations are bothersome, unwanted email messages (often
called spam) tend to have a more negative effect on the customer relationship. One reason may be
that customers are often paying for their Internet connection or for the disk space for email.
Another reason may be that this mail may arrive at work, rather than at home. Then there is the
problem of spam that includes annoying pop-up ads. And, of course, such email has often been
quite unsolicited, offending people who do not want to receive solicitations for gambling, money
laundering, Viagra, sex sites, debt reduction, illegal pyramid marketing schemes, and the like.
Because email is abused so often, even legitimate companies who are com municating with bona
fide customers run the risk of being associated with the dubious ones. This is a danger, and in fact
suggests that customer contact needs to be broader than email. Another danger for companies that
offer many products and services is get ting the right message across. Customers do not necessarily
want choice; cus tomers simply want you to provide what they want. Making customers find the
one thing that interests them in a barrage of marketing communication does not do a good job of
getting the message across. For this reason, it is use ful to focus messages to each customer on a
small number of products that are likely to interest that customer. Of course, each customer has a
different poten tial set. Data mining plays a key role here in finding these associations

Gefen and Ridings (2002), were of the review that a CRM system consists of multiple modules
including: operational CRM, which supports a variety of customer- oriented business processes in
marketing, sales and service operations; and analytic CRM, which analyzes customer data and
transaction patterns to improve customer relationships. Operational and analytic CRM modules
provide the major functions of a CRM system. In addition to leveraging CRM functions, firms use
CRM systems to realize collaborative interactions with customers and business partners through
system integration. System integration links CRM systems with back-office enterprise systems
(such as enterprise resource planning (ERP) and legacy systems) and web-based e- business
applications via Internet-based communication protocols, and connects these systems with those
of suppliers‟ and customers‟ based on common data standards.