Certificate of Special Studies in Administration and Management
SPRING 2005

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Q and A with Paul Olean and Paul Tumulo

Customer Relationship Management

Some of our readers have undoubtedly heard of customer relationship management, but they may not know what it is. Can you describe it?

There may be as many descriptions of customer relationship management (CRM) as there are organizations dealing with it. Some are more specific about the outcome. They focus on the specific goals of CRM, such as better sales, efficient selling processes, etc. Many also emphasize the use of system tolls and computing technology as part of the definition. We take a broader view: that CRM has to do with using information ABOUT customers to build long-term positive relationships with them. This allows for an inclusive approach that does not filter out small organizations that may not have the resources to implement a sophisticated high-technology solution.

Is customer relationship management a new idea? Where did it originate?

Using the broader description of CRM it is easy to see that organizations have been using information about their customers since the beginning of commerce. Local shop owners were intimate with their customers because they saw them almost every day. Through conversations the shop personnel became familiar with their customers' likes, dislikes, and needs. Today those relationships are much more difficult to create. In large organizations, for example, the lack or infrequency of personal contact is not conducive to those one-on-one opportunities to learn about their customers. Technology has stepped in here. The speed and capacity of computing and the sophistication of database technology can help organizations gather, analyze, and utilize information to influence the behavior of customers.

Do you think every company can benefit from adopting customer relationship management practices, or are some companies more ripe for them than others?

The answer is yes, every company can benefit from a culture that strives to understand customers and uses that understanding to achieve organizational goals. Companies that understand that you must create an organizational environment that encourages and embraces the customer as the means to achieve organizational goals are more apt to be successful at it. Companies that view CRM as merely a process for the utilization of technology and data are more likely to be unsuccessful. More organizations seem to fall into the latter category.

What are some of the reasons customer relationship management practices may fail in certain companies?

The biggest reason is the failure to understand that the system must fit the personality, culture, and purpose of the organization. We take the view that organizations are much like human beings. They have personalities that are developed over time. They develop cultures that define how they operate and interact, both internally and externally, and, like human beings, they tend to reject those things that overly disturb their culture or oppose their personality. As we stated earlier, organizations that see CRM as simply a process are generally in for a rough ride. Success in those situations is not common.

Business is a trendy area. Do you think customer relationship management will be with us for a while, or are there signs that it is falling out of favor?

The promise of CRM is a seductive vision. All organizations would love to have the ability to favorably influence their customer's behavior. The rationale is, "If I can sell them more goods or services, have them recommend me more often to others, and help them solve their own product problems, then my business will benefit." With this in mind, CRM will probably be around for some time to come. Companies like Microsoft are still developing CRM applications that can be used by a broader group of organizations. We think the major future trend, though, will be toward smaller organizations implementing a CRM solution. Larger organizations will be more concerned with approaches that have a reasonable return on investment and are compatible with the culture of the organization. Under any circumstances, however, the "if we build it, it will be successful" approach is no longer acceptable. The CRM promise is achievable only when the approach is thoughtful, creative, and integrative. It must be sensitive to the organization as a living entity.

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