What's the Difference Between CRM, VRM, PRM and DRM?
And What Should This All Mean to Your Organization?
(Originally published in the July/August 2002 issue of AFSMI's Sbusiness.)
By William K. Pollock
While many of us are still struggling to come up with an all-encompassing definition of Customer Relationship Management (CRM) as it applies to our respective organizations and the constituencies they serve, we are already being bombarded with other, similar sounding acronyms, such as VRM, PRM, DRM, etc. What exactly are we to make of all these "new" terms, definitions and acronyms, and what types of "new" relationships do we now have to deal with in supporting our overall customer bases? Well, the answer isn't as complicated as you might initially expect. In fact, many of us are already quite well positioned to take advantage of these "new" acronyms and the relationships they address.
To a certain extent, CRM is not so much a new concept, as it is a more efficient and effective way of "bundling" together what we have all been told by our strategic planning and services marketing managers all along. Understanding customer needs and requirements; monitoring service performance, measuring and tracking customer satisfaction; managing vendor relationships; entering into the appropriate strategic partnerships; and supporting the totality of systems, equipment and devices at the customer site are all areas where our respective organizations have been focusing for some time now. This is what we, as services organizations, do. This is what makes it all work. And, by the way, this is also CRM, VRM, PRM, DRM et al.
Gartner, Inc. defines CRM conceptually in the following manner:
"Customer relationship management (CRM) is a customer-focused business strategy designed to optimize profitability, revenue and customer satisfaction. To realize CRM, organizations must implement collaborative enterprise processes and technologies that support customer interactions throughout all channels."But, how does this differ from VRM (Vendor Relationship Management), PRM (Partner Relationship Management and DRM (Device Relationship Management)? The answer is that it doesn't really differ at all. All of these "acronyms" are really nothing more than components of the same overall business philosophy, mindset and processes that define CRM. For example:
Bob Thompson, founder and publisher of crmguru.com, defines PRM (also known as VRM) as a critical component of the CRM process:
"Partner Relationship Management [PRM], is a compelling trend, with a growing track record of profitable results. The goal of PRM is to create long-term competitive differentiation with indirect sales channels. PRM is a key part of the overall CRM framework, which should support employees, customers, and partners. "Device Relationship Management (DRM) takes the concept of CRM right down to the factory floor - or right into the thick of things at any customer site. Axeda Systems defines DRM in the following manner:
"DRM is a new category of enterprise software products that leverage the global reach of the Internet to provide the real-time, continuous exchange of information between remote devices, business systems and people. DRM lets businesses, manufacturers and service providers use the Internet to monitor, manage and service intelligent devices deployed at remote sites anywhere in the world - cost effectively, and in real time."Many of the classic strategic planning, marketing planning, market research and operations management disciplines that have worked well in the past had fallen somewhat out of vogue over the years as other industry "buzzwords" such as Total Quality Management (TQM), ISO 9000 and the Baldrige Award grew in popularity. Granted, they were still important business tools, and have always been widely utilized, the newer, more trendy concepts and acronyms seemed to take on lives of their own in the minds of most business managers. However, CRM appears to be different.
Whereas, under TQM, businesses strove toward the implementation of formal quality systems; under ISO 9000, they strove toward ISO registration; and under Baldrige, they competed for a national quality award - CRM is based on a much more broadly-defined concept. What CRM has done over the past several years is "raise the bar" for recognizing and addressing the need for transforming the business into a customer-focused, or customer-centric, organization, encompassing just the right "mix" of business philosophy, business strategy, software products, applications and support to better serve customers. In a way, CRM has finally legitimized the time-proven tools that have always worked in the past, by giving them "new" credibility among a fresher crop of businesses - and business managers.
We believe that the degree to which your organization embraces a customer-centric approach will also likely determine the extent to which it will be successful in competing in an increasingly demanding market. In fact, the more customer-focused your organization is, the more likely it will be to have already embraced the concepts not only of CRM, but of VRM, PRM and DRM as well. Figure 1 illustrates the major difference in approach between the historical "company-centric" and today's "customer-centric" model for delivering customer support.
However, we strongly believe that an organization that places its customers first generally also places its vendors and channel partners at the top as well - not to mention its employees, stakeholders, shareholders and the community at large. A truly customer-focused organization knows that it will never be able to fully support its customer base unless it also provides - and receives - full support from all of the constituencies with which it interacts on a regular basis.
How can an organization that utilizes channel support for sales, marketing and/or customer support expect to deliver the services its customers require if it does not also support its vendor and partner bases with the same levels of effort? This is where VRM and PRM come into play. How can a services organization expect to support all of the equipment it has responsibility for on the customer's factory floor - or in the hospital, or in the enterprise - if it doesn't provide the required levels of system, equipment and device/instrumentation support? This is where DRM applies.
Each of the words that comprise the acronym "CRM" are important, and each are universal in their application. However, the common denominators are the terms "Relationship" and "Management". This is where CRM-focused organizations need to concentrate - on managing their relationships - but not only with their customers, but also with their vendors; partners; all the systems, equipment and devices they support; and every other one of the constituencies that, together, empower them to provide the full levels of service and support that their customers require. This is CRM.
William K. Pollock is president of Strategies For GrowthSM (SFGSM), the Westtown, Pennsylvania-based services consulting firm specializing in strategic business planning, services marketing, CRM consulting, market/survey research, and customer satisfaction measurement and tracking programs. Bill may be reached at 610-399-9717 or via e-mail at email@example.com.
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