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The essence of the information technology revolution and, in particular, the World Wide Web is the opportunity afforded companies to choose how they interact with their customers. The Web allows companies to build better relationships with customers than has been previously possible in the offline world. This revolution in customer relationship management (CRM) has been referred to as the new "mantra" of marketing. However, a problem is that CRM means different things to different people. This article develops a comprehensive CRM model incorporating seven phases: database creation, analysis of the database, customer selection, customer targeting, relationship marketing, privacy issues, and new metrics necessary for evaluating the CRM effort. The article also discusses the implications of CRM for future marketing organizations.
The essence of the information technology revolution and, in particular, the World Wide Web is the opportunity afforded companies to choose how they interact with their customers. The Web allows companies to build better relationships with customers than has been previously possible in the offline world. By combining the abilities to respond directly to customer requests and to provide the customer with a highly interactive, customized experience, companies have a greater ability today to establish, nurture, and sustain long-term customer relationships than ever before. These online capabilities complement personal interactions provided through salespeople, customer service representatives, and call centers. At the same time, companies can choose to exploit the low cost of Web customer service to reduce their service costs and offer lower-quality service by permitting only electronic contact. The flexibility of Web-based interactions thus permits firms to choose to whom they wish to offer services and at what quality level.
Indeed, this revolution in customer relationship management (CRM)1 has been referred to as the new "mantra" of marketing.2 Companies such as Siebel, E.piphany, Oracle, Broadvision, Net Perceptions, Kana, and others have developed CRM products that do everything from track customer behavior on the Web to predicting their future moves to sending direct e-mail communications. This has created a worldwide market for CRM products and services of $34 billion in 1999, a market that is forecasted by IDC to grow to $125 billion by 2004.3
The need to better understand customer behavior and the interest of many managers to focus on those customers who...