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What Is the Scope of CRM?

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CRM, or customer relationship management, is concerned with the development and maintenance of mutually beneficial relationships with strategically significant partners. Its focus is the creation of long-term value, and not just short-term profits, for the company and all it works with. The scope of CRM can thus be defined according to its constituencies, how long-term value can be created for and with them and the benefits of doing so.

The Customer

The customer is of key importance because only relationships with customers generate revenues for a company. Establishing a good long-term relationship with customers can take the form of the provision of benefits such as special prices and preferential treatment. Doing so can bring about drastic increases in value due to frequent sales from satisfied customers, positive word of mouth, a reduced need for product sampling and advertising, and increased possibility of cross-selling or purchasing of other products.

The Suppliers

Suppliers provide input, such as raw materials, technologies, components, investment, human resources and expertise, to the company’s value chain. In 2010 companies have tended to shift to a smaller number of suppliers and create and maintain long-term relationships with them. Enhanced performance can result from improved communication and coordination with this set of suppliers. Purchasing costs can be reduced thanks to elimination of the need to constantly seek cheaper sources. With fewer vendors, increased cooperation between the remaining parties in the form of management-information system alignment and customer-information sharing becomes possible.

The Owners

Companies may remain private for the duration of their lifespan, remaining the property of single proprietors or many owners. Other companies may start out that way, but at certain points may elect to go public and sell shares in order to spread liability or raise funds for future expansion. Whichever category a company may fall under, it is paramount for its management to establish productive relationships with its owners and create value for them in the form of enduring company and stock value in the long run. A poor long-term relationship can result in investors selling out and in drops in stock value, or in changes of ownership if the company is sold.

The Employees

Employees are central to CRM practitioners. Many businessmen, such as Bill Marriott and Richard Branson, claim that their employees or “internal customers” are their most important constituency, not the customers per se. Should employees be satisfied and happy with their jobs, they will be more apt to provide noteworthy service to the company’s external customers. In short, employee satisfaction drives customer satisfaction. A positive climate for service is less rule-driven, more customer-orientated, and more supportive of personal initiatives.

Other Partners

Establishing a partnering relationship with another company, such as a strategic alliance or joint venture, is done through sharing complementary strengths such as technological expertise, market reach, supplier networks, customer data and customer bases. Partnering with another firm can thus support the creation and delivery of value through increasing efficiency, sharing product development, marketing and distribution costs, and sharing key resources.

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