data which is continually updated, thus avoiding the need for customers
to repeatedly provide data. CRM requires senior management support
and needs to be ‘championed’ at board level. Additionally, customer serv-
ice/marketing staff need to be actively involved in the design of the sys-
tem. It is not simply an IT project!
Given that the above principles are adhered to, it is possible to develop
a system which achieves three major goals. Firstly, reduced marketing can
be achieved by making marketing more effective. Retaining existing cus-
tomers and/or converting a higher degree of prospects into customers is
nearly always more efficient than trying to find new customers. Secondly,
CRM promotes a better understanding of customer behaviour and motiv-
ation. This understanding can translate into loyalty and sales. Finally, it
highlights the organisation’s internal problems, bottlenecks and weak-
nesses. For example, management can analyse customer complaints to
identify where improvements can be made.
Buttle (2004) provides an interesting perspective in relation to the con-
fusion and misunderstanding surrounding CRM:
● Misunderstanding 1 CRM is database marketing
Jobber (2004) defines database marketing as ‘... using individually
addressable marketing media and channels to provide information to a target
audience, stimulating demand and staying close to customers’. Given this
definition it is clear that CRM has a wider remit.
● Misunderstanding 2 CRM is a marketing process
Leaving CRM to the marketing department would be a mistake. The
process requires numerous inputs and should be an integrative vehicle
(e.g. production, sales and distribution combined into one seamless
customer process) not a functional activity.
● Misunderstanding 3 CRM is an IT issue
Most CRM systems are highly IT dependent, but technology should be
viewed as something that enables service delivery and the creation of
customer value. The key is how it is used. Buttle (2004) makes the com-
ment; ‘... to say that CRM is about IT is like saying gardening is about
the spade’.
● Misunderstanding 4 CRM is about loyalty schemes
While loyalty is very important CRM is bigger than a loyalty scheme.
CRM may provide the basis for a scheme (e.g. customer databases) but
is more multifaceted.
Misunderstanding 5 CRM can be implemented by any organisation
CRM often requires an analytical element (e.g. statistical analysis of
data) if the organisation lacks the data and/or request skills to inter-
pret such data, then CRM is unlikely to be successfully implemented.
Firstly, an infrastructure needs to be built.
The above points show that CRM is a combination of processes/factors
which can be summarised in Figure 15.1.
The combination of databases, marketing information and IT applica-
tions permits the development of increasingly sophisticated CRM systems.
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