The impact of CRM


Survival has become very tough in this competitive world, as the global markets fight to acquire the market share irrespective of small or multinational firms. According to Raab, et al. (2008) firms survive by finding the best methods and technology and delivering them in the best ways according to the customer desires and needs. This led to the usage of an analytical tool called Customer Relationship Management (CRM), which help the firms to have competitive advantage over one another, by helping the firm to create and to maintain a database of different types of customer information. 'Know your customers and you know what they buy' (Raab, et al. 2008, p.6). This helps the firms to retain their long term valuable customers and also to attract new customers.

In this report, the main focus lies on the impact of the CRM as an application, related to information, information use and business strategy. The concept of knowledge is also explained in this report as it forms the greater part of human agency, and knowledge exist as tacit and explicit (Hislop, 2005). CRM can be treated as philosophy by focusing on the customer relationship and also as technology in terms of collecting and maintain the data obtained from the customers. By considering CRM as a technology, the integrated usage of Information Technology (IT), Information Systems (IS) and Information Communication Technology (ICT), are essential, from which enormous data are obtained and interpreted for information use.(Mutch, 2008). Information in general is a human activity that is carried out in various forms.

Business strategy is the plan of any organization to achieve their goal or mission of satisfying the customer needs in terms of quality, service and cost. CRM has an impact on strategic planning by improving the customer centric approach, through which customer expectations are met (Band, 1991). According to Greenberg (2004) business strategies are improved with the help of CRM in creating a business environment that lets the customers to manage their relationship with the organization, by sharing their views and expectations.

Customer Relationship Management (CRM):

According to Buttle (2004, p.34) 'Customer Relationship Management (CRM) is a core business strategy that integrates internal processes, functions and external networks to create and deliver value to targeted customers at a profit. It is grounded on high quality customer data and enable by IT'. This mainly includes the collection of valuable information and the appropriate usage of the information after interpreting it into a meaningful data. The implementation of CRM leads to mainly three competitive advantages in a firm such as '(i).Global efficiency, (ii).Multi-market facility and (iii).World-wide learning' (Raab, et al. 2008, p.2). CRM can be viewed in different perspective depending upon the sectors to which CRM is applied. Information Technology (IT) companies viewed CRM as a software application that can be used to stimulate the business process in terms of software development, marketing and maintenance. The three levels of CRM are '(i).Strategic, (ii).Operational and (iii).Analytical' with which CRM application is implemented in many organizations (Buttle, 2004, p.3).

Impact of CRM on Information and Knowledge:


According to Davenport (1997, p. 9) information is the data provided with some kind of 'purpose and relevance' that needs 'unit of analysis, validation on meaning and human mediation'. Information in general is a human activity and managing information is an art of managing people. The information is now easily stored on computers as data, and the structuring of computer database allows the mastering of information complexity. Even though the technological change will improve the information environment information interpreted to all the people in an organization should be the same (Davenport, 1997). CRM collects information in many ways that leads to decision making which in turn have an impact on various sectors like marketing, sales, customer service, Human Resource (HR), Research and Development (R&D), finance (Buttle, 2004). Knox (2007) stated Hierarchical Nature of Information, which defines that various data combine to form information which in turn forms knowledge when information is interpreted to get valuable meaning.

Information Technology (IT), Information Systems (IS) and Information Communication Technology (ICT) create edge over competitors. The use of information has to be carried out in an innovative and systematic way that leads to the development of competitive advantage. There are some factors such as business strategies, tactics, vision of the organization, business plan which facilitates the use of information in an appropriate way. This use of information can be using an example (Callon, 1996).

Knowledge and Knowledge Management (KM):

Awad and Ghaziri (2004, p.33) states that 'knowledge is an understanding gained through experience or study'. It is a skill or experience that a person has, to do a specialized task. Knowledge can be 'factual, procedural or heuristic' and can be related to 'intelligence and common sense' which contributes to CRM (Awad and Ghaziri, 2004, p. 33). The interpretation of meaningful information results in knowledge, that can be explicit and tacit (Little and Ray, 2005).

The Fig: 2, shows the concept of knowledge management which combines people, organizational process and technology in a right proportion for the best use of CRM. Knowledge management is a mixture of knowledge related activities such as inheriting knowledge from secondary sources, combining various aspects of knowledge which can be applied to processes or services and storing in databases (Awad and Ghaziri, 2004). CRM utilizes the concept of knowledge management and tries to use the available knowledge to find the best ways of developing and maintaining strong relationships with customers. In CRM, the main focus of knowledge management is to collect the large volumes of data, then interpret into knowledge through information processing and then finally applying the best suitable data for the business process (Awad and Ghaziri, 2004).

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