Customer Relationship Management and ISO 9001

Loyal customers are the goal.

Published: Monday, May 21, 2007 - 22:00

Customer relationship management (CRM) usually refers to sales activities, and CRM software is commonly purchased, and occasionally used, to track potential customers, existing customers and sales activities.

“Contract manufacturing is unquestionably a relationship business. CRM must manage the relationship bringing maximum value to both parties; CRM is and has been key to successful long-term partnerships. Customers rely on their contract manufacturer for the core of their business, and quality validation, corroboration, open communications and the supplier-customer relationship are critical for success,” says Larry Caretsky of Commence Corp.

According to ISO 9001, manufacturing companies seeking a product definition or answers to service and marketing questions must get such information from their customers. The ISO standard requires companies to establish processes for identifying customer requirements and communicating those requirements throughout their organization, as well as processes for tracking and analyzing customer satisfaction. The standard has direct application for CRM, particularly for contract manufacturers.

Since its first release in 1987, the ISO 9001 quality management standard has been accepted worldwide as a baseline for organizational performance. First embraced by manufacturing companies around the world, this standard quickly became the most widely used of the more than 8,000 standards published by the International Organization for Standardization. Because the original set of standards were based on existing national quality standards, they were nonprescriptive in nature and were designed to ensure compliance with written procedures.

The main criticisms of the first version of ISO 9001 was that compliance wasn’t sufficient to move a company to world-class status and that management’s role within a company’s quality system was considered minimal. Just as lean manufacturing has the core principle of continued process improvement, ISO 9001 needed to push companies beyond their maintenance mode.

Responsibility for the quality management system has now shifted from the quality assurance department to top management. ISO 9001 includes management requirements that are designed to ensure that customer needs and expectations are determined and fulfilled, that an awareness of customer requirements is promoted throughout the organization and that customer feedback is included in management reviews.

When the current ISO standard was released, the changes ranged from greater customer focus to integration to measurement processes and continual improvement. For contract manufacturers, the ability to determine customer needs and satisfaction were paramount.

Whether industries are yet compliant to ISO 9001 or not, to thoroughly understand customers’ needs is to actively seek out customer feedback and create solutions to meet those needs. Good performance leads to customer satisfaction, and strong relationships lead to customer loyalty. Customer satisfaction is great if it results in customer loyalty. Satisfied customers feel good and still may be lured by a competitor. Loyal customers will stick with their suppliers over the long term.

Commence Corp. has conducted intensive financial analyses regarding the cost of customer acquisition vs. the cost of retention. The results have shown that keeping customers is always a more profitable strategy. Caretsky notes that one of the critical roles of cost-effective CRM solutions for the mid-range manufacturing organization is creating “. . . [L]oyal customers, which lead to lower marketing costs, increased revenues, more referrals and a better understanding of how the company can improve performance.”

CRM evaluation criteria must provide the basis for a meaningful and objective CRM software comparison. The comparison factors may include sales force automation, marketing and customer support, as well as functionality requirements, technology utilization, user support, price and value criteria to demonstrate company requirements based on the quantifiable measures that are established as part of the documented ISO 9001 procedures.

CRM functionality and ISO 9001 are increasingly integrated as both promote a better understanding of customer requirements through open communication, as well as establishing processes for the measurement and analysis of customer satisfaction and loyalty.

About The Author

Thomas R. Cutler

Thomas R. Cutler is the President and CEO of Fort Lauderdale, Florida-based, TR Cutler Inc., celebrating its 21st year. Cutler is the founder of the Manufacturing Media Consortium including more than 8000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling, and process improvement. Cutler authors more than 1,000 feature articles annually regarding the manufacturing sector. More than 4,500 industry leaders follow Cutler on Twitter daily at @ThomasRCutler. Contact Cutler at trcutler@trcutlerinc.com.