Enterprise Systems for Management Instructor’s Manual – Motiwalla & Thompson 1
CHAPTER 12: CUSTOMER RELATIONSHIP MANAGEMENT
CHAPTER OBJECTIVES:
Understand the customer relationship process.
Know the evolution, current status, and categories of customer relationship management (CRM)
systems.
Understand the components and architecture of CRM systems.
Examine the CRM life cycle and its relationship with other enterprise software.
Examine the impact of CRM on an organization.
CHAPTER OUTLINE:
I. Opening Case: Walt Disney’s CRM Strategy
II. Preview
III. What is CRM?
a. CRM Evolution
b. CRM Today
c. Types of CRM
Operational CRM
Analytical CRM
Collaborative CRM
IV. Customer Relationship Processes
a. CRM Delivery Processes
Campaign Management
Sales Management
Service Management
Complaint Management
b. CRM Support Processes
Market Research
Loyalty Management
c. CRM Analysis Processes
Lead Management
Customer Profiling
Feedback Management
V. CRM Technology
a. CRM Components
Market Research
Sales Force Automation (SFA)
Customer Service and Support
Data Mining and Analytics
b. CRM Packages and Vendors
c. CRM Architecture
d. On-Demand CRM
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
, Enterprise Systems for Management Instructor’s Manual – Motiwalla & Thompson 2
VI. CRM Life Cycle
VII. Implications for Management
VIII. Summary
IX. Real World Case: Plexipave: A Failed CRM Implementation
CHAPTER OVERVIEW:
Customer Relationship Management (CRM) integrates corporate strategy, business methods, and
technology to accomplish company goals in a customer-centric environment. Goals include maximizing
profitability, revenue and customer satisfaction. CRM technology provides the capture, storage and
analysis of customer, vendor, partner and internal information in real-time. CRM should always focus
on the customer experience. CRM implementation should be customer-driver rather than technology-
driven. For example, Disney’s Pal Mickey is wirelessly integrated with the park through the use of
infrared; its design was based on a strategy to alleviate customer dissatisfaction during peak hours when
long lines would form at rides. To increase customer satisfaction when employees are busy during peak
hours, Pal Mickey offers tour-guide information, suggestions for rides with shorter lines, trivia and
interactive games for young children.
While ERP systems focus on employees and partners of an organization, the CRM systems
focuses on the needs and requirements of the customers and clients. CRM started in the 1980s, using IT
to capture customer data to determine what was important to the client. This led to automate customer
processes including sales force automation, complaint management and marketing automation. The next
evolution saw improvements in data gathering and analysis. This increased efficiency and effectiveness
by allowing for customizable customer processes. Eventually, CRM became a tool for customer
predictability giving “inside advantage” through data mining—by the late 1990s providing a 360-degree
view aimed at personalized marketing, building brand loyalty and growth.
Today, companies have to deliver both quality products and unique dynamic experiences to
customers depending on the current “context” of the individual. From a functionality perspective there
are two types of CRM’s and from an implementation perspective there are three types of CRM:
1. Operational CRM provides front- and back-end support for sales, marketing, administrative, and
customer-service processes. It improves the efficiency of delivery and support.
2. Analytical CRM provides collection and analysis of data gathered during operations to help
create better relationships/experience with clients. It stores and value-adds customer knowledge
for increased understanding of behaviors and needs.
3. Collaborative CRM are the systems that deal with interaction between customer and company.
Using channels like e-mail, telephone, Internet and fax the customer can interact electronically
with the company.
CRM delivery processes deal with direct contact to support the activities of a customer interaction.
They facilitate leads by campaign management and assist the customer throughout the services
processes. Support processes deal with maintaining the customer satisfaction with direct contact by
market research and loyalty management. Analysis processes are back-end systems that collect,
consolidate and analyze customer knowledge. By providing this knowledge to campaign and loyalty
management it improves their effectiveness.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
, Enterprise Systems for Management Instructor’s Manual – Motiwalla & Thompson 3
CRM technology is different from a call center because while a call center focuses on better
communication with the customer, CRM implements a company-wide strategy to reduce costs and
enhance service by increasing customer loyalty. Market research, Sales Force Automation, Customer
Service Support and Data Mining all increase the effectiveness of CRM.
CRM life cycle needs to focus on up-front planning to reduce costs during technology changes.
Functional requirements must be considered before deciding on architecture. Success or failure is linked
to correctly identifying functional requirements. There are many vendors depending on varied
complexities of the information needed. A Hosted CRM from an Application Service Provider like
Salesforce.com can quickly implement basic functions and is less expensive. It is the choice for small to
midsize companies who lack enough internal IT professionals to manage more complex options.
CRM is a strategic business solution and not a technical solution. Management cannot use CRM as
an afterthought; it must be part of the enterprise management solution from the start. It should be
implemented in a step-by-step fashion, starting from the functions deemed most critical. Each CRM
solution is unique and must be customized to meet customer requirements. CRM does come with
drawbacks such as increased responsibility to keep customer information secure and private. Ethical
lines must not be crossed such as selling customer data.
ADDITIONAL RELATED INFORMATION:
1. http://en.wikipedia.org/wiki/Customer_relationship_management
2. http://mediaproducts.gartner.com/reprints/oracle/149500.html Commonly Deployed CRM
ApplicationVendors in 2006 (Gartner, Inc. (22 June 2007))
3. http://www.crm2day.com/library/EEEuukAukEdtvgQDjz.php Choosing a CRM Solution
(Benjamin Holtz, President & CEO of Green Beacon 2008)
4. http://searchsap.techtarget.com/originalContent/0,289142,sid21_gci776528,00.html CRM:
Cutting Through the Hype (By Matt Danielsson, Assistant Site Editor 18 Oct 2001)
5. Also interesting article with a market- leader board and descriptions of companies:
http://www.online-crm.com/leader_board.htm (Accessed 03-31-08)
ANSWERS TO END-OF-CHAPTER REVIEW QUESTIONS:
1. Why is it necessary for an organization to have a good customer relationship management
(CRM) system?
CRM systems are necessary to efficiently and effectively support/maintain one-on-one
relationships with customers to improve their experience and compete in the global market. By
successfully implementing a CRM system, a company can reduce costs and improve customer
satisfaction. Focusing on customer’s requirements helps with the building of brand loyalty and
market growth.
2. Define the role of CRM in your own words.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
, Enterprise Systems for Management Instructor’s Manual – Motiwalla & Thompson 4
CRM captures, stores and analyzes customer data in real-time so the organization can improve
processes that directly impact customer satisfaction and support them. CRM helps efficiently and
effectively carry out its business strategy.
3. What are the key differences between today’s CRM and the early generation of CRMs?
Early CRMs focused primarily on sales management but as technology has evolved, CRM has
developed analytical processes that assess each customer interaction with the company. Today,
CRM is integrated into ERP, which allows for sophisticated data mining that assists with
understanding and predicting customer behaviors and needs.
4. How does CRM impact the company’s bottom line or performance?
CRM can help improve the bottom line if carefully planned and monitored throughout. CRM
should help implement companywide business strategy that will reduce costs and enhance
service by increasing customer loyalty and making quick yet informed decisions in real-time.
5. What are the major types of CRM?
At the highest level, CRM systems can be categorized by functionality (which includes customer
service and sales force automation), by business strategy (which includes business, technology
and customer as shown in Table 12-1 of book), and by the implementation perspective (which
includes operational, analytical, and collaborative CRM implementation processes).
6. Briefly describe the customer relationship processes.
CRM delivery focuses on direct interaction with the customer to support activities to solve a
specific customer process. CRM support focuses on assisting customer contact processes rather
than facilitating them. CRM analyses are back-end systems that collect, consolidate and analyze
customer knowledge improving support for customer contact processes like campaign and
loyalty management.
7. What are the major components of CRM?
Market research tools provide sophisticated segmenting and targeting of customer data in real-
time. Sales force automation provides sales data (forecasting/reporting) that allows reps to focus
more on selling rather than administration. Customer service and support consolidates services
into help desk support centers that can be accessed by trained help desk ticket runners or by
customers via the Internet. Data mining and analytics include OLAP and other software that
looks for trends, demographics and other sales patterns.
8. What is hosted CRM?
A hosted CRM is a type of architecture where the CRM vendor hosts the web site and data.
Scalability and performance are better in hosted models than in-house. The main concern with
hosted CRM is that the vendor might run into down time. An application service provider like
Salesforce.com can offer a hosted CRM for quick implementation for basic functions.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
CHAPTER 12: CUSTOMER RELATIONSHIP MANAGEMENT
CHAPTER OBJECTIVES:
Understand the customer relationship process.
Know the evolution, current status, and categories of customer relationship management (CRM)
systems.
Understand the components and architecture of CRM systems.
Examine the CRM life cycle and its relationship with other enterprise software.
Examine the impact of CRM on an organization.
CHAPTER OUTLINE:
I. Opening Case: Walt Disney’s CRM Strategy
II. Preview
III. What is CRM?
a. CRM Evolution
b. CRM Today
c. Types of CRM
Operational CRM
Analytical CRM
Collaborative CRM
IV. Customer Relationship Processes
a. CRM Delivery Processes
Campaign Management
Sales Management
Service Management
Complaint Management
b. CRM Support Processes
Market Research
Loyalty Management
c. CRM Analysis Processes
Lead Management
Customer Profiling
Feedback Management
V. CRM Technology
a. CRM Components
Market Research
Sales Force Automation (SFA)
Customer Service and Support
Data Mining and Analytics
b. CRM Packages and Vendors
c. CRM Architecture
d. On-Demand CRM
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
, Enterprise Systems for Management Instructor’s Manual – Motiwalla & Thompson 2
VI. CRM Life Cycle
VII. Implications for Management
VIII. Summary
IX. Real World Case: Plexipave: A Failed CRM Implementation
CHAPTER OVERVIEW:
Customer Relationship Management (CRM) integrates corporate strategy, business methods, and
technology to accomplish company goals in a customer-centric environment. Goals include maximizing
profitability, revenue and customer satisfaction. CRM technology provides the capture, storage and
analysis of customer, vendor, partner and internal information in real-time. CRM should always focus
on the customer experience. CRM implementation should be customer-driver rather than technology-
driven. For example, Disney’s Pal Mickey is wirelessly integrated with the park through the use of
infrared; its design was based on a strategy to alleviate customer dissatisfaction during peak hours when
long lines would form at rides. To increase customer satisfaction when employees are busy during peak
hours, Pal Mickey offers tour-guide information, suggestions for rides with shorter lines, trivia and
interactive games for young children.
While ERP systems focus on employees and partners of an organization, the CRM systems
focuses on the needs and requirements of the customers and clients. CRM started in the 1980s, using IT
to capture customer data to determine what was important to the client. This led to automate customer
processes including sales force automation, complaint management and marketing automation. The next
evolution saw improvements in data gathering and analysis. This increased efficiency and effectiveness
by allowing for customizable customer processes. Eventually, CRM became a tool for customer
predictability giving “inside advantage” through data mining—by the late 1990s providing a 360-degree
view aimed at personalized marketing, building brand loyalty and growth.
Today, companies have to deliver both quality products and unique dynamic experiences to
customers depending on the current “context” of the individual. From a functionality perspective there
are two types of CRM’s and from an implementation perspective there are three types of CRM:
1. Operational CRM provides front- and back-end support for sales, marketing, administrative, and
customer-service processes. It improves the efficiency of delivery and support.
2. Analytical CRM provides collection and analysis of data gathered during operations to help
create better relationships/experience with clients. It stores and value-adds customer knowledge
for increased understanding of behaviors and needs.
3. Collaborative CRM are the systems that deal with interaction between customer and company.
Using channels like e-mail, telephone, Internet and fax the customer can interact electronically
with the company.
CRM delivery processes deal with direct contact to support the activities of a customer interaction.
They facilitate leads by campaign management and assist the customer throughout the services
processes. Support processes deal with maintaining the customer satisfaction with direct contact by
market research and loyalty management. Analysis processes are back-end systems that collect,
consolidate and analyze customer knowledge. By providing this knowledge to campaign and loyalty
management it improves their effectiveness.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
, Enterprise Systems for Management Instructor’s Manual – Motiwalla & Thompson 3
CRM technology is different from a call center because while a call center focuses on better
communication with the customer, CRM implements a company-wide strategy to reduce costs and
enhance service by increasing customer loyalty. Market research, Sales Force Automation, Customer
Service Support and Data Mining all increase the effectiveness of CRM.
CRM life cycle needs to focus on up-front planning to reduce costs during technology changes.
Functional requirements must be considered before deciding on architecture. Success or failure is linked
to correctly identifying functional requirements. There are many vendors depending on varied
complexities of the information needed. A Hosted CRM from an Application Service Provider like
Salesforce.com can quickly implement basic functions and is less expensive. It is the choice for small to
midsize companies who lack enough internal IT professionals to manage more complex options.
CRM is a strategic business solution and not a technical solution. Management cannot use CRM as
an afterthought; it must be part of the enterprise management solution from the start. It should be
implemented in a step-by-step fashion, starting from the functions deemed most critical. Each CRM
solution is unique and must be customized to meet customer requirements. CRM does come with
drawbacks such as increased responsibility to keep customer information secure and private. Ethical
lines must not be crossed such as selling customer data.
ADDITIONAL RELATED INFORMATION:
1. http://en.wikipedia.org/wiki/Customer_relationship_management
2. http://mediaproducts.gartner.com/reprints/oracle/149500.html Commonly Deployed CRM
ApplicationVendors in 2006 (Gartner, Inc. (22 June 2007))
3. http://www.crm2day.com/library/EEEuukAukEdtvgQDjz.php Choosing a CRM Solution
(Benjamin Holtz, President & CEO of Green Beacon 2008)
4. http://searchsap.techtarget.com/originalContent/0,289142,sid21_gci776528,00.html CRM:
Cutting Through the Hype (By Matt Danielsson, Assistant Site Editor 18 Oct 2001)
5. Also interesting article with a market- leader board and descriptions of companies:
http://www.online-crm.com/leader_board.htm (Accessed 03-31-08)
ANSWERS TO END-OF-CHAPTER REVIEW QUESTIONS:
1. Why is it necessary for an organization to have a good customer relationship management
(CRM) system?
CRM systems are necessary to efficiently and effectively support/maintain one-on-one
relationships with customers to improve their experience and compete in the global market. By
successfully implementing a CRM system, a company can reduce costs and improve customer
satisfaction. Focusing on customer’s requirements helps with the building of brand loyalty and
market growth.
2. Define the role of CRM in your own words.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
, Enterprise Systems for Management Instructor’s Manual – Motiwalla & Thompson 4
CRM captures, stores and analyzes customer data in real-time so the organization can improve
processes that directly impact customer satisfaction and support them. CRM helps efficiently and
effectively carry out its business strategy.
3. What are the key differences between today’s CRM and the early generation of CRMs?
Early CRMs focused primarily on sales management but as technology has evolved, CRM has
developed analytical processes that assess each customer interaction with the company. Today,
CRM is integrated into ERP, which allows for sophisticated data mining that assists with
understanding and predicting customer behaviors and needs.
4. How does CRM impact the company’s bottom line or performance?
CRM can help improve the bottom line if carefully planned and monitored throughout. CRM
should help implement companywide business strategy that will reduce costs and enhance
service by increasing customer loyalty and making quick yet informed decisions in real-time.
5. What are the major types of CRM?
At the highest level, CRM systems can be categorized by functionality (which includes customer
service and sales force automation), by business strategy (which includes business, technology
and customer as shown in Table 12-1 of book), and by the implementation perspective (which
includes operational, analytical, and collaborative CRM implementation processes).
6. Briefly describe the customer relationship processes.
CRM delivery focuses on direct interaction with the customer to support activities to solve a
specific customer process. CRM support focuses on assisting customer contact processes rather
than facilitating them. CRM analyses are back-end systems that collect, consolidate and analyze
customer knowledge improving support for customer contact processes like campaign and
loyalty management.
7. What are the major components of CRM?
Market research tools provide sophisticated segmenting and targeting of customer data in real-
time. Sales force automation provides sales data (forecasting/reporting) that allows reps to focus
more on selling rather than administration. Customer service and support consolidates services
into help desk support centers that can be accessed by trained help desk ticket runners or by
customers via the Internet. Data mining and analytics include OLAP and other software that
looks for trends, demographics and other sales patterns.
8. What is hosted CRM?
A hosted CRM is a type of architecture where the CRM vendor hosts the web site and data.
Scalability and performance are better in hosted models than in-house. The main concern with
hosted CRM is that the vendor might run into down time. An application service provider like
Salesforce.com can offer a hosted CRM for quick implementation for basic functions.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
