Crm Constitutes the Heart of Business to Business Marketing

Customer relationship management has become the marketing buzzword of the past two decades with business-to-business firms jumping in, many without really being certain of what they hope to achieve from it, and oftentimes being disappointed with the results.

Gummesson (2004) describes CRM as “the values and strategies of relationship marketing with particular emphasis on customer relationships- turned into a practical application.” CRM has become a necessity to successfully and profitability manage customers and a firm’s relationship with them, with the market reaching a value of approximately $11.5 billion in 2002. (Xu et al. 2002). However, despite this large spending it is estimated that 70% of CRM implementations fail. (Xu et al. 2002). There are a number of reasons for these failures, such as a failure to implement it throughout the organisation and resistance from employees. But in some cases the buyer-seller relationship does not merit a collaborative-style relationship; the customer may only require a transactional relationship. It is because of this reason than I believe that CRM does not always have to constitute the heart of B2B marketing.

Many firms adopt CRM technologies because it is what their competitors are doing, without clarifying exactly what they hope to achieve from it. Many do not realise that they are already undertaking basic CRM practices, without the use of expensive systems such as Oracle or Siebel. Gummesson (2004) points out that the behaviour of the classical industrial salesman in many successful companies was the same that is advocated in relationship marketing, CRM and key account management such as working in the long term, not evaluating customers in terms of profit per year, aiming for the �share of the customer’ and not market share. IBM were doing this in the 1960’s, long before the term CRM was being used.

In the 1980’s successful Japanese firms proved to be leaders in modern management techniques with strong relationships with suppliers, allowing them to produce products of a higher quality and a faster rate than their American and European counterparts. (Ehret, 2004) Their business model focused on economies of scope, as opposed to economies of scale. Industrial firms realised they needed to manage buyer-seller relationships in order to manage cross-functional and cross-organisational processes that would allow them to become more flexible.

Today’s CRM systems are vast multi-functional systems that allow firms to manage multiple elements of relationships with their customers. Xu et al. (2002) offer the four characteristics of CRM as:

1. Sales force automation: Provides easy retrieval of information on customers, deals, products and competitors. Order placement and tracking are integrated so they can be easily monitored.

2. Customer service and support: CRM allows companies to “incorporate an exemplary customer service into its core.” It allows queries to be directed to appropriate experts.

3. Field service: Remote staff can quickly and effectively communicate with customer service personnel to meet customer’s individual expectations.

4. Marketing automation: CRM systems provide up to date information on customers buying habits so that the most effective marketing campaigns can be used to attract new customers and cross-sell to existing customers.

CRM is undoubtedly an important tool for B2B marketers more so than for B2C marketers for a number of reasons. Firstly, customers in B2B markets are much larger in terms of potential revenues they generate and they tend to be smaller in number. Losing just one customer can have a severe effect on company profits. Secondly, business customers have much more specific needs than B2C customers. They are more likely to need tailored products and services.

Before a CRM system is implemented it is essential that a firm looks deeply into its existing situation and identifies a clear view of their CRM priorities and the strategy they will use to meet these priorities through CRM. Rigby et al (as used in Hutt and Speh, 2007) identified a 5 step path in identifying a firms priorities. Once identified and implemented, a clearly defined strategy helps remove the many barriers than often result in the failure of CRM systems.

Firstly is helps to identify the customers a firm should serve. It then allows a firm to identify the best way to deliver products and equally importantly, the service capabilities that are required to �add value’ to your package to your customer. Next, it helps a firm to see what their employees need to develop customer relationships. And finally, it identifies the training employees will need, which will increase employee motivation and loyalty.

Once this strategy has been properly identified, the implementation of the CRM system