CRM systems help organizations improve customer relationships and profitability through personalized interactions. They aim to enhance customer service and satisfaction to increase retention. Benefits include higher revenues from retaining existing customers and opportunities for cross-selling and up-selling. However, implementing CRM systems involves significant costs to organizations for new technologies and process changes. While CRM provides benefits like simpler buying and personalized attention, costs to customers include loss of privacy and reduced opportunities to consider other companies' offers.

1. The CRM System as a Hub of Applied
Learning
 Potential returns of CRM systems
 Potential benefits of CRM systems to the
organization
 Potential costs of CRM systems to the
organization
 Potential benefits of CRM systems for
customers
 Potential costs of CRM systems for
customers

2. Potential Returns of CRM Systems
 A fundamental principle of marketing
is that customers are different
 Some customers cost a great deal to
attract and require a great deal of
service
 The basic tenet is that different
customers
 represent different levels of profit for
the firm

3. Potential Returns of CRM Systems
 Successful organizations attempt to
define characteristics of the best
customers,
 to then estimate the lifetime value of
such customers,
 and to adjust marketing strategy
accordingly

4. Potential Returns of CRM Systems
Best customers
 A proportion of all customers in an
industry
who provide profitable interactions,
cost little to care for, and
who tend to spread positive word-of-
mouth information about the
organization

5. Potential Returns of CRM Systems
 Organization, or the CRM champions
within the organization,
 tend to think of all the benefits of the
systems
 the promise of increased revenues and
lowered costs

6. Potential Returns of CRM Systems
 Customers, in contrast, may first think of
the costs associated with the system and
 have to be reminded of some of the benefits
 For example,
 if the customer orders one product from a
supplier on the Internet and
 there are suddenly 2,000 messages from firms
that sell related goods,
 the customer may think twice before placing
another order on the Web or with that
organization

7. Potential Returns of CRM Systems
 Thus, it can be helpful for
organizations to consider the
 benefits and disadvantages of CRM
systems as they invest in their
development

8. Potential Benefits of CRM Systems to
the Organization
 Customer focus—the organization is ready
 to view the purchasing process from the
customer’s point of view,
 to empathize with the customer’s feelings, and
 to treat the customer’s information with great
care
 If organization can learn enough about
individual customers, then
 the customer should be more satisfied, trusting,
and willing to talk positively to others about the
organization’s wonderful approach

9. Potential Benefits of CRM Systems to
the Organization
 Customer retention—the organization
satisfies customers and/or offers variety
 such that the customer comes back and repeats
transactions
 Retaining customers and establishing
customer loyalty are major objectives of
CRM approaches
 An old business adage says,
 “It costs six times as much to get a new
customer as it does to keep an old customer”

10. Potential Benefits of CRM Systems to
the Organization
 Share of customer/share of wallet
 the organization wants to please customers to
the point that
 they want the organization to sell them
something else
 Historically, marketers have thought in
terms of a single product, and
 Their goal has been achieving a high share of
the market

11. Potential Benefits of CRM Systems to
the Organization
 In relationship management, the company
objective often is
 to achieve a high share of customer
 The company tries to sell an individual
customer as many goods and services as
 it can over the lifetime of that customer’s
patronage

12. Potential Benefits of CRM Systems to
the Organization
 Cross-selling
 The marketing of complementary products to
existing customers
 For example,
 a retail bank that has a checking account
customer may market
 a safety deposit box or a car loan to its
customer
 overtime, it may be able to get the customer’s
home mortgage and equity loan business

13. Potential Benefits of CRM Systems to
the Organization
 Up-selling
 The marketing of higher value products to new
or existing customers
 For example,
 an insurance company may convince a
customer to upgrade coverage,
 a credit card company may try to persuade a
customer to upgrade to the platinum card, or
 a furniture store may attempt to convince a
customer to purchase the more expensive
version of a table

14. Potential Costs of CRM Systems to the
Organization
 A major benefits of an effective CRM
approach is that it follows marketers to
 send the right messages about the right offers
to its best customers at the right time
 Achieving that level of quality from a CRM
system may require
 a significant investment in the organization’s
information technology (IT) infrastructure
 For example, server-based systems, software
licenses and updates, firewalls for security,
personnel to install and maintain systems,
training for system users in different disciplines,
etc..

15. Potential Costs of CRM Systems to the
Organization
 IT infrastructure
 the processing capacity required to fulfill
customer needs.
 Another significant cost in developing an
effective CRM system is the price of
process change
 an alteration in the habitual pattern for
accomplishing a task
 Implementing new systems and changing
traditional thought patterns may both be
very difficult to accomplish

16. Potential Costs of CRM Systems to the
Organization
 Despite the best efforts of organizations to
design effective CRM systems,
 it is people who must implement those
systems and customers who must appreciate
them,
 use them with ease, and feel safe in the
process
 CRM systems hold the promise of growth
and benefits but
 the implementation of such systems carries
with it limits, costs, and other risks

17. Potential Benefits of CRM Systems for
Customer
 Customers may also profit from CRM
approaches and relationship
marketing efforts
 Continuity
Derived from a relationship with the
same seller simplifies the buying
process
Implies a stable connection or linkage
Reduce the risk of dealing with a new
supplier

18. Potential Benefits of CRM Systems for
Customer
 Buyers become regular customers because
they want to do business with
organizations that
 will provide a consistent level of product or
service quality
 For example,
 Most people are loyal to their hairdressers or
barbers
 They do not want to risk service quality that is
below their expectations or
 risk disappointing the provider of this personal
service

19. Potential Benefits of CRM Systems for
Customer
 Effective CRM systems provide a number
of contact or touch points
 the customer can communicate and explain his
or her needs;
 for examples,
 the telephone,
 e-mail,
 point-of-purchase, or
 customer service desk

20. Potential Benefits of CRM Systems for
Customer
 For example,
 The jewelry store salesperson would
often send a note
 to a male customer just before his wife’s
birthday
 Unfortunately, if the salesperson left the
company, so did the client information
 CRM systems are designed to offer the
salesperson’s notebook to the entire
firm

21. Potential Benefits of CRM Systems for
Customer
 In an age when personalization is rare,
 CRM information technology is bringing it back
 Personalization—the organization
 knows the customer, by name,
 knows the customer’s normal purchasing
routine, and
 can forecast the customer’s needs
 Relationship marketing has been called
“one-to-one marketing”
 Because it allows marketers to tailor offering
to individuals

22. Potential Benefits of CRM Systems for
Customer
 For example,
 Neiman Marcus stores now track customers’
buying habits, preferences, and special dates
through their computerized cash registers
 Sales associates can notify a client when new
merchandise comes in or
 send a reminder about buying a gift for a
personal event like an anniversary
 Customers may benefit from feeling special
and enjoy being recognized as an important
entity to the organization

23. Potential Costs of CRM Systems for
Customers
 Perhaps the most obvious cost of the
widespread adoption of CRM systems by
organizations is
 the inevitable loss or privacy for customers
 Privacy—confidentiality or a feeling that
 you can have some space to yourself where
other people cannot intrude
 Organizations want to know
 which people purchase which products in which
colors on which days of the week with which
credit card

24. Potential Costs of CRM Systems for
Customers
 Customers want to feel that no one knows
that much about their personal choices
 Another intangible cost to the customer of
developing a sole-source relationship with
an organization is
 the opportunity cost associated with ignoring
other offers from competitive sources
 If customers take the time to search,
 they may find a better price for the same
features or find options that better meet the
original need

25. Potential Costs of CRM Systems for
Customers
 As firm “reward” loyal customers by
 sending them prizes,
 extra frequent flyer miles, or
 discounts on other products,
 customer become less inclined to search
for alternatives

26. Summary
 Customer relationship management
(CRM) is a business strategy that
 uses information technology to provide
the enterprise with a comprehensive,
reliable, and integrated view of its
customer base
 so that all business processes and
customer interactions help maintain and
expand mutually beneficial relationships

27. Summary
 CRM systems help organizations improve
the profitability of their interactions with
current and potential customers
 while at the same time making those
interactions safer and friendlier through
individualization and personalization
 The system’s goals are to
 enhance customer service,
 improve customer satisfaction, and
 ensure customer retention

28. Summary
 Customer retention and customer loyalty
are major benefits of CRM systems to the
organization
 Working to retain existing customers by
managing relationships with them
 will generally increase revenues and, in most
cases, reduce costs
 Positive outcomes can include a larger
share of a customer’s business are a
result of activities
 such as cross-selling and up-selling

29. Summary
 There are also real costs to the
organization from implementing CRM
systems,
 including investment in information
technologies and the reactions of people to
process changes
 Customers benefit from CRM systems and
relationship marketing in a number of
ways,
 Including simpler buying processes, ongoing
dialogs with the firm, and personalized
attention

30. Summary
 Costs to customers of CRM systems
include a loss of privacy and,
 perhaps, missed opportunities to learn
about or to purchase offerings from other
organizations
 While CRM systems can be expensive to
implement,
 the long-term benefits should become
apparent as time progress, repeat
purchases occur, and customer loyalty
deepens