Application of Knowledge Management Technology in Customer Relationship Management

Given the important role being played by knowledge management (KM) systems in the currentcustomer-centric business environment, there is a lack of a simple and overall framework tointegrate the traditional customer relationship management (CRM) functionalities with themanagement and application of the customer-related knowledge, particularly in the contextof marketing decisions. While KM systems manage an organization’s knowledge throughthe process of creating, structuring, disseminating and applying knowledge to enhance organizationalperformance and create value, traditional CRM have focused on the transactionalexchanges to manage customer interactions. True CRM is possible only by integrating themwith KM systems to create knowledge-enabled CRM processes that allow companies to......
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Application of Knowledge Management Technology in Customer Relationship Management Knowledge and Process Management Volume 10 Number 1 pp 3–17 (2003) Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/kpm.163& Research ArticleApplication of Knowledge ManagementTechnology in Customer RelationshipManagementRanjit Bose1* and Vijayan Sugumaran21 Anderson School of Management, University of New Mexico, USA2 School of Business Administration, Oakland University, USA Given the important role being played by knowledge management (KM) systems in the current customer-centric business environment, there is a lack of a simple and overall framework to integrate the traditional customer relationship management (CRM) functionalities with the management and application of the customer-related knowledge, particularly in the context of marketing decisions. While KM systems manage an organization’s knowledge through the process of creating, structuring, disseminating and applying knowledge to enhance orga- nizational performance and create value, traditional CRM have focused on the transactional exchanges to manage customer interactions. True CRM is possible only by integrating them with KM systems to create knowledge-enabled CRM processes that allow companies to eval- uate key business measures such as customer satisfaction, customer profitability, or customer loyalty to support their business decisions. Such systems will help marketers address customer needs based on what the marketers know about their customers, rather than on a mass general- ization of the characteristics of customers. We address this issue in this paper by proposing an integrated framework for CRM through the application of knowledge management technology. The framework can be the basis for enhancing CRM development. Copyright # 2003 John Wiley & Sons, Ltd.INTRODUCTION One CRM trailblazer was the gaming company Harrah’s Entertainment, which has successfullyCRM is one of the hottest tools in business combined software and human marketing exper-today. But like total quality management and re- tise to get gamblers into its 25 casinos. Harrah’sengineering before it, CRM has not always lived do a thorough, sophisticated analysis of 24 millionup to its hype (Brown, 2000; Swift, 2001). Still, com- customers in their database. Harrah’s know—howpanies ignore it at the risk of being left behind. frequently customers come, what they play, andSimply, CRM is a high-tech way of gathering mou- they then provide follow-up with continuous com-ntains of information about customers, then using munication over the phone, direct mail and e-mailit to make customers happy—or at least a source and on their Web site. It allows Harrah’s to be par-of more business. It is therefore, concerned with ticipatory rather than being simply reactive. Theirunderstanding and influencing customer behavior technologists refer to it as CRM but their managers(Kotler, 2000). refer it as their loyalty program. Although CRM is the fastest-growing business tool satisfaction with its use currently ranks quite*Correspondence to: Dr Ranjit Bose, Anderson School of Man-agement, University of New Mexico, Albuquerque, NM 87131, low (Winer, 2001). Many companies have startedUSA. Email: bose@mgt.unm.edu to realize that they need both the mountains ofCopyright # 2003 John Wiley & Sons, Ltd.RESEARCH ARTICLE Knowledge and Process Managementinformation on millions of customers as well as an larly in the context of marketing decisions (Helmkeappropriate technical infrastructure coupled with et al., 2001; Massey et al., 2001; Parasuram and Gre-marketing expertise to use CRM satisfactorily wal, 2000). While KM systems manage an organiza-(Zeithaml, 2001). CRM is not necessarily about tion’s knowledge through the process of creating,automating or speeding up existing operational structuring, disseminating and applying knowledgeprocesses; rather, it is about developing and opti- to enhance organizational performance and createmizing methodologies to intelligently manage cus- value (Alavi and Leidner, 2001; Davenport andtomer relationships. Thus, it is about effectively Prusak, 1998; Liebowitz, 1999; Offsey, 19 ...