Pergamon

PII:

European Management Journal Vol. 19, No. 5, pp. 534–542, 2001  2001 Elsevier Science Ltd. All rights reserved. 0263-2373/01 $20.00 S0263-2373(01)00067-6

Cross-Functional Issues in the Implementation of Relationship Marketing Through Customer Relationship Management
LYNETTE RYALS, Cranfield University School of Management SIMON KNOX, Cranfield University School of Management
There is a major change in the way companies organise themselves as firms switch from productbased to customer-based structures. A key driver of this change is the advent of Customer Relationship Management which, underpinned by information systems convergence and the development of supporting software, promises to significantly improve the implementation of Relationship Marketing principles. In this paper we explore the three main issues that can enable (or hinder) the development of Customer Relationship Management in the service sector; the organisational issues of culture and communication, management metrics and crossfunctional integration — especially between marketing and information technology.  2001 Elsevier Science Ltd. All rights reserved. Keywords: Customer relationship management, Cross-functional integration, Information technology, Relationship marketing keting debate were made by Reichheld and Sasser (1990) reporting on the customer retention work of Bain and Co. These findings indicated that a 5 per cent increase in customer retention resulted in an increase in average customer lifetime value of between 35 and 95 per cent, leading to significant improvements in company profitability (Reichheld, p. 36) (Figure 1). Reichheld (1996) concluded that there are six underlying reasons why retained customers are more profitable (p. 39):

Introduction
Customer Relationship Management (CRM) has its roots in relationship marketing which is based in turn on the formative