Database Reference
In-Depth Information
The rationale for establishing elaborate relationship-based enterprise architecture
and the framework of Management by Collaboration (MBC) can only be under-
stood in context of the future potential of, for instance, social networks-based Social
CRM. Chapter 14, Section 14.11 “Social CRM via Social Networks” discusses the
phenomenally important concept of Social CRM. Throughout human history, a social turn
has always led to tremendous spurt in human's enterprise. So we are in for an explosive surge
in next few decades that will leave even the information revolution/economy of the 1990's
far behind.
1.4 Summary
Customer relationship strategy is emerging as one of the most important components of corpo-
rate strategy for competitive differentiation and shareholder value. The concept of CRM aims at
identifying the customers that are more profitable to the company and helps in optimizing rela-
tionships with those customers. In today's world of decreasing margins, increasing competition,
and ever-changing business environment, corporate success depends on an enterprise's ability to
build and maintain loyal and valued customer relationships. The key to forge long-term, profit-
able relationships with valuable customers involves two major aspects: customer centricity and
customer responsiveness. The importance of customer relationships is based on a simple fact:
it
can cost four to seven times more to replace a current customer than it does to retain one
. A major step
in this direction is to realize that whereas customer relationships are not all about information, all
customer-related information is certainly about customer relationships.
This chapter looked at the concept of Customer relationship management (CRM). We pre-
sented a definition of CRM and the importance of customer centricity and customer respon-
siveness. Following this, we positioned customer relationship as the core strategy to achieve the
objective of delivering value to customers at a profit. After explaining the concept of
information is
relationship
as the underlying theme of CRM, we discussed related topics such as customer capital,
customer responsiveness, customer loyalty, and measures to cultivate it. With a view to judging the
profitability of customers, we then looked at the concept of customer value and customer lifetime
value. Finally, we introduced the concept of management by collaboration (MBC) as a unifying
framework in the context of the customer-centric enterprise.
It must be highlighted that this chapter discussed major concepts, factors, and issues
in the CRM space without major references to the Internet whose operating charac-
teristics are natural manifestations of many of these concepts.
