Definitions and segmentation

There are many different definitions and interpretations of CRM. The definitions are varied and Iriana & Buttle collected examples from various publications. The overview in Figure 4. reveals, that some researchers believe, that CRM deals with one main topic and the options are manifold. In addition other researchers believe that a combination of focal points better describes CRM. This overview makes it obvious, how important a uniform definition is (Iriana/Buttle, 2007, p. 24).

Figure 4. Variety of CRM definitions Source Iriana/Buttle, 2007, p. 24, own figure

One possible segmentation is operational, collaborative and analytical CRM. Operational CRM supports the day-to-day business in dealing with customers. The focus here is on increasing the efficiency of work processes. Areas such as marketing or sales are supported.

When it is a matter of exchanging information with customers via different channels, it can be summarised under the term collaborative CRM. All channels of communication are considered here, from direct communication with the customer to voice communications, but also exchanges via web stores or e-mails.

Customer relationships generate a large amount of data. In order to be able to draw conclusions about customer needs from this data, or to derive strategic decisions, corresponding data warehouse solutions are required. Solutions in this regard can be titled under the term analytical CRM (METAGroup, 2001, p. 5).

A similar form of segmentation splits the tasks of CRM into strategic, operational and analytical CRM. Strategic CRM is concerned with the sustainable development of processes and value creation. The processes should be defined in such a way that they serve the basic positioning of the company. This involves the orientation of the company, the segmentation of customers or how the customer service is designed. In this definition, operational CRM includes all exchanges of data and information, but also the physical transfer of goods.

Finally, analytical CRM uses all data material to improve the customer relationship. In addition, it is emphasised that all three categories support each other across processes (Payne, Frow, 2005, 169).

A further possibility of differentiation is grouping according to defined goals that are aimed at with a CRM initiative, such as reducing the churn rate or increasing customer satisfaction (Iriana, Buttle, 2008, p. 26).

A CRM strategy requires appropriate planning and a concrete definition of objectives. CRM programmes can be divided into four distinct stages: operational CRM, analytical CRM, collaborative CRM or eCRM. Depending on the strategy to be pursued, it is crucial to determine what to do at the beginning so that the appropriate steps can be taken. The objective of the operational CRM is to collect as much customer data as possible.

Information can be gathered across all communication channels like mails, social media, call centre records or sales processes. All information is stored centrally and made available to all employees in the company. In this way, the information available can help to provide the best possible service to customers. Analytical CRM assumes a more sophisticated use of existing data. A more in-depth analysis is made to determine buying habits, enable customer segmentation or support marketing strategies. The collaborative CRM is closely integrated with existing enterprise systems. The integrated approach allows the integration of additional company data and avoids issues coming from interfaces. eCRM provides information on all possible touchpoints; even data from external partners is provided. The data is exchanged via the intranet and the internet, thus improving communication on all channels (Xu, Walton, 2005, p. 957).

According to literature, CRM can also be categorised into the operational and strategic approach. The strategic approach is analysed more frequently. The strategy definition – in the name of strategic CRM – refers to a long-term orientation towards the customer. The main objective is to acquire new customers, build long-term relationships with them and maintain existing ones. Customer and company equally contribute in this cooperation that is mutually beneficial (Elbeltagi et al., 2014, pp. 130–131).

A CRM strategy that focuses on data accuracy reducing transaction costs is covered by the operational CRM. That position is very limited, because the benefits of CRM are not fully exploited with operational CRM. However, in addition to savings, value creation is also

included. This definition includes front-office support like sales, marketing and service.

Automation of those processes allows an increase in performance and communication with the customer, because responses are faster and better quality. Though, it can be misleading if the focus is only on automation, because this alone does not necessarily require technology (Elbeltagi et al., 2014, pp. 130–131).

However, IT developments brought improvements for the old, established CRM and additional possibilities with the new CRM. Old CRM can be explained as customer relationship management without CRM software, and is thus executable in every company.

Activities in this regard are, for example, data collecting, data-mining, cross-selling, call centre management or the installation of a learning library. On the other hand, the new CRM requires CRM software which can then support customer segmentation, remove unbeneficial customers, or allocate a dedicated person to a predefined customer (Elbeltagi et al., 2014, p.

132).

A comprehensive evaluation, detailed in Table 1, reveals that research has different perceptions of focus on CRM topics (Neumann, 2014, p. 159).

Table 1. CRM focus of different authors.