Updates on the Connection Between Customer Relationship Management and Commoditization

High levels of commoditization offer exceptional opportunities for the application of customer relationship management (CRM) strategies. Inherently, all products become commodities at some level. Product innovation, globalization, competition intensity, and technology evolution have increased the speed of commoditization in most industries. The main objective in a highly commoditized industry is to avoid a price war. Innovation, migration from product to service solutions, and diversification are all options for avoiding a price war. Customer insight leveraged by CRM implementation also presents an excellent alternative. In highly commoditized industries, CRM strategies demonstrate superior results in comparison to industries of low commoditization. The personalization that can be derived from the intimacy resulting from an efficient customer interaction is an aspect of CRM strategy that strengthens customer loyalty. CRM allows organizations to develop genuine relationships with each customer; keeping the most valuable customers, expanding relationships with customers with high potential value, and maximizing the value of customers with low potential and low current value. In this chapter, we discuss why CRM is a differentiator to avoid commoditization and what features should be considered for successful implementation.