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Management article
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Reference no. SMR44310
Published by: MIT Sloan School of Management
Published in: "MIT Sloan Management Review", 2003
Length: 8 pages

Abstract

In most markets, one or two companies outperform their rivals by staying more closely connected to their customers. Their advantage does not have much to do with customer relationship management tools and technologies; the author''s research confirms, rather, that superior performance is about how a business builds and manages its organization. In particular, successful companies orchestrate three components of the customer-relating capability. First, they have an organizational orientation that makes customer retention a priority and gives employees wide latitude to satisfy customers. Second, they use metrics, incentives and structure (organizing on the basis of customer groups) to produce the proper ''configuration''. And third, they gather and use information about customers that is in-depth, relevant and available through IT systems in all parts of the company. The author uses case studies involving two major credit-card companies and a high-quality chain of hotels to demonstrate how sustained advantage with customer''s results when companies build these components of the capability. The combination of a true customer-directed orientation, the right technology for generating and distributing information, and the proper organizational configuration can help turn a company into a market-driven leader.

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Abstract

In most markets, one or two companies outperform their rivals by staying more closely connected to their customers. Their advantage does not have much to do with customer relationship management tools and technologies; the author''s research confirms, rather, that superior performance is about how a business builds and manages its organization. In particular, successful companies orchestrate three components of the customer-relating capability. First, they have an organizational orientation that makes customer retention a priority and gives employees wide latitude to satisfy customers. Second, they use metrics, incentives and structure (organizing on the basis of customer groups) to produce the proper ''configuration''. And third, they gather and use information about customers that is in-depth, relevant and available through IT systems in all parts of the company. The author uses case studies involving two major credit-card companies and a high-quality chain of hotels to demonstrate how sustained advantage with customer''s results when companies build these components of the capability. The combination of a true customer-directed orientation, the right technology for generating and distributing information, and the proper organizational configuration can help turn a company into a market-driven leader.

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