Advantages & disadvantages of customer relationship marketing

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Relationship marketing is the general marketing concept of using relational software databases to gather data on customers and transactions for use in marketing and sales programs.

This general ideas has expanded in the first decade of the 21st century to involve a company-wide business marketing system known as customer relationship management (CRM). This process includes data collection, analysis and development and implementation of targeted marketing efforts. In an enterprise-wide CRM program, all functional departments have customer-centric roles.

CRM Advantage 1: Improved Customer Experience

One of the defining traits of a true CRM system is its overall emphasis on perpetually improving the total customer experience. This is all of the vital product and service components of your business that effect the customer's experience. By giving all employees access to customer data, the customer has a better opportunity to efficiently and effectively have positive, efficient interactions across all of your company's touch points (in-person, phone, e-mail). Additionally, CRM processes involve analysis of customer transactions and requests for feedback, which are used to constantly improve all facets of the customer's experience.

CRM Advantage 2: Customer Retention and Reduce Costs

CRM is grounded in basic marketing principles of generating customer retention and loyalty. Many companies have long understood that by providing a great customer experience, you generate loyalty that has cumulative affects over time through increased revenue and lower costs. Loyal customers buy consistently and in large volume over time. They typically require less investment to retain than new customer's cost to acquire. Plus, CRM often includes the provision of self-service tools online and in store that reduce manual aspects of store operation while giving customers efficient control of parts of their experience.

CRM Disadvantage 1: Costs

One of the main reasons given by company leaders opposed to implementing a CRM program is the investment. Building a CRM program can have significant costs related to the time involved by CRM teams to develop and implement plans, as well as training of employees on new roles. Additionally, CRM can involve a complete build up of technology infrastructure depending on what an organisation has in place. You may have to buy all of the hardware up front, or license a software solution through a third-party provider.

CRM Disadvantage 2: Company Overhaul

Related to the expense of developing CRM, starting a program often involves a major overhaul of company culture and employee roles. This is especially true when a formerly product-centric company has to become more customer-centric to make CRM work. Each employee is likely to see some changes in his CRM role and responsibilities. This often means overcoming change resistance, setting new cultural norms and training. For instance, information technology (IT), formerly a more employee supporting role, becomes more customer enabling in CRM. This means IT workers have to help implement CRM technology and manage with customer needs in primary focus.