CUSTOMER RELATIONSHIP MANAGEMENT
Paul Gray
Jongbok Byun
I. INTRODUCTION
Over a century ago, in small-town America, before the advent of the
supermarket, the mall, and the automobile, people went to their neighborhood
general store to purchase goods. The proprietor and the small staff recognized
the customer by name and knew the customer's preferences and wants. The
customer, in turn, remained loyal to the store and made repeated purchases.
This idyllic customer relationship disappeared as the nation grew, the population
moved from the farm communities to large urban areas, the consumer became
mobile, and supermarkets and department stores were established to achieve
economies of scale through mass marketing.
Although prices were lower and goods more uniform in quality, the relationship
between the customer and the merchant became nameless and faceless. The
personal relationship between merchant and customer became a thing of the
past. As a result, customers became fickle, moving to the supplier who provided
the desired object at lowest cost or with the most features.
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The last several years saw the rise of Customer Relationship Management
(abbreviated CRM) as an important business approach. Its objective is to return
to the world of personal marketing. The concept itself is relatively simple. Rather
than market to a mass of people or firms, market to each customer individually.
In this one-to-one approach, information about a customer (e.g., previous
purchases, needs, and wants) is used to frame offers that are more likely to be
accepted. This approach is made possible by advances in information
technology.
Remember that CRM is an abbreviation for Customer Relati ...