Customer relationship management 2nd peelen beltman

Second Edition

Customer Relationship

Management
Ed Peelen Rob Beltman

‘CRM has gone through many changes and developments over the years. But a constant factor is the
inspiration Ed Peelen provides by combining solid theoretical knowledge with practical examples and
business applications.’
Hans Zijlstra, Head of Customer Insight, Air France-KLM
‘This book recognises the major shortcomings of most CRM books – that is, the focus on the tactical,
systems approach to managing customers. This book establishes the need for CRM strategies not only to
be developed, but to be consistently used as an aid to long-term organisational profitability.’
Dr John Oliver, Associate Professor, The Media School, Bournemouth University, UK
‘This book inspired me during the defining process … of our CRM implementation at
PricewaterhouseCoopers in the Netherlands. The book kept me on track and saved me from operational
pitfalls. This CRM “bible” provides vision in establishing the backbone of any company’s
CRM programme.’
Gerard Struijf, Chairman PvKO (Platform for Customer-Centric Entrepreneurship), former Senior Manager
CRM, PricewaterhouseCoopers, the Netherlands

Most businesses know that how they manage their relationships with their customers is vital to their success.
Yet the field of Customer Relationship Management lacks proper academic coverage. Ed Peelen’s Customer
Relationship Management is the only comprehensive academic text in English to cover the entire scope of CRM.
This fully updated second edition cements its position as essential reading for anyone who wants to understand this
continually evolving field.
Addressing the strategic, organisational, commercial and technological aspects of CRM, Peelen brings a social
psychology perspective, blending theory and practice to aid a full understanding of the subject. The book is
geared towards advanced undergraduates and MBA students, but is ideal for anyone taking courses in Customer

Relationship Management, Relationship Marketing, Direct Marketing or Database Management.

Rob Beltman is also a partner at ICSB.

www.pearson-books.com

Front cover image:
© Getty Images

Ed Peelen is one of the founders and partners of ICSB, a consulting firm in
marketing and strategy. He was Professor of Marketing at the Centre for
Marketing and Supply Chain Management, and the Executive Management
Development Centre at Nyenrode Business University, the Netherlands.


Customer Relationship Management

i


Contents

ii


Contents

Second edition

Customer Relationship

Management

Ed Peelen and Rob Beltman

iii


Pearson Education Limited
Edinburgh Gate
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United Kingdom
Tel: +44 (0)1279 623623
Web: www.pearson.com/uk
First UK edition published 2005 (print)
Second edition published 2013 (print and electronic)
© Pearson Education Benelux and Ed Peelen 2003
Translated by ABK Translations (print)
© Pearson Education Limited 2005 (print)
© Pearson Education Limited 2013 (print and electronic)
The right of Ed Peelen to be identified as author of this work has been asserted
by him in accordance with the Copyright, Designs and Patents Act 1988.
This edition is translated by Rob Beltman.
The translation of Ed Peelen: Customer Relationship Management, 2nd edition is
published by arrangement with Pearson Education Benelux BV, Amsterdam.
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electronic, mechanical, recording or otherwise, permission should be obtained from
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Kingdom should be obtained from the Copyright Licensing Agency Ltd, Saffron House,
6−10 Kirby Street, London EC1N 8TS.

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as specifically permitted in writing by the publishers, as allowed under the terms and
conditions under which it was purchased, or as strictly permitted by applicable copyright
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of the author’s and the publishers’ rights and those responsible may be liable in law
accordingly.
All trademarks used herein are the property of their respective owners. The use of any
trademark in this text does not vest in the author or publisher any trademark ownership
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Pearson Education is not responsible for the content of third-party internet sites.
ISBN: 978-0-273-77495-2 (print)
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British Library Cataloguing-in-Publication Data
A catalogue record for the print edition is available from the British Library
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A catalog record for the print edition is available from the Library of Congress
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NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION


Brief contents
Preface
Acknowledgements
About the authors

Publisher’s acknowledgements

Part I
Introduction
1 Customer–supplier relationships
2 Customer relationship management

Part II
Strategy and organisation
3 CRM as an integral business strategy
4 The relationship-oriented organisation

Part III
Intelligence
5
6
7
8
9
10

xiii
xv
xvi
xvii

1
3
32

47
49
67

91

Customer knowledge strategy
Customer data management
Data analyses and data mining
Segmentation and selection
Retention and cross-sell analyses
Management reporting: measuring, learning and optimising

178

Part IV
Marketing (Managing the exchanges in the relationship)

201

11 The customer proposition
12 The relationship policy

Part V
Channels
13 Multichannel management
14 Personal selling

93
117

135
147
161

203
229

251
253
277

v


Brief contents

15 The online environment
16 Contact centre management

Part VI
CRM systems and their implementation
17 CRM systems
18 Implementation of CRM systems
19 The future
Index

vi

296
326

349
351
375
396
405


Contents
Preface
Acknowledgements
About the authors
Publisher’s acknowledgements

xiii
xv
xvi
xvii

Part I  Introduction
 1 Customer–supplier relationships
1.1
1.2
1.3
1.4
1.5

History
Description of customer–supplier relationships
The dynamic in relationships

Networks
Conclusion

Case study: Collateral trust obligations
Questions
References

 2 Customer relationship management
2.1
2.2
2.3
2.4
2.5

The definition of CRM
CRM building blocks
Entrance, applications and success of CRM
Contents of this book
Conclusion

Case study: CRM at C. Fun Parks
Questions
References

3
4
5
15
19
26

26
28
29
32
33
36
40
41
43
43
45
46

Part II  Strategy and organisation
 3 CRM as an integral business strategy
3.1
3.2
3.3
3.4

The nature of the CRM strategy
The context of the CRM strategy
The results of a successful CRM strategy
Conclusion

Case study: Starbucks in the US
Questions
References

49

50
56
59
63
63
65
65

vii


Contents

 4 The relationship-oriented organisation
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9

The challenge and leadership
Mission
Culture
Structure
People
Communication and information

Systems
Where do we stand?
Conclusion

Case study: A personal experience: customer focus in healthcare
insurance
Questions
References

67
68
69
71
73
76
78
79
83
85
86
88
88

Part III  Intelligence
 5 Customer knowledge strategy
5.1
5.2
5.3
5.4
5.5

5.6
5.7

The value of customer knowledge
The utilisation of data as an asset
From data to customer knowledge
Privacy
Personal Data Protection Act
Information policy
Conclusion

Case study: Customer knowledge at Center Parcs:
a life-long holiday!
Questions
References

 6 Customer data management
6.1
6.2
6.3
6.4
6.5

Customer identification
Expanding the size of the customer database
Customer profiling
Customer data integration
Conclusion

Case study: Optimisation of addresses for European football

Questions
References

 7 Data analyses and data mining
7.1
7.2
7.3
7.4

viii

Experiences with data analysis
The analysis process
Data mining
Conclusion

93
94
98
101
107
108
111
112
113
115
115
117
118
122

124
130
131
132
133
134
135
136
137
141
144


Contents

Case study: SNS Bank wins CRM Innovator Award

144

Questions
References

145
146

 8 Segmentation and selection

147

8.1 Segmentation study as input for the formulation of marketing strategy

8.2 Segmentation research used in compiling the list
8.3 Conclusion

148
152
157

Case study: Alpe d’HuZes
Questions
References

158
159
159

 9 Retention and cross-sell analyses

161

9.1 Retention
9.2 Cross-selling
9.3 Conclusion

162
167
174

Case study: Cross-selling within a fully automated convenience store
Questions
References

174
176
177

10 Management reporting: measuring,
learning and optimising

178

10.1 Evaluating the effect of marketing activities
on the customer value
10.2 Relating marketing investments to life-time value
10.3 Experiments
10.4 The learning organisation
10.5 Conclusion

179
185
190
193
196

Case study: Carglass wins CRM Award
Questions
References

197
199
199

Part IV  Marketing (Managing the exchanges in the relationship)
11 The customer proposition
11.1
11.2
11.3
11.4
11.5
11.6

Customisation
Co-creation
The long tail: the complete assortment
Individualisation of the product offering
Individualised pricing policy
Conclusion

Case study: Nike+
Questions
References

203
204
208
213
216
219
225
225
227

228

ix


Contents

12 The relationship policy

229

12.1 Customer asset management: improvement in the size
and quality of the customer database
12.2 Acquisition policy
12.3 Relationship policy by segment
12.4 Relationship policy and life events
12.5 Relationship policy by relationship phase
12.6 Translating the relationship policy into contact moments
12.7 Conclusion

230
232
233
235
240
243
246

Case study: The relationship between a logistics service
provider and its new client

Questions
References

246
249
249

Part V  Channels
13 Multichannel management
13.1 The multichannel challenge
13.2 The key questions underlying a multichannel strategy
13.3 Should the multichannel strategy be adapted?
13.4 What is the right channel combination?
13.5 Translating the channel combination into an integrated multichannel strategy
13.6 The business case for a multichannel strategy
13.7 Building a multichannel organisation
13.8 Performance measurement in the multichannel environment
13.9 Stimulating customers to use the channel mix
13.10 Conclusion

254
257
257
262
266
268
269
271
272
273

Case study: KPN business portal
Questions
References

273
275
275

14 Personal selling
14.1
14.2
14.3
14.4
14.5
14.6

The role and function of personal sales
Customer selection and customer value
The sales process
Managing the sales process
Information technology and sales
Conclusion

Case study: Secrets of success for going mobile: Agrifirm wins the CRM Award
Questions
References

15 The online environment
15.1 The evolution of the web

15.2 Marketing on the social web
15.3 Mobile marketing

x

253

277
278
281
282
285
289
290
291
294
295
296
297
301
309


Contents

15.4 Marketing on the commercial web
15.5 Measuring results
15.6 Conclusion

310

319
321

Case studies: Albert Heijn: where off- and online meet each other;
Harry Potter: a magic brand
Questions
References

321
323
323

16 Contact centre management
16.1
16.2
16.3
16.4
16.5
16.6
16.7

Contact centres described
Determining the service level
Capacity planning
Managing contact satisfaction
Key performance indicators
Managing the development of contact centres
Conclusion

Case study: Zappos

Questions
References

326
327
329
333
336
341
341
344
345
346
347

Part VI  CRM systems and their implementation
17 CRM systems
17.1
17.2
17.3
17.4
17.5
17.6
17.7
17.8

An overview of CRM systems
The contact centre
The internet (web 2.0)
Data warehouses and datamarts

Campaign management systems
Content management system
Selecting CRM software package(s)
Conclusion

Case study: Canada Post delivers on its CRM strategy
Questions
References

18 Implementation of CRM systems
18.1
18.2
18.3
18.4
18.5
18.6
18.7

Reasons for disappointing results
An initial exploration with CRM and how companies handle this
The CRM road map
CRM project management
A different approach to CRM project management
International or cross-division projects (Gentle, 2002)
Conclusion

Case study: Shell and CRM: one database for 20 million customers
Questions
References

351
352
355
358
362
365
368
369
371
371
373
374
375
376
376
378
383
386
388
391
392
394
395

xi


Contents

19 The future

396

19.1 Factors which influence the future of CRM
19.2 The journey continues
19.3 Conclusion

396
399
403

Questions
References

403
404
405

Index

Lecturer Resources
For password-protected online resources tailored to
support the use of this textbook in teaching, please
visit www.pearsoned.co.uk/peelen

xii

ON THE
WEBSITE

Preface
CRM from the start . . .
It was 25 years ago when I was first confronted with relationship marketing. The newly
founded Lester Wunderman Institute approached me with a request to initiate a study on
the subject. Freshly graduated as an economist with a marketing specialisation, this was
both a challenge and the beginning of an interesting discussion with marketing specialists. Following the publication of my first article, marketers began to respond. Nobody
had ever applied theories and concepts from social psychology to relationships between
individual consumers and sellers in the field of marketing. Initial doubts were shortly
replaced by enthusiasm, and a demand for relationship marketing took off. From the outset, Gummesson, Grönroos and Håkansson in Scandinavia, Payne in the UK and Berry in
Canada all played major innovative roles; thus relationship marketing was born.
Over the years, relationship marketing has not attracted universal acclaim in Europe.
Some countries have started slowly or late; with others, their interest related directly to the
economic climate; meanwhile, others have shown continuous commitment. However, all
those who became involved in relationship marketing discovered that the field was more
difficult than at first expected. The necessary data were lacking, owing to the fact that the
majority of organisations were still more product- and market- than customer-oriented.
Acquiring customers had a higher priority than retaining them, and the need to redesign
processes was apparent.
In the 1990s, people became more aware of the development of the buyer–seller relationship and realised that this relationship had consequences for entire organisations. Customer
relationships were no longer just a marketing issue; everybody in the organisation played
a direct or indirect role in customer contact. Relationship marketing was implemented in
organisations and affected company culture, communication patterns and reward systems.
Organisations that had previously been built around factories had to be rebuilt around customers. Conquering markets and achieving market leadership was no longer a company’s primary concern; instead, activities within the organisation had to be orchestrated to ensure they
contributed to the development of mutually profitable relationships with the right customers.
Improved understanding of the organisational consequences brought both advantages and disadvantages to the discipline. It was good to increase knowledge; however,
organisations realised that it was difficult to achieve short-term results with relationship marketing playing an integral role in every aspect of the organisation. In several
countries and organisations the initial enthusiasm evaporated. Management ambitions
went unrealised and clients complained that, as customers, they were being treated
shabbily by companies.

Customer satisfaction rates in the US are at an all-time low.
When we talk to people about their life as consumers, we do not hear praise for their
so-called corporate partners. Instead, we hear about the confusing, stressful, insensitive, and
manipulative marketplace in which they feel trapped and victimized . . . Customers cope . . .

xiii


Preface

They tolerate sales clerks who hound them with questions . . . They muddle through the
plethora of products that line grocery store shelves . . .
Source: Fournier, S., Dobscha, S. and Mick, D.G. (1998) Preventing the premature death
of relationship marketing, Harvard Business Review, January–February, 42–52.

In several countries and companies, CRM might have disappeared completely had it not
been for the information technology industry which introduced CRM systems with great promises. Ambitions regarding buyer–seller relations soared again and earlier negative experiences
seemed to be forgotten within days. The economic climate was prosperous, and visionary
people grabbed our attention. Relationship marketing, now named CRM, was once again high
on top management agendas. Technology would enable us to communicate at low costs with
large numbers of individual customers, educate them, deliver customised solutions to them,
engage and bind them. Customers themselves would play a major role in the transformation of
product- or market-oriented organisations into customer-oriented ones. Customers would take
the lead and would force organisations to build their processes around consumers.
This initial unrealistic enthusiasm was not without consequences for the perception of CRM
in the period that followed. For years, CRM came to be associated with expensive projects
being stopped prematurely. Initial big programmes and projects were replaced by smaller ones
with a fixed scope and clear objectives. In many cases, these small steps appeared to profitable
and helped organisations to learn how to deal with CRM from strategic, marketing, organisational and IT perspectives. The learning process is still going on; we are improving on a daily
basis, but we’re still not there, particularly since the discipline itself continues to evolve as well.

In fact, it’s probably evolving faster than ever before, since social media became popular and
widespread and started to fuel a process wherein the seller’s domination in many instances of
buyer–seller relations is changing. The lead role is partly being taken over by customers, who
are in contact with other customers, asking sometimes for an active role in the relationship,
new pricing models, customised offerings that fit into their physical and social context.
As a consequence bilateral relations have to be seen in the context of social networks.

The promise of this book
In today’s world, organisations are in the midst of a transition process, wondering how to
build mutually beneficial relations with the right customers, in an environment where roles
are changing and media are democratised and open to all. This book helps to find answers
by exploring relations in the midst of social networks. It shows what commercial strategy to
opt for and how to work on an organisation that focuses on the customer. It supports them
in the development of their customer intelligence function and the new customer–service
provider interface, where value is exchanged, if so desired in a co-creative way, and where
the customer experience is facilitated by integrated channels. All this enabled by processes
and technology and monitored through the use of critical performance indicators.
The book opens with an introduction to the topic of customer–provider relations amidst
social relations in networks. The subject is approached on an academic basis. This is followed by a description of CRM; its meaning and its building blocks. Part II addresses the
strategic and organisational aspects of CRM. In Part III we discuss one of the key elements of
CRM: customer intelligence. What do we want to know about our customers and how are we
going to organise for that? Part IV then covers the marketing aspects of CRM. We discuss the
proposition towards customers, the decision to invest in a specific customer relationship and
the way to develop this relationship. Part V examines the channels the organisation can use

xiv


Preface

to interact with customers. From the customer perspective we formulate the multichannel
strategy and decide how to organise these channels. The internet, including social media,
personal selling and contact centres are discussed. The final part of the book addresses CRM
systems and their implementation and concludes with a glimpse into the future.
Old and new experiences are united in this book. Lessons learned from direct marketers,
database managers, project managers, strategists, change masters, internet and social media
experts and contact centres are combined. To achieve a thorough discussion of all aspects of
CRM, the book blends together theory and practice to convey a full understanding of the subject.

The target audience
This book is geared towards MBA students and undergraduate students in the later years of
their study, as well as those attending courses on relationship marketing, CRM, customercentricity, database management or business intelligence. It is also appropriate for graduate
students in information management attending courses on CRM and participants in specific
CRM/database management courses. Students reading this book should have basic knowledge of marketing management.

Pedagogy
To help reinforce key learning points, each chapter includes the following;
●

Sections and sub-sections, which break up the main text to help students digest and retain
the information.

●

Tables, figures and other illustrative material to help the reader grasp the essential facts.

●

Boxes throughout the text with Practitioner’s insights, CRM illustrations and CRM
definitions to reinforce concepts.

●

Case studies, which provide a basis for class discussion or in-depth assessment of a set of
issues.

●

Review questions, which provide a basis for self-assessment by the students or revision
topics at the end of the programme.

While the book can be read from cover to cover, it has also been structured so that parts
can be read independently from one another. For example, Part III (with the exception of the
first and last chapters) on customer intelligence can be omitted from the undergraduate syllabus as this section primarily addresses people with a database management specialisation.

Instructor learning resources
Visit www.pearsoned.co.uk/peelen to access an Instructor’s Manual and PowerPoint slides. For
further information, please e-mail the author at or

Acknowledgements
I would like to thank many people for their pleasant cooperation and support during the
past few years and during the writing of this book. First, I extend thanks to the Pearson
publishers for their support.

xv


Preface

I would also like to mention the initiators of this project, HEO-ICT and the insurance

company Centraal Beheer Achmea. I also extend thanks to several of my students who
wrote their theses on CRM and were a great help. In particular, I thank Wouter Niks, Kees
Ekelmans and Leontine Brandt. It was Pieter Vijn who first introduced me to this subject
all those years ago. He, as well as Gerard Wolfs, Cees den Hollander, Jeffrey Berend, Frank
Slisser, Pauline van Esterik-Plasmeijer, Wojtek Kowalczyk, Wim Kwakernaat and many others have been a great inspiration.
This second edition has been realised with the help of Rob Beltman. Since completing his
MA at Erasmus University, he has been active in the field of CRM as both a consultant and a
lecturer involved in CRM projects on different topics and in a range of industries. He followed
a path comparable to mine, and might be a good successor in the discipline.
Ed Peelen
Rotterdam
Spring 2013

About the authors
Ed Peelen is a partner and co-founder of ICSB Marketing and Strategy.
For over ten years he has been a professor in marketing/CRM at Nyenrode Business
University, responsible for the marketing and supply chain department and for executive
education for several years. He studied business economics at the Erasmus University of
Rotterdam after which he specialised in relationship marketing and direct marketing.
He now specialises in customer relationship management, account management and
marketing in general. He organises several programmes on these topics at Nyenrode for
managers and specialists and is the academic supervisor for several PhD students. He has
written some 18 books and numerous managerial and academic journal articles.
Professor Peelen has been Chairman of the jury of the CRM Award for ten years, an
award presented to the company with the best results in the field of CRM. He is an editorial
board member of the Journal of Direct, Data and Digital Marketing Practice.
He completed his PhD on relationship marketing in 1989 at the Erasmus University,
Rotterdam, and was one of the first to introduce this topic to The Netherlands.
Rob Beltman is partner and senior consultant at ICSB Marketing and Strategy. He supports organisations in becoming more customer-centric and market-oriented and developed a specialisation in Customer Relationship Management and Customer Engagement
Management. He has worked for companies in, for example, financial, agricultural, logistics

and professional services industries, as well as for organisations that have a more social or
governmental background and need to become more market-oriented. During the past ten
years of his consultancy practice he has written several articles and books on the topic, one
of which is based on interviews with chief marketing officers in various organisations.
He completed his MA studies in Business Economics at the Erasmus University with a
study of Customer Relationship Management.

xvi


Publisher’s acknowledgements
We are grateful to the following for permission to reproduce copyright material:

Figures
Figure 1.2 from Contemporary Topics in Social Psychology, General Learning Press (Thibaut,
J.W., Spence, J.T. and Carson R.C. (eds) 1976); Figure 1.4 from Social media? Get
serious! Understanding the functional building blocks of social media, Business Horizons,
Vol.54(3), pp. 241–251 (Kietzmann, J.H., Hermkens, K.. McCarthy, I.P. and Silvestre,
B.S. 2011), Copyright (2011), reprinted with permission from Elsevier; Figure 1.5 from
The role of hubs in the adoption process, Journal of Marketing, Vol.73 (March), pp. 1–13
(Goldenberg, J., Sangman, H., Lehmann, D.R. and Hong, J. 2009), Reproduced with permission of AMERICAN MARKETING ASSOCIATION in the format Republish in a book via
Copyright Clearance Center.; Figure 3.2 from Why satisfied customers defect, Harvard
Business Review, November/December (Jones, T.O. and Sasser Jr, W. 1995), Reprinted
by permission of Harvard Business Review. Copyright © 1995 by the Harvard Business
School Publishing Corporation; all rights reserved.; Figures 3.3, 3.4 from The Loyalty
Effect: The Hidden Force Behind Growth, Profits, and Lasting Value, Harvard Business School
Publishing (Reichheld, F.F. 1996); Figure 4.3 from Putting the service–profit chain to work,
Harvard Business Review, March/April (Heskett, J.L. et al. 1994), Reprinted by permission
of Harvard Business Review. Copyright © 1994 by the Harvard Business School Publishing
Corporation; all rights reserved.; Figure 4.4 from Strategy Maps: Converting intangible assets

into tangible outcomes, Harvard Business Publishing Corporation (Kaplan, R.S. and Norton,
D.P. 2004), Copyright © 1994 by the Harvard Business School Publishing Corporation; all
rights reserved.; Figure 5.4 adapted from Follow That Customer: Event Driven Marketing,
Racom Communications (Bel, E.J.van 2004); Figures 6.1, 6.2 from Mentality: Sociographics
in Marketing, Motivaction International BV (Sprangenberg, F. & Liebreghts, L. 1999),
© Motivaction International B.V. 1999. www.motivaction.nl. Reproduced with permission;
Figures 6.1, 6.2 from Mentality: Sociographics in Marketing, Motivaction International BV
(Sprangenberg, F. & Liebreghts, L. 1999); Figure 9.3 from Genetic algorithms and neural networks versus statistical techniques: a case study in marketing, PASE ’95 Workshop
Proceedings, Mainz, 31 August (Eiben, G., Slisser, F., Peelen, E., Kowalczyk, W. and
Euvermans, T. 1995); Figure 9.4 from Response modeling and target group selection in a
business-to-business market, Henry Stewart Conference Proceedings, Amsterdam, 26 January
(Eiben, G., Slisser, F., Peelen, E., Kowalczyk, W. and Euvermans, T. 1995); Figure 10.3 from
Value Based Knowledge Management, Amsterdam: Addison Wesley Longman (Tissen, R.,
Andriessen, D. and Deprez, F.L. 1998); Figure 11.6 from www.nikeplus.nike.com; Figure 12.1
from Getting the most out of all your customers, Harvard Business Review, July–August,
pp. 117–123 (Thomas, J.S., Reinartz, W. and Kumar, V. 2004); Figure 12.3 from Database
Marketing and Customer Connections, Achmea workshop, Zeist (Wang, P. 1998); Figure 12.4
from The social readjustment rating scale, Journal of Psychosomatic Research, Vol.11(2),

xvii


Publisher’s acknowledgements

pp. 213–218 (Holmes, T.H. and Rahe, R.H. 1967), Copyright (1967), reprinted with
permission from Elsevier; Figure 12.5 from Business Model Generation: A Handbook for
Visionaries, Game Changers, and Challengers, John Wiley & Sons (Osterwalder, A. and
Pigneur, Y. 2010); Figure 12.7 from The Relation Oriented Organisation, Nyenrode University
(Peelen, E. 1999); Figure 13.1 from The Multichannel challenge: Integrating experiences
for profit, Butterworth-Heinemann/Elsevier (Wilson, H., Street, R. and Bruce, L. 2008)

p. 25; Figure 13.2 adapted from The Multichannel challenge: Integrating experiences for
profit, Butterworth-Heinemann/Elsevier (Wilson, H., Street, R. and Bruce, L. 2008) p. 27;
Figure 15.1 from Mobile, Interfaces, Sensors & Singularity, TedxBrainport 2012 Eindhoven
(van Geest, Y, 2012), Reproduced by permission of the author.; Figure 15.2 from Economie
van experiences, 3rd., Amsterdam: Pearson Education (Boswijk, A., Peelen, E., and Olthof, S.
2011); Figure 16.2 from Belloni Business Consultancy Contact Centers; Figure 16.4
from Call Center Management on Fast Forward: Succeeding in the New Era of Customer
Relationships, ICMI Press (Cleveland, B. 2012), Reproduced with permission from the
author; Figure 17.2 from Datawarehousing en daarna, Kluwer BedrijfsInformatie (Jonker, J.
1997).

Tables
Table 1.1 from After the sale is over, Harvard Business Review, Sept/Oct (Levitt, T.
1983), Reprinted by permission. Copyright © 1983 by the Harvard Business School
Publishing Corporation; all rights reserved; Table 1.3 from Commitment to personal
relations, Advances in Personal Relationships, 3, pp. 117–143 (Johnson, M.P. 1991),
Reproduced by permission of Michael P. Johnson, Ph.D. Emeritus Professor of Sociology,
Women’s Studies, and African and African American Studies, Penn State; Table 3.1 from
Inzet customer relationship management de moeite waard, Vrijetijdstudies, Vol 22(4),
pp. 47–51 (Rooy, P. de 2004); Table 8.1 adapted from Optimal Database Marketing:
Strategy, development and data mining, Sage Publications (Drozdenko, R.G. and Drake,
P.D. 2002), © 2002 by Sage Publications, Inc. Reprinted by permission of Sage publications, Inc.; Table 8.3 adapted from Optimal Database Marketing: Strategy, development and
data mining, Sage Publications (Drozdenko, R.G. and Drake, P.D. 2002) p. 220, © 2002 by
Sage Publications, Inc. Reprinted by permission of Sage publications, Inc.; Table 10.1 from
Direct Marketing Management, Prentice-Hall (Roberts, M.L. and Berger, P.D. 1999) Fig. 9,
p. 188, Reproduced by permission of Mary Lou Roberts and Paul D. Berger. available for
download at www.marylouroberts.info; Table 10.2 from Customer Equity: Building and
managing relationships as valuable assets, Harvard Business School Press (R.C. Blattberg,
G. Getz and J.S. Thomas 2001) p. 26, Reprinted by permission of Harvard Business School
Press. Copyright © 2001 by the Harvard Business School Publishing Corporation; all rights

reserved; Tables 10.3, 10.4 adapted from Customer Equity: Building and managing relationships as valuable assets, Harvard Business School Press (R.C. Blattberg, G. Getz and J.S.
Thomas 2001) p. 28, Reprinted by permission of Harvard Business School Press. Copyright
© 2001 by the Harvard Business School Publishing Corporation; all rights reserved;
Table  10.5 adapted from Customer Equity: Building and managing relationships as valuable assets, Harvard Business School Press (R.C. Blattberg, G. Getz and J.S. Thomas 2001)
p. 29, Reprinted by permission of Harvard Business School Press. Copyright © 2001 by the
Harvard Business School Publishing Corporation; all rights reserved; Table 10.6 adapted
from Customer Equity: Building and managing relationships as valuable assets, Harvard

xviii


Publisher’s acknowledgements

Business School Press (R.C. Blattberg, G. Getz and J.S. Thomas 2001), Reprinted by permission of Harvard Business School Press. Copyright © 2001 by the Harvard Business
School Publishing Corporation; all rights reserved; Tables 10.7, 10.8a, 10.8b from Getting
the most out of all your customers, Harvard Business Review, July–August, pp. 163–123
(Thomas, J.S., Reinartz, W. and Kumar, V. 2004); Table 13.1 adapted from The Multichannel
Challenge: Integrating experiences for profit, Butterworth-Heinemann/Elsevier (Wilson, H.,
Street, R. and Bruce, L. 2008) p. 24; Table 15.1 from The future of on-line food retailing
(Cost/profit Analysis, Marketing & Logistics), Food Personality, Jan. (Laan, J.W. van der
2000); Tables 16.1, 16.2 from Call Center Management on Fast Forward: Succeeding in the
New Era of Customer Relationships, ICMI Press (Cleveland, B. 2012), Reproduced with permission from the author.

Text
Case Study on pages 26–28 from Reinventing Financial Services, Pearson Education:
Amsterdam (Peverelli, R. and de Feniks, R. 2010); Case Study on pages 63–64 adapted from
Starbucks in US: Too Much Coffee Spilling All Over? (RTS0132), IBS (Jain, S. 2009); Case Study
on pages 86–87 adapted from Bunt, J. (2012) Klantgerichtheid kan verkeren in klantverlakkerij. Een persoonlijke ervaring uit in de zorgverzekeringsbranche (Unpublished); Case
Study on pages 144–145 adapted from Platform voor Klantgericht Ondernemen (2010)
Persbericht CRM Award. Case Study

on pages 174–176 adapted from Using Association Rules for Product Assortment Decisions:
A case study, ACM (Brijs, T., Swinnen, G., Vanhoof, K. and Wets, G. 1999); Case Study on
pages 345–346 adapted from Zappos Milestone: Customer Service, Footwear News, May
(Beaudry, J.E. 2009), Copyright © 2009 Condé Nast. All rights reserved. Reprinted by
permission; Case Study on pages 371–73 adapted from Canada Post Delivers on Its CRM
Strategy, CS-16-7100, Gartner Inc. (Eisenfeld, B. 2002).
In some instances we have been unable to trace the owners of copyright material, and we
would appreciate any information that would enable us to do so.

xix



PART I

Introduction
What is the true meaning of a relationship? It is a fundamental question to which a book
on customer relationship management should provide an answer. Relationships, between
customers and suppliers and the people and organisations around them are at the heart
of this book. It therefore reflects the more human approach that is nowadays taken to
the subject, in comparison to the more technocratic approach that was dominant when
customer relationship management (CRM) was put on the management agenda in the
1900s by the IT industry. We will describe the relational approach to CRM that we will
adhere to in this book when we further elaborate how organisations can initiate and then
expand mutually beneficial relations with their customers. A brief history of the rise and
evolution of the topic of CRM will be followed by an analysis of its current state and scope.
It covers both strategic, organisational, marketing and IT elements.

Chapter

1

Customer–supplier relationships
The emphasis in classical marketing and sales has been on customer acquisition and
transactions, not on customer loyalty and building relationships. Customer service was
long considered only to be an ‘after sales activity’, not a part of the core of a commercial process. Over the past three decades retaining customers and building relationships
with them has gained attention and with that attention, the roles of marketing, sales
and service have changed. This evolution will be described in Section 1.1. From there
on the concept of relationships will be further defined (Section 1.2); a number of core
elements, such as reciprocity and interactions, trust and commitment will be examined.
Subsequently, the dynamic pattern customer–supplier relationships tend to follow will be
explored (Section 1.3).
In this chapter we will address the following questions:
●

When and how did the relationship orientation arise within marketing?

●

What are the differences between a transaction-based and a relationship-based
orientation in marketing?

●

What is the meaning of customer–supplier relationships?

●

How can we assess the quality or strength of relationships in terms of interactions, trust
and commitment?

●

How can we describe the dynamic of relationships; the relationship life-cycle?

●

How are customer–supplier relationships embedded in less dyadic, networked
relationships, such as are seen in social networks and communities?

PraCtItIoner’s InsIght
It is quite easy for people in an organisation to speak of their relationships with customers,
but further inquiry always reveals they give different meanings to it. For one it is the delivery of quality and service, for another it is to listen and to be customer friendly, and for yet
another it is commitment. Building a common understanding of buyer–seller relationships is
a prerequisite for an organisation to build relationships with their customers.

3