Introduction to CRM

CUSTOMER RELATIONSHIP MANAGEMENT

Professor Constant Cheng, PhD

2025
Learning Objectives

• A definition of CRM.
• Three major forms of CRM: Strategic, Operational and
Analytical.
• CRM 1.0 vs CRM 2.0.
• Models of CRM.
• Constituencies with an interest in CRM.
• CRM deployments in several contexts.
Defining CRM

CRM is an organizational capability that centers on the

creation and maintenance of profitable customer
relationships through the design and delivery of superior
value propositions grounded in insights from customer-
related data.
Forms of CRM
Strategic CRM

Strategic CRM aims to foster a customer-centric culture

by focusing on winning and retaining profitable customers through
superior value propositions,
integrated company-wide customer experience management,
and aligning resources and employee rewards with customer value
maximization,
though many businesses struggle to achieve true customer-centricity
due to the significant resources and tough decisions required.
Strategic CRM: PayPal
Case illustration 1.1

PayPal's approach centers on understanding and meeting the evolving

needs and expectations of its customers.
By offering secure, convenient payment options like 'Pay in 4',
expanding into cryptocurrency, and leveraging extensive data to provide
tailored services, PayPal enhances customer satisfaction and loyalty.
This customer-centric strategy involves integrating customer insights
into business decisions, aligning resources and innovations with
customer value, and continuously adapting to market trends, all of
which are key aspects of strategic CRM.
Operational CRM

Operational CRM aims to improve the efficiency and effectiveness of customer-

facing business processes and their integration between different corporate
divisions or teams, particularly through automation.
Operational CRM includes:
Marketing automation (MA) involves the software-based application of rules
and algorithms that execute marketing activities with little or no human
intervention.
Sales-force automation (SFA) is the application of computerized technologies to
support and manage the sales activities of the company whether these be
through customer-facing staff or through self-service channels.
Service automation (SA) involves the application of technology to customer
service operations. It helps companies manage service operations, whether
delivered through call center, contact center, field-service, web or face-to-face
with high levels of efficiency, reliability, and effectiveness.
Operational CRM applications
Operational CRM: Roche
Case illustration 1.2

Roche, a leading research-based healthcare organization and

manufacturer of pharmaceuticals and diagnostic systems.
Roche transitioned from a product-centric to a customer-centric
approach by implementing a Sales Force Automation system
that centralizes customer data, enabling improved customer
understanding, service, and sales effectiveness,
leading to better identification, acquisition, and retention of
customers.
Analytical CRM

Analytical CRM utilizes diverse customer-related data from

internal and external sources stored in enterprise-wide
relational databases,
allowing companies to leverage data mining tools to
enhance customer relationships and achieve customer
relationship goals.
Analytical CRM:
Data and Analytics
Analytical CRM:
Case: Netlix
CRM 1.0 vs 2.0:

Aspect CRM 1.0 CRM 2.0

Customer engagement and
Focus Internal process optimization
experience
One-way communication Two-way communication
Customer Interaction
(company to customer) (company and customer)
Combination of internal and
Data Sources Limited to internal data
external data
Basic data storage and Advanced data analytics and
Technology
retrieval social media integration
Real-time feedback through
Collected through traditional
Customer Feedback digital channels (social media,
methods (surveys, calls)
forums)
High level of personalization
Personalization Limited personalization
and customization
CRM 1.0 vs 2.0 (I):

Aspect CRM 1.0 CRM 2.0

Customer engagement and
Focus Internal process optimization
experience
Collaborative and interactive
Customer Relationship Transactional relationships
relationships
CRM software with social
CRM software for data
Tools and Platforms media, mobile, and AI
management
integration
Advanced analytics with
Analytics Basic reporting and analytics predictive and prescriptive
capabilities
CRM 1.0 vs 2.0 (II):

Aspect CRM 1.0 CRM 2.0

Customer engagement and
Focus Internal process optimization
experience
Broad segmentation based on Detailed segmentation based
Customer Segmentation
limited criteria on comprehensive data
Inclusive and customer-
Implementation Approach Top-down implementation
centric implementation
Multi-channel (social media,
Engagement Channels Primarily email and phone
mobile apps, web)
CRM 1.0 vs 2.0 (III):

Aspect CRM 1.0 CRM 2.0

Customer engagement and
Focus Internal process optimization
experience
Structured and unstructured
Customer Data Structured data data (including social media
data)
Improve operational Enhance customer experience
Goal
efficiency and loyalty
Active participants in the
Customer Role Passive data source
relationship
Personalized and targeted
Marketing Approach Mass marketing
marketing
Real-time feedback and
Feedback Mechanism Delayed feedback
interaction
Real-time and predictive
Customer Insight Historical data analysis
insights
Models of CRM: IDIC

The IDIC model of CRM emphasizes Identifying customers, Differentiating them

by their needs and value, Interacting to strengthen relationships, and Customizing
products and services to enhance customer satisfaction and loyalty.

1. Identify who the customers are and build a deep understanding

of them
2. Differentiate customers to find which customers have most value
now and which offer most for the future.
3. Interact with customers to ensure that you understand customer
expectations and their relationships with other suppliers or
brands
4. Customize the offer and communications to ensure that the
expectations of customers are met.
 Models of CRM: Value Chain

The Value Chain model of CRM focuses on creating value at each stage of the
customer relationship process, from initial contact to post-purchase support, to
enhance customer satisfaction and loyalty while driving business success.
 Models of CRM: Five-Process Model

The Five Process Model of CRM encompasses Strategy Development, Value Creation,
Multi-Channel Integration, Information Management, and Performance Assessment to
enhance customer relationships and drive business performance.
Constituencies for CRM
Commercial Context of CRM

The commercial context of CRM

involves leveraging customer relationship management strategies and technologies
to enhance customer satisfaction, loyalty, and lifetime value,
thereby driving sales growth, competitive advantage, and overall business
profitability.
Businesses use CRM for various purposes:

• banks to manage customer churn, enhance cross-sell performance, and

compete with non-banking mobile service providers;
• auto manufacturers to improve relationships with distribution networks
and end-users;
• technology vendors for disintermediation and efficient customer
segmentation and service; and consumer goods manufacturers to
develop profitable retailer relationships and run cost-effective marketing
campaigns.
Case Study: New Zealand Trade and Enterprise (NZTE)
The third sector: Non-for-profit, NGO, Education, and Gov’t)

New Zealand Trade and Enterprise (NZTE),

a government agency assisting businesses in international
expansion, implemented CRM software to centralize data,
enhancing decision-making and customer engagement by 400%,
and coordinating over 300 annual trade and marketing events to
tailor support and boost the New Zealand economy.

Hyperlink: https://www.nzte.govt.nz/