1.1. Emergence of Customer Relationship Management (CRM)
The evolution of the concept of CRM has vital implications on organizations in the 21st century. The aim of this strategy is the maintenance of long-term relationships with customers (Aguinis & Glavas, 2012; Carroll, & Shabana, 2010; Chirani, Taleghani, & Moghadam, 2012; Creel, 2012; Urbanskienė et al., 2008). The structure of this chapter is based on essential elements of the traditional best practices associated with a qualitative case study. Initially, a description of the historical aspects of CRM, then a discussion of the emergence and development of CRM as an essential business practice is followed by benefits of a CRM system. This sets the stage for a case study of two major financial firms headquartered in the NE Ohio area: Progressive Corporation and KeyCorp Bank.
For business success, a healthy long-term relationship with the customer is vital. Relationship building and management are leading approaches in marketing (Kamakura, Mela, Ansari, Bodapati, Fader, Iyengar, Naik, Neslin, Sun, Verhoef, Wedel, & Wilcox, 2005). CRM-embedded strategies are increasingly necessary in the improvement of a firm’s customer lifetime value (Mishra & Mishra, 2009). Understanding customer needs and offering value-added services are essential factors that set the difference between successful and non-successful companies (Urbanskienė, Žostautienė, & Chreptavičienė, 2008). The emergence of electronic forms of CRM (eCRM) has allowed firms to be proactive in considering their customer’s needs in all business aspects ensure customers’ satisfaction. Providing information on customer profiles, data, and history facilitates the strengthening of core processes of companies, specifically in service, sales, and marketing.
CRM-based initiatives focus on optimizing profitability and ensuring control over the customer by making them fell included in the business operations (Kamakura, et al., 2005). A successful customer relationships management system integrates the management of customers groups, enhances loyalty and raises the switching costs (de la Fuente Sabate & de Quevedo Puente, 2003; Mishra & Mishra, 2009). This is because information of consumer preferences provides the organization with a competitive advantage. The system benefits both customers and enterprises’ employees.
1.2. Historical Perspectives of CRM
The interest of researchers and organizations in relationship marketing emerged in the second half of the 20th century (Hsu, 2012; Mishra & Mishra, 2009). The dynamic state of the market and the changing service market sector provided significant challenges to the traditional marketing concept. The disadvantage of the traditional concept is that it did not focus on sustaining long-term relationships with market partners and customers (Urbanskienė, et al., 2008). Changing market conditions necessitate new forms of competitiveness, individual random interaction with competitors, suppliers and customer needs satisfaction (Drumwright, 1996; Kamakura, et al., 2005). The focus on marketing continually shifted towards maintaining long-term relationships from a focus on the business activity system. The shift in marketing from setting prices, creation of goods and services, and distribution, to including the marketing mix has been progressing quite well in the corporate world (Kamakura, et al., 2005). Current marketing systems also focus on supporting, maintaining and strengthening relationships with other vital market participants. This shift further led to the uprising of electronic CRM that improves customer management (Kamakura et al., 2005). These systems are essential in increasing the productivity of companies and maximizing customer satisfaction in CRM-based systems also increase the income earned by companies.