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Putting the 'Relationship' Back Into CRM

Many managers think that the way to capture value through relationship marketing is to focus on the "good" customers and get rid of the "bad" ones. But there is a lot more to best practice relationship management than maximizing revenues on individual customers.

There are three important ways in which the current practice of customer relationship management (CRM) fails. First, companies forget that their relationships are not just with consumers, but with people who live rich and complicated lives. Second, because relationships come in different shapes and sizes, companies sometimes forget the need for diverse types of relationships beyond the loyalty ideal. Finally, companies don't recognize that relationships are two-sided and that these relationships evolve with each interaction.

This article provides guidelines for companies that want to improve the overall value of their customer relationships. Companies are encouraged to catalog the types of customer relationships they have, then develop a portfolio of relationships. Companies need to determine which metrics to use to track the health and performance of those relationships, adjusting as they go. For most companies, the transition to a relationship-based approach will require a significant shift in mindset and practice.

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