Simply stated, Customer relationship management (CRM) is "a management approach that enables organizations to identify, attract and increase retention of profitable customers, by managing relationship with them, (Source: CRM Strategies, Ovum Report, 1999). CRM systems are an outgrowth of the traditional customer care systems that concentrate on customer loyalty through improved service and communication. The average firm loses 10% of its customers each year due to poor service and sales personnel can spend up to 40% of their time coordinating and managing major account interactions which in turn steals time from revenue-generating activities [Aberdeen-CRM 2000]. As products and services become harder and harder to differentiate, CRMs have become a source of revenue, profitability and value. A study conducted by Andersen Consulting in the Telecom industry found a direct link between CRM improvement and financial improvement of surveyed companies. CRM performance accounts for 50% of the companies return on sales.

 

At present, CRM has evolved into a collection of methodologies, software, and Internet capabilities that help an enterprise manage customer relationships in an organized way. CRM applications, often used in combination with call centers, data warehousing, and Ecommerce applications allow companies to gather and access information about customers' buying histories, preferences, complaints, and other data so they can better anticipate what customers want and need.