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As the Microsoft industry manager for the Customer Management (now often referred to as CRM or Customer Relationship Management) market, I needed to establish the basic foundation of this market for my marketing efforts moving forward.  This article, printed in an insert in one of the industry magazines, was one of those first steps that I took.


Customer Management: Origins and Directions
Matthew B. Ragen
April 1997

Modern business principles have led corporations to continually evaluate and re-evaluate their assets in order to ensure that they are receiving the best rate of return at an acceptable level of risk. In the traditional view, assets refer to anything that carries value: cash, securities, real property, products, other tangible assets, and even patents. As corporations have increased the size of their portfolio of assets, sophisticated asset management theories have been created to help ensure that the organization is making the right choice for allocating those assets properly.

For example, one of the best known theoretical models for evaluating risk and return for securities or other capital assets is the Capital Asset Pricing Model (CAPM). This model is just one of the theories designed to help understand the relationship between risk and return. Complex portfolio models like CAPM have always been used in the securities markets but it, and similar models, can be used for any group of assets where risk and return can be measured. They have been used to construct asset portfolios that are balanced appropriately to meet pre-defined business objectives. These business models are well understood by business managers. In fact, in the last few decades, these theories have been used to create and manage many multinational conglomerates.

However, most businesses have intangible assets as well.  On balance sheets, the accounting industry has long recognized intangibles such as goodwill, trademarks, and other similar line items.


The ‘Customer’ Asset

There is one other important asset that is rarely, if ever, explicitly captured on balance sheets. Astute businessmen have always known that their customers are one of the most important assets of their businesses. However, until the last few years, the ‘customer’ asset has not been managed in its entirety. With the exception of the capital goods market for very costly things such as airplanes or other similar items where each and every potential customer is a known quantity, customers are often an intangible asset.

Unlike the securities market, where theories like CAPM have been used to accurately model the real world, customer relationships and the value associated with them have not had the same theoretical rigor and discipline consistently applied across all kinds of customers in different markets.  In large part, this is because the nature of customer relationships and their purchase intentions is difficult to quantify in small numbers. It is true that good sales managers have always known that their success depends on having enough opportunities flowing into their sales system. If they have a large enough pipeline of opportunities, they will close enough sales to help them make  quota. In other words, the larger their portfolio of possible sales opportunities, the more likely they would be able to meet their sales goals.  The principle involved is often called ‘opportunity management’ and is not significantly different from the management of a large securities portfolio.

It’s also true that many businesses have attempted to apply some aspect of opportunity management, configuration management, or other capabilities to the relationships that they maintain with customers. When these principles are applied consistently across an entire organization with complete acceptance by the sales staff and by management, sales activities can become more effective. Consistent usage across an entire sales organization has resulted in a reasonable payback with more certainty than businesses could count on before the adoption of these tools.

These principles are not new in concept. What is new is that the application of technology has made it possible to effectively manage a group of customers in much the same way that the CAPM theory is used to manage a portfolio of assets.. Ultimately, this is what vendors of sales force automation products are promising – computing technology will result in more efficient management of seller-buyer relationships. When analysts like Gartner Group refer to 5th-generation technology enabled selling products, they are referring to products that meet this kind of promise. Because of the need to manage large amounts of data on a customer relationship, these applications are often data intensive – in fact, they are generally built around relational database systems, such as Microsoft® SQL Server™, that are designed for enterprise-class applications.

Customer Management and Other Opportunistic Terms…

Microsoft refers to this market opportunity as the Customer Management market. There are other terms coined by analysts and vendors that capture the essence of what it takes to help corporations understand, maintain and grow their customer relationships. Some of these terms are:


Customer Asset Management


Customer Interaction Software


Customer Relationship Management


Customer Value Management


Technology Enabled Relationship Management

Even though there is consensus on the concept of customer management, philosophical differences are clearly apparent. The range of different perspectives on how organizations derive value from customer management systems demonstrates the value of the opportunity.

The term ‘Customer Management’ refers to a similar concept where customer relationships are managed holistically. That is, the vendor-customer relationship needs to be maintained from the initial request for information through sale and delivery into the long-term support of the product because customers are often considering their next purchase at the same time as they are receiving support and service for other products. It is particularly critical to ensure that they are pleased with the product and support, as it will be easier to overcome any objections before they will purchase again.

Complete customer management becomes important when managing this complete cycle. For example, sales automation is only a small part of the picture when it comes to customers.  Customers expect more than just a good relationship with their salesperson when they purchase many goods – customers really want to have a complete relationship with their vendors. Consequently, improvements in support and service relationships have also helped result in more profitable customer relationships.

In brief, the customer management market is based around the three ‘S’es that are involved with customer relationships: Sales, Service, and Support. Complete customer management solutions will address, at a minimum, these three requirements.

bulletSales Force Automation products increase productivity in a sales organization.  Products support telemarketing groups in addition to salespeople, most likely in the field, who call directly on customers.
bulletCustomer Service products help to streamline various processes after a customer has purchased a product or service. They often provide a combination of customer account management and customer care and are frequently used to open up cross-selling opportunities with existing accounts.
bulletCustomer Support products are used after the sale.  Not only can these products help to quickly resolve customer issues but they can also help provide valuable feedback to designers of next generation products.

Until very recently, most vendors in this market have not provided solutions that support all three of these aspects of customer management products.  In fact, most vendors designed their initial products to begin at one end of this spectrum – either sales force automation or customer support – and have gradually expanded their focus across this entire spectrum to meet market opportunities.

It’s well known that an existing customer who is satisfied with the products and service that he has received is much more likely to repurchase from the same vendor.  Moreover, that satisfied customer is significantly less costly to sell to than a new, unqualified customer where the sales team needs to start from ground zero in building a relationship. On the other hand, an unsatisfied customer can do considerable harm to a sales effort through bad word of mouth to other potential customers.

The current leaders in customer management applications already are providing integrated solutions that help keep salespeople in closer touch with support and service departments. For example, if a salesperson knows that a particular customer is having a support problem, he can determine an appropriate strategy for addressing this before calling on his customer next. Many analysts refer to this as a complete team-selling approach that integrates multiple departments within a corporation around one common goal of making the customer relationship successful. This is one result of a complete customer management solution – making it easier to arm salespeople with information that is relevant to a particular customer.

The point is clear: satisfied customers lead to greater profits.  This is the market opportunity that customer management products are designed for a consolidated effort to sell, service and support customers more efficiently.  A single, comprehensive system that helps multiple departments with multiple points of contact manage all aspects of the vendor-customer relationship. The customer management market is based on the creation of synergy between sales, service and support. The interaction of these factors in customer relationships creates incremental value for an organization.

Today, customer management products are primarily designed for client-server configurations.  They are based around a database such as Microsoft SQL Server – and sometimes around messaging standards for improved communications capabilities. Many corporations have found that building their implementation around Microsoft platforms and tools eases customization and quickens deployment of integrated customer management solutions resulting in reduced cost of ownership. Because they have a consistent environment on their desktops and servers, the use of Windows® and BackOffice™ makes it easy to build and administer solutions for small businesses and big multi-site enterprises.


The Internet Dimension

In the future, products derived from Internet-based technologies will become a significant factor in defining the relationship between a customer and their vendors. Some analysts consider the Internet to be the ultimate market for “Unassisted Buying” while others think that it will form the basis for “Unassisted Selling”.  The name really doesn’t matter. What will make a difference is that the application of technology to the way that vendors present their products on the Internet and the way that the treat their “virtual” selling relationship will ultimately depend on how well they can really manage the entire spectrum of the buyer-seller relationship.

For example, many corporations are already using merchant technologies such as Microsoft’s Merchant Server to complete sales transactions on the Internet. They expect that a potential customer will visit a web site, identify the products they need, and then purchase them. Many technology vendors today provide customer support for their products through their Internet web sites.

Imagine the power available to a corporation that integrates customer support with sales capabilities on the Internet.  When a customer visits a web site, he can be automatically notified of a new product or, alternatively, he might be shown a support bulletin on a product that he’s registered for. Either way, the automated level of service is part of the customer management environment. Moreover, the fact that he has seen the information can be logged in the customer management database. Then, the next time his salesperson calls on him, in person, they can discuss the products that the customer has purchased across the web or support issues that he has logged into the web site.

These web sites become “virtual call centers” on the Internet. They will become commonplace regardless of whether the sale is consummated online through a merchant server or offline through more traditional sales models. With the volume of potential sales, the customer management model based on all three fronts of sales, service and support will still need to be handled. With the Internet, though, it is easier to gather information on a potential customer and post a screen pop that will help an agent provide the most effective followup. The traditional customer management vendors are targeting these opportunities.

Customer Management applications for sales force automation, customer service, and customer support offer enormous opportunities with today’s integrated products. Microsoft is providing the platforms and tools to build the best customer management applications – and a wide range of vendors are providing the solutions today.



Note 1: Technology alone will not make customer management projects successful. Many industry analysts and consultants such as Barton Goldenberg of ISM and Barry Trailer of Trailer, Vavricka focus on organizational and personnel issues in addition to management supports.

Note 2: Gartner Group, 1996.

As Microsoft’s Worldwide Marketing Manager for the Customer Management markets, Matt Ragen directs initiatives in sales force automation, call centers, helpdesks, and computer telephony. Mr. Ragen works extensively with Solution Developers who are delivering products based on Microsoft platforms such as Microsoft BackOffice, Windows NT, or Windows 95. For more information on Microsoft’s current directions in the customer management market, connect to on the Internet.

© Copyright, Microsoft Corporation, 1997.  All rights reserved. This document is for informational purposes only.  MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS DOCUMENT. Microsoft, Windows, and Windows NT are registered trademarks and Backoffice is a trademark of Microsoft Corporation.  All other trademarks are the property of their respective owners.


Since that time, there have been a number of books that describe the concept behind applying technology to managing customer relationships, customer examples that show the benefits, and so on.  I've provided a short list of these books; all of these are by authors with more than five years of experience working in this market.

bullet How to Create A Profitable Business Strategy for the Internet and Beyond; Patricia B. Seybold


The Customer Revolution; Patricia B. Seybold


Customer Relationship Management Systems: ROI and Results Measurement; Glenn S. Petersen


High-Impact Sales Force Automation: A Strategic Perspective; Glenn S. Petersen


The One to One Manager: Real-World Lessons in Customer Relationship Management; Don Peppers and Martha Rogers


Capturing; George Colombo


Customer Centered Growth: Five Proven Strategies for Building Competitive Advantage; Richard Whitely, Diane Hessan

Here is a list of other best-selling books on Customer Relationship Management that are available from

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