Page 9 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Customer Relationship Management
Notes
4 LOVELY PROFESSIONAL UNIVERSITY
Self Assessment
Fill in the blanks:
1. Customer Relationship Management is a comprehensive approach for creating, maintaining
and expanding …………………….
2. The concept of customer relationship management as a co-operative and collaborative
process is mutual value creation on the part of the …………………… and customer.
3. Customer …………………… is the key element of CRM.
1.2 History and Evolution of Customer Relationship Management
Customer Relationship Management is a concept that became very popular during the 1990s. It
offered long-term changes and benefits to businesses that chose to use it. The reason for this is
because it allowed companies to interact with their customers on a whole new level. While CRM
is excellent in the long-term, those who are looking for short term results may not see much
progress.
One of the reasons for this is because it was difficult to effectively track customers and their
purchases. It is also important to realize that large companies were responsible for processing
tremendous amounts of data. This data needed to be updated on a consistent basis.
In the last few years, a number of changes have been made to customer relationship management
that has allowed it to advance. These capabilities have allowed CRM to become the system that
was once envisioned by those who created it. However, the biggest problem with these newer
systems is the price. A number of personalized Internet tools have been introduced to the
market, and this has driven down the cost of competition. While this may be a bane for vendors
who are selling expensive systems, it is a bonanza for small companies that would otherwise
not be able to afford CRM programs. The foundation for CRM was laid during the 1980s.
Did u know? During this time, it was referred to as being database marketing. The term
“database marketing” was used to refer to the procedure of creating customer focus groups
that could be used to speak to some of the customers of the company. The clients who were
extremely valued were pivotal in communicating with the firm, but the process became
quite repetitive, and the information that was collected via surveys did not give the
company a great of information. Even though the company could collect data through
surveys, they did not have efficient methods of processing and analyzing the information.
As time went on, companies begin to realize that all they really needed was basic
information. They needed to know what their customer purchased, how much they spent,
and what did they do with the products they purchased.
The 1990s saw the introduction of a number of advances in this system. It was during this time
that term Customer relationship management was introduced. Unlike previous customer
relationship systems, CRM was a dual system. Instead of merely gathering information for the
purpose of using for their own benefit, companies started giving back to the customers they
deserved. Many companies would begin giving their customers gifts in the form of discounts,
perks, or even money. The companies believed that doing this would allow them to build a
sense of loyalty in those who bought their products.
Customer relationship management is the system that is responsible for introducing things
such as frequent flyer gifts and credit card points. Before CRM, this was rarely done. Customers
would simply buy from the company, and little was done to maintain their relationship. Before