Business today has evolved to become more customer oriented. Companies are shifting towards the customer segment focusing on customer relationship management, customer lifetime value and customer retention.
General Electric (GE), a diversified company and already so successful in the old economy, was not spare from the shift either. Its former CEO, Jack Welch, executed a series of changes in the company to prepare GE for the shift towards customer focus.
Once there, it concentrated on Customer Relationship Management (CRM) to improve Customer Lifetime Value and Customer Retention. This is done by continuously delighting customers to achieve customer satisfaction. With that comes customer loyalty and ultimately a successful company.
CRM has both positive and negative strategic implications on GE. With CRM GE's has achieved employee satisfaction, quality, good positioning, customer satisfaction / loyalty and improved performance / productivity. It has also increased profit, shareholders' wealth, market value as well as voter the most admired company.
Despite GE's achievements there are also setbacks such as company downsizing, retrenchment, staff resignation, high CRM systems cost, intruding customers privacy and loss of customer through segmentation.
Companies could learn from the GE's example (known as the GE Way) on how to execute the shift towards the customer segment and implement the CRM systems smoothly and successfully. CRM helps companies manage customers effectively bringing success along the way, if implemented correctly.
Up till the early 1980s "...customers are seen as average statistic, passive buyers with a predetermined role of consumption. Market research and inquiries had very limited or no interaction with the customers. It is mostly a one way communication in the old economy..." (Prahalad C.K. and Ramaswamy V., 2000, p2).
As the business competition gets tougher in the 1990s, Kotler admitted the economy has shifted into a customer economy where companies...