Customer-Managed Interactions: A New Paradigm for Firm-Customer Relationships

Electronic commerce has intensified competition and transformed relationships between firms and their customers. To cope with and capitalize on these changes, many firms are using customer relationship management (CRM) to strengthen their links with customers, learn more about customers¡¯ preferences, and boost customer retention. However, customers typically have relationships with many firms, even head-to-head competitors. As a consequence, any one firm may have incomplete knowledge of its customers¡¯ activities in its industry, and firm-centric CRM strategies may be inherently limited. We predict that traditional, firm-centric CRM strategies will coexist with a customer-centric approach that we call customer-managed interactions (CMI). In CMI, customers retain complete control over data about their past transactions and their future needs, and share this information when appropriate with a selected group of firms with which they are interested in doing business. A few predecessors of CMI are now in use, such as recommender systems. Implementation of CMI requires resolving six issues: customer acquisition of data, designing new business processes, managing costs, overcoming vendor resistance, adopting new standards, and establishing trusted intermediaries