Defining customer relationship management

The perusal of the article by Boulding, Staelin, Ehret and Johnston (2005) clearly states that little is known about CRM. CRM, as a leading modern business and market strategy, is employed in the highly competing business environment and has finally become a major concern of business managers (Nwankwo & Ajemunigbohun, 2013).

However, the authors point out that the understanding of the concept differs in

meaning depending on the working arena where it is being used. According to

Rababah, Mohd and Ibrahim (2011), three major reasons explain discrepancies in the understanding of CRM:

 the different academic backgrounds of the researchers and scholars;  CRM is a relatively new field of research that needs more maturity in

conceptualisation; and

 the multidisciplinary nature of CRM, which it is a combination of management, marketing and information system disciplines.

In light of its benefits, CRM is commonly considered as synonymous with organisational success (see Larentis, Antonello & Slongo, 2018; Marzo, Iglesias & Rivera, 2018; Nwakanma & Jackson, 2007). Despite marketing being a discipline in its own right with a considerable amount of literature on CRM, it is worthy to note that the definitions in the current study have been carefully selected in close consideration of their pertinence to the topic under discussion. In other words, for the purposes of this study, only definitions, including aspects that were felt to be necessary to support the discussion of the nature and development of CRM in a retail landscape, have been selected.

To provide some clarity in this regard, Ryals and Knox (2001) define CRM as a relationship orientation, customer retention and superior customer value created through process management. Thus, as a business strategy, CRM is a customer-

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focused business strategy that aims to increase customer satisfaction and customer loyalty by offering more responsive and customised services to each customer. CRM is further defined by researchers (such as Lun, Jinlin & Yingying, 2008; Roberts-Lombard, 2011; Long, Khalafinezhad, Ismail & Rasid, 2012) who refer to CRM as the philosophy, policy and coordinating strategy mediated by a set of information technologies, which focus on creating two-way communication with customers so that firms have an intimate knowledge of customers’ needs, wants and buying patterns.

In the same context, Buttle (2009) defines CRM as the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers and the broader community at a profit. From an information technology (IT) perspective, Rababah et al. (2011) also suggest that CRM is the building of a customer-oriented culture by which a strategy is created for acquiring, enhancing the profitability of, and retaining customers, that is enabled by an IT application, for achieving mutual benefits for both the organisation and customers.

CRM as a culture acknowledges that there is a crucial need for buy-in from the entire organisation according to Berndt and Tait (2013). This would imply that once the organisation decides to embark on CRM, from top management to front office employees, the entire organisation should change.

The IT perspective is also considered by Richards and Jones (2006) cited in

Nwankwo & Ajemunigbohun, 2013) as they define CRM as a set of business activities supported by the alignment of both technology and process directed by strategy and designed to enhance firm performance in an area of customer management. Thus, successful CRM aims at fathoming the desires and needs of the customers, and is accomplished by the integration of these desires with the strategy of the organisation, technology, people and the enterprise process (Fagbemi & Olowokudejo, 2011).

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In summary, it is important to emphasise that, although the definitions from other disciplines are acknowledged, the discussion of the concept of CRM takes place in the overall context of marketing thought.

In Table 4.1, the most important concepts embedded in the above definitions are highlighted.

Table 4.1: Perspectives on customer relationship management

Point of view Description Success requirement Concept

As a process

This improves the relationships between the seller and the buyer. The relationship must be strong and endurable.

The institution should have the ability to discover the customer’s desires and to respond to them.

CRM is creating and enhancing the engagement and relationships with the external parties, especially the agents and end consumers.

As a strategy

The value of the lifetime of the customer with the institution determines the amount and kind of resources that the organisation can invest in a relationship.

The institution should assess its relationship with the customer continuously. It should assign priorities in dealing with him or her on the basis of the quantitative profitability during the lifetime of the customer.

CRM is the investment of the company in the customers who are expected to be valuable for the institution, and the reduction of investment in the valueless customers of the company.

As a philosophy

Customer retention can be achieved better through focusing on establishing relationships and maintaining them.

The customer should be the focus of the attention of the institution, which should be

oriented towards

understanding the changeable needs of the customer.

CRM is not a temporary project, but a work philosophy, which aims at putting the customer in the focus or the attention of the organisation.

As an ability Profitable and long-term relationships only arise when companies are able to customise their behaviour continuously towards every customer.

The company should possess a group of tangible and intangible resources, which the company uses to remodel its behaviour flexibly and continuously towards the customer.

CRM means the desire and ability of the institution to custom its behaviour towards every customer on the basis of the information the customer provides and what the institution knows about that customer.

As a technology

Knowledge management and reaction represent the main resources that the institution needs to establish profitable and long-term relationships with the customer.

The institution should be directed with the functional method, and also the user’s acceptance of the technology applied by the institution in order to establish the customer’s knowledge and reaction management.

CRM is the technology used to integrate sales systems, marketing systems and information systems to establish relationships with customers.

Source: Soliman (2011:168).

Table 4.1 clearly shows that researchers usually approach CRM from different perspectives, which are not exclusive. For the purposes of this study, the following definition of CRM is supported by the researcher:

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A market-based approach, a marketing philosophy, technology-enabled process that treasures customers and their management in terms of provision and integration of consistent feedback for the development of predictive models. CRM is also both a process and a means of understanding customers individually and collectively in terms of lifetime value, driving revenue with the ultimate goal of building loyalty.

For a better understanding of CRM, it is necessary to reflect on the main reasons for implementing CRM and how this marketing concept has evolved.