Integrating Customer Relationship Management, Performance Management, and Knowledge Management through Balanced Scorecard

Integrating Customer Relationship Management, Performance Management, and Knowledge Management through Balanced Scorecard

Anthony Liew (Capital Motors Inc., Taiwan)
DOI: 10.4018/978-1-4666-4153-2.ch013

Abstract

This chapter is primarily based on literature review or secondary research and analysis. The objective of this study is to extend and amalgamate the three major business management concepts: CRM, PM, and KM.
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Customer Relationship Management

The fundamentals of Customer Relationship Management (CRM) grew from demand on after-sales customer service. In addition, it is based on sales transactions and intensive data processing. With further influence of marketing and customer orientation principles, customer relationship management advances to adoption of value-added problem solving and customized services. However, the ultimate customer relationship management principle is to build customer loyalty and lifetime patronization. (Liew, 2008)

CRM is or should be a core competency in a customer oriented business. CRM emphasizes customer value added, customized services, customer driven products/processes, and customer relationship building. It has three levels of progress in terms of operating sophistication aligned with the concept of Knowledge Management (KM). They are:

  • 1.

    Transaction-based data processing customer services

  • 2.

    Informed decision based customized services, and

  • 3.

    Knowledge-based customer and value driven relationship management (Liew, 2008)

Within the KM literature, the knowledge hierarchy (a.k.a. information hierarchy) has several versions; the amalgamated version is as follows: Data, Information, Knowledge, Intelligence, and Wisdom. For the purpose of this context, the first three levels should suffice. The importance of understanding the differences and interrelationships between data, information, and knowledge cannot be overemphasized. (Liew, 2007; Zins, 2007)

  • Level 1: Transaction-based data processing customer service

The essence of data management is accuracy, timeliness, and relevance of the data. IT removes certain inefficiencies in the analysis, decision-making and servicing of the customers. Level one requires selling skills, understanding of customer needs and wants, real-time customer data access, customer handling skills, and data processing skills.

  • Level 2: Informed decision-based value-added customized service

Useful information becomes the main driver at this stage where effectiveness of decision making as well as product/service offering fuels business success. Level two requires anticipating customer needs and wants from extrapolated information, customization skills within given cost or budget, creativity, creative problem-solving skills, analytical skills, creating added value, interpersonal communication skills, customer information extraction skills etc., in addition to level one skills.

  • Level 3: Knowledge-based customer and value driven relationship building

Knowledge is the primary value driver in the knowledge economy. It allows firms to create value offer to customer, customer loyalty through effective relationship building as well as firm value. Level three requires measuring and managing customer loyalty and customer lifetime value, customer driven process management, skills in relationship building, best practices in customer service, collaboration, effective learning and knowledge transfer etc. in addition to level one and two skills.

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