Competence-based Customer Relationship Management

With the trend of the integration of world economy, rapid development of free market and the customer demand diversified and changing, many firms feel the intensification and mercilessness of market competition. Generally speaking, the supply and demand of the China market change from shortage to relative overproduction, which leads to the fundamental change in the relationship between firms and customers. It is essential for firms which succeed in market to listen to and care for the demand of customers, to maintain good relationship with them, and create the value they need. To earn the loyalty of target customers and therefore competitive advantage and long-term profits, firms need to construct the support competence of customer relationship management (CRM), develop and maintain interactive customer relationship strategically.Chapter 1 and Chapter 2 point out the necessity of the study from the perspective of practice and theory. To clarify the strategic significance of CRM, the first chapter analyses the origin of the bottleneck of customer, the value of customer relationship, the cumulative impact of customer defection, its effect on firm's study and innovation, the change of operational environment, etc. According to the current situation analysis in more than 50 firms, it is clear that many firms don't have the concept of CRM, while many other firms don't have suitable methods to carry out customer-oriented strategy although they recognize the importance of meeting customer demand. Accordingly, the paper puts forward a research framework of CRM which is based on competence. The second chapter first explores the theoretical origin and the stages of CRM. Then the paper clarifies the concept of CRM. After the theoretical commentary summary of competence-based CRM, the paper points out their shortcomings and thereby reaches the research focuses.The definition of target customers is the base of the CRM, and integration competence of customer information is the key factor to define target customers. Chapter 3 first summarizes the four meanings of customer and the main methods for dividing customers with the emphasis on the profitability, customer loyalty, and strategic division. It also describes the profile of the three most valuable customer groups, namely, the group of profitability, strategy, and loyalty respectively. Furthermore, it clarifies how to establish corresponding relationship with these groups. Having defined the target customers rationally, firms can try their best to retain the most valuable customer group while "fire" those customers who don't have strategic significance or value through suitable ways. Then it explores the growth strategy which is based on the loyal customers, the innovation strategy which is based on the leading or innovative customers, and the moderate competition strategy which is based on customer relationship. In order to identify and define target customers, firms have to improve the corresponding support competence and establish customer database and information network.The loyalty of target customer group is what CRM tries to achieve, and the fundamental path to it is the creation of customer value. Therefore chapter 4 first discusses the concept of customer value. Then it puts forward the three levels of customer value creation, namely fundamental value, customer desired value, and the value of surpassing competitors or customer expectation. After that, it analyzes the main factors to improve customer value. To enhance the value for diversifiedcustomers, the chapter brings forward supply mode, customization mode, and cooperation mode for customer value creation from the two dimensions namely the ability and wish of customer's participation in the value creation, and the importance of customers to firms. Finally, the chapter analyzes the interactive model between customers and firms, thereby providing a framework of qualitative analysis to firms which want to control the demand and supply of customers and change customer's perception.CRM originates f...