Definition

CRM is the integral handling of an organization’s interaction with its clients. Distribution, communication, and supply policies must be integrated in line with customer requirements.

Client satisfaction is the central measure of CRM-successfulness. It is a sign of client loyalty and ultimately for the long-lasting success of an organization (Helmke, Uebel, and Dangelmaier, 2017, p. 7). In marketing science, this concept is defined in the narrower sense as

an integrated information system and in the broader sense as a comprehensive corporate strategy. CRM focuses on identifying, building up, and securing a profitable customer base and in this way contributes to the optimization of a company's customer portfolio. The profitability of the exchange relationship is the central target of CRM. In addition to the stability and value of the relationship, it also includes the company's efficient use of resources throughout the entire customer relationship life cycle (Sperl, 2016, pp. 41-43).

CRM must be understood as a holistic philosophy, which always represents the relationship to the customer as the starting point of the consideration. It requires the re-orientation of business processes and responsibilities, based on a new customer-oriented corporate strategy. Integrated information systems are needed to support this approach, as only the targeted integration and structuring of all customer-related information can provide a central view and a coordinated strategy for the respective customers of the company (Leußer, Hippner, and Wilde, 2011, p. 18). It is quite demanding to expose a primary or ordinary persuasion regarding CRM in theory and practice. CRM-systems, which will be described later in detail, are part of Information Technology (IT) instruments, supporting various administrative actions from a technological viewpoint. Instead it develops into an increased challenge to universalize what CRM combines when thinking about its correlation with humans, corporations, and procedures (Perna and Baraldi, 2014, p. 57).

When it comes to the question of what exactly is to be understood by CRM, the scientific literature has a wide variety of views, ranging from a relatively narrow interpretation to definitions of CRM that encompass almost all operational functions. It should be noted that the individual definitions partly address very different aspects of CRM (Greve, 2006, p. 15). The term has been evolving over time and several definitions attempted to incorporate the meaning of CRM, as stated and summarized in table 1. Exemplary authors, who define CRM in completely different ways, are Helmke et al. (2017), Bruhn (2016), Leußer et al. (2011), Homburg and Sieben (2008), Götz (2006), and Rapp (2005). The focus varies from information technology concepts to a holistic corporate strategy.

Table 1: Definitions of CRM

Author(s) Focus Definition

Kumar and Reinartz, 2018,

p. 5 Profit

“CRM is the strategic process of selecting customers that a firm can most profitably serve, as well as of shaping interactions between a company and these customers. The goal is to optimize the current and future value of customers for the company.”

Helmke, Uebel, and

Dangelmaier, 2017, p. 7 Customer satisfaction “CRM is a holistic processing of the relationship between a company and its customers, in which the communication, distribution, and offer policy is geared towards customer needs, with customer satisfaction being the central measure.”

Bruhn, 2016, p. 8 Information technology

“CRM is a synonym for a purely IT-concept that is used to establish customer relationships with the help of software, i.e. programs for archiving and processing customer data, analysing, and controlling.”

Glattes, 2016, p. 250 Customer experience

“CRM describes the consistent alignment of a company with its customers and the systematic design of customer relationship processes. The associated documentation and management of customer relationships enables in-depth relationship marketing and is therefore an important component and basis for building customer experience management.”

Rai, 2013, p. 30 Holistic view

“CRM is a continuously updated process of identifying relative value of customers and designing customized company interaction to delight them so that they do not just remain with the company profitably, but also be the company’s ambassador. Full involvement and empowerment of employees and appropriate technology are two essentials for successful CRM.”

Shafia et al., 2011, p. 1107 Holistic view “Customer Relationship Management is defined as an effective tool to achieve the objectives, such as satisfied and loyal customers, and increased market share.”

Leußer, Hippner, and

Wilde, 2011, p. 18 Profit

“CRM encompasses the establishment and consolidation of long-term profitable customer relationships through coordinated, customer-specific marketing, sales and service concepts with the help of modern information and communication technologies.”

Laudon et al., 2010, p. 5 Holistic view

“CRM emphasizes the use of IT for targeted analysis, planning, and makeup of business relationships with individual purchasers/customers. CRM is a management concept, as well as a technological concept that utilizes application systems to support business processes for business relationship management.”

Schawel and Billing, 2009,

p. 61 Profit

“Customer Relationship Management includes the segment-specific support and processing of customers in marketing and sales. This is done based on a detailed understanding of customer segments, which includes customer needs and customer value for one's own company.”

Lambert, 2009, p. 5 Profit “CRM is considered as strategic, process-oriented, cross-functional, and value creating for buyers and sellers and a way of achieving superior financial performance.”

Homburg and Sieben,

2008, p. 502 Holistic view “CRM includes the planning, implementation, control, and adjustment of all company activities to optimize the customer portfolio.”

Bohling et al., 2006, p. 186 Profit

“The practice of CRM is described as the process for achieving a continuing dialogue with customers across all available touch points to offer them customized treatment, based on their expected response to available marketing initiatives, such that the contribution from each customer to overall profitability is maximized.”

Shang and Fen, 2006, p. 2 Holistic view “CRM is a combination of people, processes, and technology that seeks to provide understanding of a company’s customers and to support a business strategy to build long-term, profitable relationships with them.”

Wilde, 2001, p. 417 Holistic view

“CRM is a customer-oriented corporate philosophy that, with the aid of modern information technology, attempts to build and solidify profitable customer relationships over the long term by applying comprehensive and differentiated marketing, sales, and service concepts.”

Parvatiyar and Sheth,

2001, p. 13 Holistic view “CRM is a comprehensive strategy and process of acquiring, retaining, and partnering with selective customers to create superior value for the company and for the customers.”

Galbreath, 1998, p. 14 Holistic view

“Activities an enterprise performs to identify, select, acquire, develop, and retain increasingly loyal and profitable customers. CRM integrates sales, marketing, and service functions through business process automation, technology solutions, and information resources to maximize each customer contact. CRM facilitates relationships among enterprises, their customers, business supplies, and employees.”

Source: Author’s table

The previously stated definitions of CRM imply the following:

 CRM is a process

 CRM requires uninterrupted emendation and updates

 CRM needs client value detection

 CRM pursues client rapture

 CRM-procedures aim at a rewarding interaction with clients

 CRM-targets on converting clients to function as an organization’s representatives

 CRM-implementations require participation and procuration of employees

 CRM requires adequate technological support

Figure 2: Customer Relationship Management (CRM)

Source: Author’s figure

As shown in figure 2, customer interactions must be managed across multiple communication channels, like for example call centres, web applications and e-mails, dealers or partners, and field sales. The coordination and linking of purposes in direct customer processing and those that support the back-office area is significant for success. All customer information must be collected, analysed, and used in a meaningful way accordingly. Numerous corporations also keep various principles of business with several overlapping clients. The defiance lies in making it uncomplicated for clients to do commercial activities in a manner they like or prefer to do it anytime, via any channel, and in every currency or language.

Furthermore, it should be achieved to give them the impression that they are interacting with a solitary corporation that pays attention at all touch points. Finally, CRM should make a directed commonly advantageous profitable interaction with clients possible (Rai, 2013, p. 31).

Customers

Call centre

Field Web and e-mail

Partners

Customer

information Back office

Marketing Analytics

As it can be seen in figure 3, the strategic component of a holistic CRM-approach includes long-term goals and principles. These flow directly into the various main- and sub-processes of the corporation. The CRM-strategy is derived after these guidelines have been adjusted to the respective framework conditions of the organization. As a result, various building blocks that build on one another can be identified that aim at economic success. Based on an entrepreneurial orientation towards the customer, customer satisfaction needs to be achieved through CRM-activities. This creates an incentive for the customer to maintain the business relationship (customer loyalty). The longer the customer can be bound to the company, the higher its value.

This is due to the falling costs of maintaining contacts and the increased consumption of services. CRM-systems represent the technological aspect (Torggler, 2007, p. 5).

Figure 3: Holistic CRM-approach

Source: Torggler, 2007, p. 5

As shown in figure 3, CRM is a holistic concept that contains both, a management and technology component, and is based on the control and coordination of the interactions of a corporation with existing customers, as well as activities that affect potential new customers (Laudon, Laudon, and Schoder, 2010, pp. 533-534).