Strategy and

Organization
A successful CRM strategy requires careful planning and organization.
To maximize its impact, you need to understand your target audience
and their needs. It is important to segment your customer base into
distinct groups based on their demographics, behavior, and other
relevant factors. This allows you to tailor your marketing efforts and
communication to specific customer segments, leading to higher
engagement and conversion rates.

You also need to define your CRM goals and objectives. What do you
want to achieve with your CRM system? Are you looking to improve
customer satisfaction, increase sales, or reduce churn? Once you
have a clear understanding of your goals, you can develop a strategy
to achieve them. This may involve implementing new processes,
integrating your CRM system with other tools, or training your team on
how to use the system effectively.
CRM as Integral Business Strategy
Customer relationship management (CRM) is an essential business strategy that focuses on understanding, nurturing,
and managing customer relationships to achieve long-term success. CRM goes beyond merely providing products and
services. It aims to build lasting relationships with customers, ensuring customer satisfaction and loyalty. By
implementing a robust CRM strategy, businesses can gain valuable insights into customer behavior, preferences, and
needs, enabling them to provide personalized experiences and foster a strong customer-centric approach.

Formulating the CRM Strategy The Three Value Disciplines

A well-defined CRM strategy is crucial for achieving The three value disciplines, operational excellence,
successful implementation. It should clearly outline the product leadership, and customer intimacy, provide a
organization's goals, objectives, and key initiatives. It is framework for understanding and developing a CRM
vital to identify target customer segments, understand their strategy. Operational excellence focuses on delivering
needs and expectations, and tailor strategies accordingly. products and services efficiently and consistently. Product
A comprehensive strategy should address how the leadership emphasizes continuous innovation and creating
organization will leverage customer data, technology, and superior products. Customer intimacy focuses on building
resources to enhance customer relationships. deep relationships with customers, understanding their
needs, and providing personalized experiences.
The Nature of the CRM
Strategy
To understand a CRM strategy, we need to look at the three value
disciplines. These disciplines define how companies create value for
customers and how they differentiate themselves in the marketplace.
The three value disciplines are Operational Excellence, Product
Leadership, and Customer Intimacy.

Operational Excellence Product Leadership

Companies that excel in Organizations that prioritize
operational excellence focus product leadership are driven
on efficiency and cost by innovation and offering
reduction. They aim to cutting-edge products and
provide customers with high- services. They invest heavily
quality products and services in research and development,
at competitive prices. Their seeking to constantly
emphasis is on streamlining improve their offerings and
processes and eliminating stay ahead of the
waste. competition.

Customer Intimacy
Companies with a customer intimacy strategy build deep
relationships with their customers. They focus on understanding
their needs and providing personalized solutions. They prioritize
customer service and strive to create a loyal customer base.
The Nature of the CRM Strategy

Operational Excellence Minimizing Costs Consistent Customer

Companies employing this strategy These companies dedicate resources Experience
prioritize efficiency and cost to improving production processes Companies using this strategy aim to
optimization. They strive to deliver and minimizing operational expenses. deliver a consistent and hassle-free
products or services at the lowest They invest in technology and experience for their customers. They
possible price while maintaining high automation to streamline workflows emphasize clear communication,
quality. Their focus is on streamlined and reduce labor costs. They also transparent pricing, and quick and
processes and consistent customer focus on standardizing processes and efficient problem resolution. Their
experience. minimizing waste. goal is to minimize any potential
customer frustration.
Product Leadership
Innovation and Renewal Customer-Centric Mindset
Product leadership is a core CRM strategy that Product leadership companies are deeply customer-
emphasizes continuous innovation and renewal. centric. They understand that customer satisfaction is
Companies embracing this approach are always looking crucial to long-term success. They prioritize customer
for ways to improve their products and services and feedback and actively seek out opportunities to enhance
surprise customers with the newest and best offerings. their offerings based on customer needs. This customer-
This requires a strong emphasis on research and centric approach ensures that product innovations are
development, and a willingness to take risks to stay ahead relevant and valuable to the target audience.
of the competition.
Customer Intimacy

1 1. Building Customer Relationships 2 2. Cultivating a Desired Customer Base

This strategy prioritizes establishing strong Companies employing this strategy identify their
customer relationships, rather than just transactional ideal customer segment and invest heavily in
interactions. Companies focus on understanding nurturing relationships with these customers. The
customer needs and preferences to build long- focus is on building a loyal and engaged customer
lasting connections. base.

3 3. Knowledge-Based Customer Focus 4 4. Lifetime Value Perspective

Companies leverage customer data and insights to Instead of focusing solely on short-term profits,
tailor their offerings and communication. This deep companies consider the long-term value of each
understanding of individual customer preferences customer. This approach emphasizes building
informs every aspect of the customer experience. enduring relationships that yield ongoing benefits for
both parties.
Offensive vs. Defensive Strategy

Defensive Strategy Offensive Strategy

A defensive strategy focuses on maintaining and Offensive strategies aim to aggressively capture market
defending one's current market position. This is achieved share. This often involves introducing innovative products
by building barriers to entry for competitors. Examples or services, expanding into new markets, and acquiring
include patents, brand loyalty, and strong customer competitors. Offensive strategies require significant
relationships. resources and a willingness to take risks.
Offensive vs. Defensive Strategy
Offensive strategies are proactive and focus on acquiring
new customers and increasing market share. They are
typically riskier, but can also be more rewarding.

Defensive strategies aim to retain existing customers and

protect market share. They are typically less risky, but
may not lead to growth. Companies should consider both
offensive and defensive strategies, choosing the right
approach for their specific situation.
Internal Context for CRM
Prerequisites for CRM Cross-Departmental Impact
Before developing a CRM strategy, an organization CRM implementation is not solely confined to
needs to fulfill specific requirements. The foundation marketing or IT departments. A successful CRM
for CRM success lies in establishing a clear strategy permeates all departments within an
understanding of existing processes, data organization. By integrating CRM across departments,
management capabilities, and organizational organizations can achieve a holistic view of customer
readiness. These aspects provide the necessary interactions and ensure consistent delivery of
foundation for successful implementation and customer-centric experiences. This collaborative
utilization of CRM strategies. approach ensures that all departments work in unison
to meet customer needs.
External Context for CRM

1 1. Customers 2 2. Coemption 3 3. Distribution

A CRM strategy must be Coemption involves preempting The distribution channels used
mindful of the customer's competition by anticipating to reach customers can
changing needs. Businesses customer needs and fulfilling significantly impact CRM
need to understand the them before rivals. This involves effectiveness. Evaluating and
customer's preferences, identifying potential future optimizing these channels for
expectations, and their buying customer demands and offering customer accessibility and
behaviors. It is crucial to gather solutions proactively. By staying communication is essential.
customer insights through data ahead of the curve, businesses This includes analyzing the
analysis and market research to can establish a strong effectiveness of different
tailor CRM strategies competitive advantage through channels like online platforms,
effectively. CRM. physical stores, and customer
service interactions.
Customer Considerations
Customer Appreciation Customer Personality and Culture
A successful CRM strategy requires a mutual interest in It's crucial to understand the customer's personality or
building a long-term relationship. Simply having a the purchasing company's culture. This includes their
supplier's interest isn't enough. Customers must also values, preferences, and communication styles. Tailoring
value the relationship and be willing to engage. the CRM approach to match these aspects is essential for
building trust and rapport.
Coemption and Distribution

Customer Retention Intermediaries

In a monopolistic market, a supplier may not need to Companies using intermediaries to reach customers
expend as much effort to retain customers compared to a should find opportunities within their CRM strategy to
competitive market. This is due to limited customer strengthen these relationships. This involves leveraging the
choices and less pressure to differentiate. Retention intermediary's reach and expertise to engage customers.
strategies in a monopoly can focus on maintaining existing Successful CRM strategies in this context require building
relationships, with less emphasis on acquiring new strong partnerships with intermediaries.
customers.
The Result of Successful CRM Strategy

Long-Term Advantage Mutual Commitment

A strong customer-supplier relationship can provide a Experts like Rowe and Barens believe that only close
competitive advantage. The relationship should protect the relationships built on mutual commitment can lead to long-
supplier from competitors. This requires a commitment term competitive advantage. This means both parties
from both parties. should work together for a shared goal.
Relationship-Oriented Organization
Mission Culture Staff Structure
A relationship-oriented To create a culture that Investing in staff is crucial Organizational structure
organization emphasizes fosters customer for a relationship-oriented plays a vital role in
fostering a mutually relationships, an organization. This facilitating customer
beneficial relationship organization needs to includes hiring individuals relationships.
between itself and its cultivate an environment with strong social skills Implementing a structure
customers. This means where employees are and a passion for that aligns departments
going beyond simply inspired by the right customer service. and teams around
meeting customer needs customers and are Continuous training and customer needs and
and focusing on building empowered to build development programs priorities can improve
genuine, long-lasting strong connections. This are essential to ensure communication,
connections. requires investing in employees have the skills collaboration, and
training, development, and knowledge needed to responsiveness. This can
and recognition programs build and maintain also help ensure a
that promote customer- relationships. consistent customer
centric thinking and experience across all
behavior. touchpoints.
Mission Characteristics

The Purpose The Strategy The Code of Conduct The Value

The purpose outlines the The strategy defines the The code of conduct The value defines the
organization's reason for organization's approach to defines the standards of organization's core
being. It should clearly achieving its purpose. It behavior expected of all principles and beliefs. It
define the goals and sets out the key actions and members of the guides the organization's
ambitions of the decisions that will be taken organization. It guides the decision-making and
organization. This serves as to achieve the organization's interactions ensures that all actions are
the foundation for all organization's goals. with its customers and aligned with its purpose
subsequent actions. other stakeholders. and strategy.
Challenges for Relationship-Oriented
Companies

1 1. Short-Term Focus 2 2. Risk Aversion

A company that prioritizes short-term gains over A company that avoids risks may miss out on
long-term customer relationships may struggle to opportunities to innovate and differentiate itself in
build loyalty. Focusing solely on immediate cost the market. It may be hesitant to embrace new
reduction can hinder investments in customer technologies or invest in customer-centric initiatives,
service, leading to customer dissatisfaction and ultimately limiting its ability to build strong
churn. relationships.

3 3. Reactive Behavior 4 4. Lack of Entrepreneurial Spirit

A company that primarily reacts to customer issues A company with limited entrepreneurial spirit may be
rather than proactively anticipating needs will have a slow to adapt to changing market dynamics and
harder time building trust and loyalty. It needs to customer expectations. It requires a culture that
invest in customer insights and proactive encourages innovation and experimentation to
engagement strategies to foster a sense of create and deliver value in new and meaningful
partnership. ways.
Mission Planning Process
A Collaborative Focus on Shared
Approach Values
The mission planning Align the mission with the
process should be organization's core values.
collaborative. Involve key These values should reflect a
stakeholders from various customer-centric approach.
departments. This ensures a Communicate these values
shared understanding of clearly to all employees. This
goals and values. Encourage will shape their interactions
participation from all levels to with customers.
foster ownership and
commitment.

Building a Sense of Mission

Cultivate a sense of mission among employees. This requires a
clear understanding of the organization's purpose and its impact
on customers. Communicate the mission regularly. Foster a sense
of pride and ownership in the work being done.
Organizational Culture

Shared Beliefs and Values Impact on Interactions Reflecting Internal Etiquette

The culture of an organization is The way employees interact with each The way an organization approaches
comprised of the beliefs, norms, and other can provide insights into the its customers often reflects its internal
values that its employees adhere to. organization's culture. A collaborative etiquette and culture. A customer-
These shared values shape employee and respectful environment can be a centric culture, focused on building
behavior and how they interact with sign of a healthy and positive culture. relationships and delivering excellent
each other. This culture can be service, will be reflected in
positive or negative, influencing interactions with customers.
employee morale and productivity.
Relationship-Oriented Culture

Understanding Customers Embracing Values Nurturing Culture

A relationship-oriented culture is It's crucial for companies to create an A company's culture is malleable and
characterized by a deep environment where employees can be influenced over time.
understanding of customers. The organically embrace the values of Implementing programs, initiatives,
company's employees are genuinely customer-centricity. Forcing and leadership training can shape the
invested in comprehending their acceptance of fundamental norms culture in a desired direction. The key
needs, desires, and pain points. This can be counterproductive and lead to is to create a positive and supportive
understanding extends beyond basic resistance. Authentically cultivating a environment that encourages
demographics and encompasses a culture of customer-centricity is a employees to act in a customer-
holistic view of the customer journey. gradual process that requires centric way.
consistent reinforcement.
Creating a Corporate Culture
Define Shared Values Role Models
A strong corporate culture begins with a clear definition Identify and position individuals who embody the desired
of common values and norms. These values serve as values and norms in leadership roles. These individuals
guiding principles for all employees, influencing their serve as role models for others, demonstrating the
behavior and decision-making. principles in action.

They act as a compass, ensuring alignment and Their behavior and actions reinforce the values, making
consistency throughout the organization. The values them tangible and relatable for employees. This creates a
should be communicated effectively and consistently to positive feedback loop, encouraging others to adopt and
create a shared understanding and commitment. emulate the desired behaviors.
Organizational Structure
Centralized Structure Decentralized
A centralized structure is Structure
where one department or A decentralized structure
individual holds all the power allows different departments
and responsibility for to take ownership of
customer relationships. This customer relationships. This
can be efficient, but it can can be beneficial for
also create bottlenecks and fostering innovation and
stifle innovation. It can make responding quickly to
it difficult to manage and customer needs. However, it
coordinate complex customer can lead to inconsistent
relationships. customer experiences and
difficulty in coordinating
activities across
departments. It requires
strong communication and
collaboration to be effective.

Hybrid Structure
A hybrid structure combines elements of centralized and
decentralized structures. This approach can balance efficiency
and flexibility, offering a good balance between centralized
control and departmental autonomy. It can be effective in
organizations with complex customer relationships and a need for
both consistency and innovation.
Importance of People

1 1. Human Connection 2 2. Social Skills Are Essential

It's crucial to remember that successful customer Relationship-oriented organizations need individuals
relationships are built through human interaction, not who excel at communication, empathy, and
just technology. IT systems can facilitate problem-solving. These social competencies are
communication and record data, but ultimately, essential for understanding customer needs,
people with strong interpersonal skills are the key to building trust, and resolving conflicts.
establishing and nurturing lasting customer
connections.

3 3. Wide Range of Roles 4 4. Comprehensive Customer

From call center agents to service staff, Understanding
administrative personnel, and sales representatives, Effective customer interaction involves more than
individuals across all departments play a role in simply exchanging information. Employees must
customer interactions. Every employee who possess the ability to build rapport, understand
interacts with customers must be equipped with the customer needs, and navigate complex situations.
social skills necessary to foster positive This requires individuals who can empathize with
relationships. customers and build lasting relationships.
Social Competency
Aspects
Empathy Congruence
The ability to empathize with Creating congruence
customers is a vital aspect of between your words and
social competency. This actions is crucial for building
means understanding their trust. This involves being
needs, perspectives, and authentic and genuine in your
emotions. By taking the time interactions with customers.
to listen and understand, Customers can sense when
organizations can build someone is being insincere
stronger connections with or trying to manipulate them.
their customers.

Positive Approach
A positive approach to customer interactions is essential. This
means treating customers with respect and understanding, even
in challenging situations. A positive attitude can go a long way in
building rapport and fostering loyalty.
Communication and Information Quality
Structure's Influence IT and Data Investment
The structure of a business significantly impacts the Investing in information technology and data
quality of communication between parties. A well-defined infrastructure is essential for effective CRM. These
organizational structure facilitates information flow and investments should be strategically planned to ensure that
ensures clear lines of responsibility. Effective they contribute meaningfully to customer information.
communication is crucial for establishing and maintaining Customer data should be accurately collected, analyzed,
strong customer relationships. Customer interactions and utilized to personalize interactions and enhance the
should be seamless and consistent across all touchpoints. customer experience.