The Importance of Customer Relationship Management in Business Marketing

Table of Contents

List of Abbreviations

List of Figures and Tables

1 Introduction

2 Characteristics of CRM and B2B

3 Advantages to Business Organisations of Adopting a CRM Approach

4 Framework for CRM in a B2B Context

5 Conclusion and Outlook

Reference List

List of Appendixes

Appendix

List of Abbreviations

illustration not visible in this excerpt

List of Figures and Tables

Figure 1 Relationship Spectrum / Determinants of the Buyer-Seller Relationship

Figure 2 The Customer Relationship Framework

Table 1 Competitive Advantages Gained From CRM Systems

1 Introduction

An increased competitive situation on the basis of similar products, scarce resources, advancements in technology and changes in customer behaviour are forcing companies to consider a sustained and efficient structure of the provision of their services over and above a strong customer orientation. Customer relationship management (CRM), as a part of strategic marketing, can be seen as the emerging management paradigm, with which companies seek to respond to these changing market conditions.

Through the adoption of a CRM system, companies are able to collect and evaluate spe­cific knowledge about their customers in a systematic way, hence primarily improving customer service and customer loyalty. Until recently, companies ignored the impor­tance of this, which lead to a loss of customers and thus a decrease in profitability. Be­yond that, the fact that companies neglect their customers is oftentimes intensified by a lack of appropriate equipment, tools or project management methods (Nguyen, Sherif & Newby, 2007, p. 102). Estimates by some market observers even state that nearly 70 - 80% of all CRM projects fail or do not attain the intended target (Schneider, 2007, p. 1).

Nevertheless, CRM can be an effective and profitable cross-functional management tool for attaining a lasting exchange with customers across all their points of contact and access with a personalised treatment of the most beneficial customers in order to ascer­tain customer retention and the effectiveness of marketing initiatives (Hutt & Speh, 2007, p. 104). The adoption of an effective customer relationship management within the field of business-to-business (B2B) marketing is therefore essential, as companies have to be exceedingly responsive to individual customer preferences, equally requiring a differentiated sales approach in order to raise customer profitability (Bowman & Na- rayandas, 2004, pp. 433-447).

The objective of this paper is to provide a clear overview of the importance of customer relationship management. The coursework is divided into five chapters. Initially, the general theoretic foundations of customer relationship management are explained in chapter two. Thereafter, the specific advantages of adopting a CRM approach for busi­ness organisations will be outlined in chapter three. Chapter four describes a framework of CRM explaining the ideas and techniques within a business marketing context. Fi­nally, in a retrospective analysis of the paper, the research findings will be analysed and an outlook of the future development of CRM in business marketing will be given.

2 Characteristics of CRM and B2B

Customer relationship management is commonly defined as a ‘business strategy that maximizes profitability, revenue and customer satisfaction by organising around cus­tomer segments, fostering behaviour that satisfies customers and implementing cus­tomer-centric processes’ (Nelson, 2003). Another definition delineates CRM as ‘all the tools, technologies and procedures to manage, improve or facilitate sales, support and related interactions with customers, prospects, and business partners throughout the en­terprise’ (Davenport, Harris & Kohli, 2001, p. 63). Above all, CRM places an emphasis on the foundation of sustainable and long-term customer relationships, which make a contribution to both company and customer value. These relationships are a fundamen­tal aspect of business or relationship marketing, which ‘centers on all activities direct toward establishing, developing and maintaining successful exchanges with customers and other constituents’ (Morgan & Hunt, 1994, pp. 20-38). Figure 1 below outlines the continuum of the relationship spectrum that characterises the business market.

Figure 1: The Relationship Spectrum and Determinants of the Buyer-Seller Relationship

illustration not visible in this excerpt

Adapted from: Day, G.S. (2000). Managing Ma]rket Relationships. Journal of Academy of Marketing Science, 28, p. 25; Cannon, J.P., & Perreault, W.D. Jr. (1999). Buyer-Seller Relationships in Business Markets. Journal of Marketing Research, 36, 439-460.

[...]