The Goals of Customer Relationship Management

Customer Relationship Management

Every business desires to create profitable relationships with customers. In fact, some might argue that one of the most valuable assets a firm has is its customers; and it is well established that the economics of customer relationships yield lower costs and higher margins than pursuing one-off sales (Gronroos, 1997, p. 7). To achieve these economies, firms are recommended to follow the practices summarized by the term “customer relationship management” (e.g., Buttle, 2009). As is often the case, however, when new ideas appear in the business world, there is often an initial period of uncertainty with regard to their meaning. This is certainly the case with CRM, which is sometimes understood differently by both practitioners and by academics alike, and is taken to refer variously to techniques, strategies, and business philosophies. Bringing order to this confusion is a first step in its optimal application.

Payne and Frow (2005) carefully document the variety of ways in which firms define and implement CRM. Their research highlights the tangle of CRM definitions and practices, some of which bear little resemble each other, but which share the same rubric. Based on their study of business practice, Payne and Frow (2005, p. 168) argue that CRM is commonly associated in the minds of managers with (1) technology, (2) relationship building, and (3) customer orientation. On this basis, they propose a continuum of definitions ranging from the narrow specification of technology and solutions to a middle ground of “customer-oriented technology solutions,” and finally to a strategic perspective for managing customer relationships to create shareholder value. Such comprehensive and consistent definitions are necessary in order to avoid piece-meal and inconsistent implementation by practitioners and to promote effective research and teaching.