Customer-relationship management (CRM) is an organization’s efforts to build and maintain relationships with the people who buy their products and services. CRM became a popular buzzword among marketers in the last decade as new technology improved the ability of firms to gather information about and communicate with their customers using a variety of methods. But as Stephen Horne suggests, “In essence, CRM is your corner grocer knowing you by name, remembering what grade your child is in and suggesting that you pick up extra batteries for the big storm.” Customer-relationship management is based on the reality that, in most markets, it is much cheaper to maintain existing customers than to find new ones. Retailers know they spend hundreds or thousands of dollars for each new customer, but a thank-you note, sample, or discount coupon can stimulate additional purchases from existing customers. A good customer-relationship management program involves applying the MARKETING CONCEPT, thinking of the customer in every aspect of the business, and involving everyone in the organization. Horne defines CRM as “process discipline,” remembering and treating people well. Customer-relationship management involves collecting and using information about existing customers to extend and strengthen relationships. In the 1990s, many marketers jumped on new CRM technology: DATABASE MANAGEMENT, INTERNET customization, and e-mails. But CRM is a process, not a technology. New technologies facilitate building relationships. One of the major issues in American business today is PRIVACY. CRM is based on knowing one’s customers, but some consumers are concerned about the use of technology to invade privacy and distrust institutions involved in collecting information. Direct marketers Michael Staten and Sheila Colclasure report one researcher has found that familiarity fosters trust. Those institutions with which consumers maintain positive relationships are trusted to act responsibly with information about them. “Thus, paradoxically, acquiring more information and showing greater interest in your customers can reduce privacy concerns.”
See also CUSTOMER RELATIONS / SATISFACTION.