Recent trends of fast adoption of CRM, whether as a philosophy, a strategy, an aid to the general marketing effort and mix, or merely as a fashion; as every body else is doing it; is driven by a clear acknowledgement and recognition that long-term relationships with customers are one of the most important assets of an organization and that information-enabled systems must be developed that will give the organization some form of ownership, that is: 'customer ownership'.CRM, SME, IT, e-tools, strategy

Constanta MIHAESCU

Ileana Gabriela NICULESCU-ARON

Miruna MAZURENCU MARINESCU

English

Research Papers in Economics

Informatica Economică, nr. 1 (41)/2007  109
Why should SME adopt IT enabled CRM strategy? 
 
Miruna MAZURENCU MARINESCU, Constanţa MIHĂESCU, 
Gabriela NICULESCU-ARON 
Academy of Economic Studies, Bucharest 
 
Recent trends of fast adoption of CRM, whether as a philosophy, a strategy, an aid to the gen-
eral marketing effort and mix, or merely as a fashion; as every body else is doing it; is driven 
by a clear acknowledgement and recognition that long-term relationships with customers are 
one of the most important assets of an organisation and that information-enabled systems 
must be developed that will give the organisation some form of ownership, that is: 'customer 
ownership'.  
Keywords: CRM, SME, IT, e-tools, strategy. 
 
uccessful long term customer retention 
will most likely result in improved cus-
tomer loyalty manifested in regular and re-
peated profitable business for the company. 
Narrow functionally-based traditional mar-
keting is being replaced by a new form of 
cross functional marketing - CRM. Tradi-
tional approaches to marketing have been in-
creasingly, and gradually adjusted or wholly 
replaced questioned in recent years, focusing 
on the total picture, not only the mere man-
agement of the key marketing mix elements 
such as product, price, promotion and place 
within the functional context of the market-
ing department. 
Customer Relationship Management (CRM) 
is rapidly emerging as a key element that per-
forms a major role in realising corporate 
strategy of many organisations, large and 
small.  
Large organisations, typically employing 
over 1000 people, do possess correspond-
ingly large pools of resources, while medium 
sized organisation, employing some 100 to 
999 personnel, may not have the luxury of 
open ended resources, nor can they any 
longer guarantee an open ended future, with-
out properly marketing their presence effec-
tively than ever before, and especially when 
considering matching larger rivals in both 
image and quality of offerings, whether 
through their traditional marketing approach, 
or thorough adoption of the most optimised 
technology based Targeted Customer Infor-
mation systems that underpins their holistic 
approach to managing their relationships 
with their clients, aiming to provide maxi-
mum satisfaction of the total customer ex-
perience, before acquisition, during transac-
tion period, and long thereafter. 
CRM, may also de described as “relationship 
marketing”, or, ‘customer management”, 
where it has been connected with all activi-
ties connected with the creation, develop-
ment and enhancement of individualised cus-
tomer relationships with carefully targeted 
customers and customer groups resulting in 
maximizing their total customer life-time 
value. 
  Now CRM in its current approach, whilst 
recognising that the above mentioned key 
elements still need to be addressed, whether 
in the traditional way, or through new emerg-
ing e-tools, reflects the need to create an in-
tegrated cross-functional focus on marketing 
- one which will be focused upon keeping, in 
addition to winning customers. The focus is 
therefore shifting from customer acquisition 
to customer retention, through fostering cus-
tomer loyalty, and ensuring the appropriate 
amounts of time, money and managerial re-
sources are directed at both of these key 
tasks. The new CRM is a new shift towards a 
sustainable long term management process.  
 In many companies there is still confusion as 
to what CRM is all about. To some it is about 
a loyalty scheme, to some it is about a help 
desk. To others it is about a relational data 
base for key account management and for 
others it is about mass profiling the customer 
base without undertaking detailed segmenta-
tion. Relatively few organisations have im-
S 
 Informatica Economică, nr. 1 (41)/2007  110 
plemented an integrated approach, which ad-
dresses all the key strategic elements of 
CRM. Only a small number of businesses 
have a clear idea what should be done with 
information technology in order to effec-
tively implement a successful CRM.  
 The amount an organisation spends on mar-
keting is not necessarily related to its market-
ing effectiveness.  Some organisations under-
take relatively little marketing activity and as 
a result have a fragmented customer base, 
poor market positioning and low levels of 
marketing effectiveness. 
Other organisations have been successful 
with relatively little expenditure on market-
ing.  For companies such as Virgin Atlantic, 
The Body Shop and First Direct, public rela-
tions and word-of-mouth marketing have 
been very important to them, so that despite 
fairly low levels of advertising spend they are 
highly effective in their marketing.   
Many organisations, despite heavy invest-
ment in marketing departments and market-
ing activities, have achieved poor results 
from their marketing effects; quite a number 
of financial services companies fall into this 
category. Relatively few organisations have 
adopted relationship marketing and CRM ap-
proaches to effectively harness the tools of 
marketing to deliver real increased customer 
value and, with the help of technology, de-
veloping appropriate long-term relationships 
with customers.    
To achieve success, businesses need to have 
the appropriate measurement systems and 
marketing metrics in place to ensure their ef-
fectiveness in terms of their use of customer-
focused resources. Over the past two decades 
businesses have developed sophisticated ap-
proaches to measurement in other functional 
activities within their business - in Opera-
tions, Finance, IT and Human Resources. 
However, the Marketing function may be the 
last bastion of inadequate and inappropriate 
metrics. A famous businessman is reputed to 
have once said that: “Half the money I spend 
on advertising is wasted - the trouble is I 
never know which half it is.”  This approach 
to marketing is no longer appropriate or ac-
ceptable.   
  Traditional marketing activities which em-
phasise customer acquisition are no longer 
sufficient.  CRM recognises that marketing 
starts after the sale is over, not when the sale 
is completed. 
  
The role of information technology in 
CRM 
In considering how CRM should be imple-
mented, information technology has a pivotal 
role to play in enabling Medium sized com-
panies, in particular, to maximize profitabil-
ity through more precise targeting of market 
segments and the micro segments within 
them. We are now in a new era of technol-
ogy-enabled marketing which involves lever-
aging relationships through the use of tech-
nology. Powerful new technological ap-
proaches involving the use of data bases, data 
marts, data warehouses, data mining and one-
to-one marketing are now assisting organisa-
tions to increase customer value and their 
own profitability. 
Technology can greatly assist in managing 
the data required to understand customers so 
that appropriate CRM strategies can be 
adopted, and further strengthen medium 
sized companies competitive position, and, at 
the same time, the use of IT can transform 
basic raw data into useful metrics aiding in 
company’s effort when determining the eco-
nomic parameters of customer acquisition, 
retention and life-time value. 
Research shows that a 5% points increase in 
customer retention yields a profit, in net pre-
sent value terms, of between 20% and 125%.  
Although many managers are now familiar 
with these findings, our research shows that 
few managers know the profit impact of re-
tention in their own business. Few compa-
nies do even segment their customer base by 
life-time value. A result, they may not adopt 
appropriate retention and acquisition strate-
gies.  
To improve customer retention; three main 
steps are required: customer retention meas-
urement, identification of root causes of de-
fection and related key service issues (Cus-
tomer satisfaction); and the development of 
corrective action to improve retention. 
 Informatica Economică, nr. 1 (41)/2007  111
Measurement of existing customer retention 
rates is the first critical step in the task of im-
proving loyalty. This involves measuring re-
tention rates and profitability analysis by 
segment.   
 Regardless of the approach taken to model-
ing the econometrics of acquisition and re-
tention, life-time value will not only to need 
be identified by market segment, but will 
also need to address how to improve it.   
Clearly improving retention can have a huge 
impact on life-time profitability.  The busi-
ness will also need to consider how they will 
get the greatest benefit from their acquisition 
activities.   
.In business-consumer organisations that do 
deal with a large number of customers, a 
critical issue will be increasing the quality of 
how to handle customer contact through tools 
such as sophisticated call- centers and e-
commerce . 
The ultimate objective of this will be to iden-
tify opportunities for increased profitability 
through enhanced customer acquisition, im-
proved customer retention and targeted cross-
selling. 
  
Developing appropriate metrics 
Central to achieving success will be the de-
velopment of new metrics to measure per-
formance in CRM across the business.  It is 
increasingly being recognized that there are 
linkages between employee-satisfaction, em-
ployee-retention, customer-satisfaction, cus-
tomer-retention, sales and profitability.   
To successfully implement the total service-
profit chain model, culture-change, impact-
ing the behavior of leadership to take respon-
sibility for the company’s culture and to un-
derstand how this impacted, in turn, on com-
pany’s revenues.  In addition, employee-
rewards need to be aligned to the same model 
for financial and non-financial measures.  A 
further pre-requisite change is the streamlin-
ing of IT systems into a single, integrated 
system. 
 
CRM implementation issues 
Where CRM is well understood as a concept, 
many board-level managers are still unclear 
as to how a particular CRM approach should 
be cost-effectively implemented and what 
technology options should be adopted. 
The starting point for introducing or further 
developing CRM must be determined from a 
strategic review of the organisation’s current 
position.  Companies need to address six 
broad issues: 
• what is our core business, and  
• how will this evolve in the future;  
• what form of CRM is appropriate for our 
business now and in the future;  
• what IT infrastructure do we have, and  
• what do we need to support the future or-
ganisation needs; and  
• what vendors and partners do we need to 
choose? 
An organisation should first examine its core 
business and consider how will it evolve in 
the future. It then needs to consider the form 
of CRM that is appropriate for their business 
now and in the future and what organisation 
resources does it have to support the business 
now and in the future. 
Having identified the present and future fo-
cus of CRM, the organisation then needs to 
address the appropriate information architec-
ture to enable their CRM strategy to be im-
plemented.  Stated simply the task is how can 
we exploit technology for improved CRM.   
As organisations increase their sophistication 
they will need to creativity integrate these 
technologies. “planned evolution” is a good 
way of summarising the technology approach 
to building the backbone to support the rele-
vant CRM strategy that has been mapped out 
for the business. 
An essential element of achieving successful 
implementation is to ensure that their strat-
egy is underpinned by viable and appropriate 
technology architecture.  This involves the 
selection of vendors and partners based on is-
sues of customisation capability and other 
appropriate commercial factors including 
both technological and commercial criteria. 
In the very near future, Customer Relation-
ship Management will have advanced con-
siderably and we will have reached much 
more sophisticated level of one-to-one mar-
keting and data mining.  There is now an 
 Informatica Economică, nr. 1 (41)/2007  112 
enormous opportunity for organisations to 
improve their ‘customer ownership’ by build-
ing a co-ordinated and integrated set of ac-
tivities which address all the key strategic 
elements of CRM.   
Ultimately, however, organisations’ success 
in CRM will involve creating an appropriate 
strategic vision for the future, making the ap-
propriate choice of applications, creatively 
using appropriate analytical techniques to 
exploit the data, and choosing the right ven-
dor for supply of the technology solution. 
  
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A framework of dynamic CRM: linking marketing with information strategy.

An evaluation of divergent perspectives on customer relationship management: towards a common understanding of an emerging phenomenon.

Closing the CRM loop: the 21st century marketer's challenge: transforming customer insight into customer value.

Customer relationship management: an analysis framework and implementation strategies.

Gearing up for CRM: antecedents to successful implementation.

The antecedents and consequences of customer-centric marketing.

Ubiquitous organization: organizational design for e-CRM.

Understanding customer relationship management (CRM): people, process and technology.

Why should SME adopt IT enabled CRM strategy?

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