In the 21st century, technology is key to providing competitive advantage in most businesses. In today’s highly competitive market place, businesses need to find ways to not only attract but maintain customers. A solution was developed that merged traditional consumer business practices with technology, resulting in Customer Relationship Management (CRM) . CRM can be described as a process to make the business philosophy more customer centric, while improving in profitability and revenue. One of the key functions of CRM is that it should be able to extract, previously unutilised, customer information from available data sources and transform it into profitable opportunities. (Kim, Suh, & Hwang)

The benefits of CRM include but are not limited to:

  • Increased customer retention and loyalty
  • Increased customer profitability
  • Efficient customisation of products and services
  • Development of higher quality products and services

An example a CRM success in the aircraft-parts distributor Aviall (Boeing). The company implemented a CRM process that tripled the sales calls, increased the customer base by a third and doubled daily orders while having the retaining amount of staff. This growth and success with customers led to the company earning an extraordinary $3 Billion USD deal with Rolls-Royce. This was possible because the company implemented the CRM process correctly (Rigby & Ledingham).

CRM has 4 key components that have to be managed for there to be a positive effect on a business;

  • Customer Focus
  • CRM Organization
  • Knowledge Management
  • Technology-based CRM

The Key Customer Focus component involves continuously giving customers personalized offering, using customer centric marketing and key customer identification. CRM organization is the process of changing the fundamentals of the business to being more customer centric. Knowledge Management is how the information gained is handled. This is because even with an abundance of information, if not implemented correctly, it can have negative outcomes. Finally, Technology-based CRM delves into the choosing of the correct type of software to implement for a given business. These 4 core components need to be studied thoroughly for the CRM implementation to have positive effects (Sin, Tse, & Yim).

Even with the fundamentals of CRM understood, it may still be a challenge to implement. invested over $1 million USD in a CRM system they developed. They made many mistakes leading to the complete overhaul of the system, costing the company millions in development and loss of customer revenue. There were 4 major mistakes made by as well as other companies include;

  • Early Implementation
  • Mismatched Organization Strategies
  • Over Dependence
  • Lastly Customer Interaction.

The error in early implementation, is due to implementing a CRM system without having a customer strategy leading to a CRM system being unable to properly translate user data into valid information. The error of having a mismatched organization strategy, suggest that the organisation still hasn’t allowed enough change to make it a more customer centric business, resulting in the CRM being ineffective. Over dependence, is when the company depends excessively on the CRM system, resulting in the negligence of standard business practices. The last and most significant error is customer interaction. The CRM process may seem intrusive to some customers, but it is up to the business to be discrete and not overwhelm the customer. If these errors are avoided, a CRM can work to its best potential. (Rigby, Reichheld, & Schefter)

CRM is meant to improve a businesses’ knowledge of its customers to better cater to their needs while improving its growth and profits. The implementation of CRM may seem daunting to many, needing many changes and precautions taken to achieve a positive outcome, but If Implemented properly, the profits greatly outweigh the initial investment.


Kim, J., Suh, E., & Hwang, H. A model for evaluating the effectiveness of CRM using the balanced scorecard. Journal of Interactive Marketing, 17(2), 5–19. doi:10.1002/dir.10051

Rigby, D., & Ledingham, D. CRM done right. Harvard business review, 82(11), 118-130.

Rigby, D., Reichheld, F., & Schefter, P. Avoid the Four Perils of CRM. Harvard Business Review, 80(2), 101-109.

Sin, L., Tse, A., & Yim, F. CRM: conceptualization and scale. European Journal of Marketing, 39(11/12), 1264-1290. doi:10.1108/03090560510623253