Customer Relationship Management

Traditional marketing strategies focused on the four Ps (price, product, promotion, and place)to increase market share. The main concern was to increase the volume of transactions between seller and buyer.

Volume of transactions is considered a good measure of the performance of arketing strategies and tactics. CRM is a business strategy that goes beyond increasing transaction volume. Its objectives are to increase profitability, revenue, and customer satisfaction. To achieve CRM, a company wide set of tools, technologies, and procedures promote the relationship with the customer to increase sales.

Thus, CRM is primarily a strategic business and process issue rather than a technical issue.

    CRM consists of three components:
  • Customer
  • Relationship
  • Management

CRM tries to achieve a ‘single integrated view of customers’ and a ‘customer centric'


The customer is the only source of the company’s present profit and future growth. However, a good customer, who provides more profit with less resource, is always scarce because customers are knowledgeable and the competition is fierce. Sometimes it is difficult to distinguish who is the real customer because the buying decision is frequently a collaborative activity among participants of the decision-making process. Information technologies can provide the abilities to distinguish and manage customers.

CRM can be thought of as a marketing approach that is based on customer information.


The relationship between a company and its customers involves continuous bi-directional communication and interaction. The relationship can be short-term or long-term, continuous or discrete, and repeating or one-time.

Relationship can be attitudinal or behavioral. Even though customers have a positive attitude towards the company and its products, their buying behavior is highly situational. For example, the buying pattern for airline tickets depends on whether a person buys the ticket for their family vacation or a business trip. CRM involves managing this relationship so it is profitable and mutually beneficial. Customer lifetime value (CLV), is a tool for measuring this relationship.


CRM is not an activity only within a marketing department. Rather it involves continuous corporate change in culture and processes. The customer information collected is transformed into corporate knowledge that leads to activities that take advantage of the information and of market opportunities. CRM required a comprehensive change in the organization and its people.

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