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Unit 1: Introduction to Customer Relationship Management

the customer. The basic objective of CRM is to increase marketing efficiency and effectiveness. Notes
It is co-operative and collaborative processes that help in reducing transaction costs and overall
development costs of the company.

Notes CRM can also be defined as an alignment of strategy, processes and technology to
manage customers and all customer-facing departments and partners. CRM in short is
about effectively and profitably managing customer relationships throughout the entire
lifecycle.

Most CRM initiatives begin with a strategic need to manage the process of handling customer
related information more effectively. For beginners it could simply mean better lead management
capabilities or sales pipeline visibility. However, as organizations mature in their CRM initiatives,
shall visualize as a tool to acquire strategic differentiators, it includes adoption of IT related
systems, training of employees and amendments in business processes related to customers. It
is not just software but an approach to update and enhance business methods to improve
customers’ relationship with the organization.

CRM is a comprehensive approach which provides seamless integration of every area of business
that touches the customer namely – marketing, sales, customer service and field support –
through the integration of people, process and technology, taking advantage of the revolutionary
impact of the Internet. CRM creates a mutually beneficial relationship with your customers. In
the rapidly expanding world of e-commerce, there is a new generation of empowered customers
emerging who demand immediate service with the personalized touch.
Relationship marketing is a term often used in marketing literature. It is sometimes used
interchangeably with CRM. Relationship marketing has been defined more popularly with a
focus on individual or one-to-one relationship with customers, integrating database knowledge
with long term customer retention and growth strategy. Some writers have taken a strategic
view and shifted the role of marketing to genuine customer involvement (communicating
shared knowledge) rather than manipulating the customer (telling and selling). Overall, the
core of CRM and relationship marketing is the focus of co-operative and collaborative
relationships between the firm and its customers and for other marketing factors. It must,
however, be noted that CRM programs now envisage a wider spectrum of efforts other than
data-based one-to-one relationship with customers, which characterizes relationship marketing.
The development of CRM as a strategy is attributable to certain emerging factors. One is the
process of disinter-mediation in many industries i.e., direct interaction with end-consumers.
This is due to the easy accessibility of companies to the sophisticated computer and telecom
technologies. Thus, in the case of financial institutions including banks, insurance companies,
computer software, household appliances and even consumables, the process of
disintermediation is making relationship marketing more popular. This development is also
due to the growth of service sector, so far as services are supplied directly to the customers, it
minimizes the role of middlemen. There is inevitably a greater emotional interaction between
service provider and user, which is found necessary to be sustained and enhanced.

Task What do you understand by customer relationship?

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