Customer relationship management

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Customer Relationship Management (CRM) includes the methodologies, strategies, software, and web-based capabilities that help an enterprise organize and manage customer relationships. It is the collection and distribution of all data to all areas of the business. The general purpose of CRM is to enable organizations to better manage their customers through the introduction of reliable systems, processes and procedures for interacting with those customers.

A successful CRM strategy cannot be implemented by simply installing and integrating a software package, a holistic approach is needed. This approach may include training of employees, a modification of business processes based on customers' needs and an adoption of relevant IT systems (including software and maybe hardware) and/or usage of IT services that enable the organization or company to follow its CRM strategy. CRM services can even replace the acquisition of additional hardware or CRM software licences.

The term itself is meant to describe the whole business strategy (or lack of one) oriented on customer needs. The main misconception of CRM is that it is only a software, instead of a whole business strategy. To be effective, the CRM process needs to be integrated end-to-end across marketing, sales, and customer service. A good CRM program needs to:

  • Identify customer success factors
  • Create a customer-based culture
  • Adopt customer-based measures
  • Develop an end-to-end process to serve customers
  • Recommend what questions to ask to help a customer solve a problem
  • Recommend what to tell a customer with a complaint about a purchase
  • Track all aspects of selling to customers and prospects as well as customer support.

Major areas of CRM focus on service automated processes, personal information gathering and processing, and self-service. It attempts to integrate and automate the various customer serving processes within a company.

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Architecture of CRM

There are three parts of application architecture of CRM:

  • Operational - automation to the basic business processes (marketing, sales, service)
  • Analytical - support to analyze customer behavior, implements business intelligence alike technology
  • Collaborative - ensures the contact with customers (phone, email, fax, web, sms, post, in person)
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Operational CRM

Operational CRM means supporting the "front office" business processes, which include customer contact (sales, marketing and service). Tasks resulting from these processes are forwarded to employees responsible for them, as well as the information necessary for carrying out the tasks and interfaces to back-end applications are being provided and activities with customers are being documented for further reference.

Operational CRM provides the following benefits:

  • Delivers personalized and efficient marketing, sales, and service through multi-channel collaboration
  • Enables a 360-degree view of your customer while you are interacting with them
  • Sales people and service engineers can access complete history of all customer interaction with your company, regardless of the touch point

According to Gartner Group, the operational part of CRM typically involves three general areas of business:

Sales force automation (SFA) 
SFA automates some of the company's critical sales and sales force management functions, for example, lead/account management, contact management, quote management, forecasting, sales administration, keeping track of customer preferences, buying habits, and demographics, as well as performance management. SFA tools are designed to improve field sales productivity. Key infrastructure requirements of SFA are mobile synchronization and integrated product configuration.
Customer service and support (CSS) 
CSS automates some service requests, complaints, product returns, and information requests. Traditional internal help desk and traditional inbound call-center support for customer inquiries are now evolved into the "customer interaction center" (CIC), using multiple channels (Web, phone/fax, face-to-face, kiosk, etc). Key infrastructure requirements of CSS include computer telephony integration (CTI) which provides high volume processing capability, and reliability.
Enterprise marketing automation (EMA) 
EMA provides information about the business environment, including competitors, industry trends, and macroenviromental variables. It is the execution side of campaign and lead management. The intent of EMA applications is to improve marketing campaign efficiencies. Functions include demographic analysis, variable segmentation, and predictive modeling occur on the analytical (Business Intelligence) side.

Integrated CRM software is often also known as "front office solutions." This is because they deal directly with the customer.

Many call centers use CRM software to store all of their customer's details. When a customer calls, the system can be used to retrieve and store information relevant to the customer. By serving the customer quickly and efficiently, and also keeping all information on a customer in one place, a company aims to make cost savings, and also encourage new customers.

CRM solutions can also be used to allow customers to perform their own service via a variety of communication channels. For example, you might be able to check your bank balance via your WAP phone without ever having to talk to a person, saving money for the company, and saving your time.

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Analytical CRM

In analytical CRM, data gathered within operational CRM and/or other sources are analyzed to segment customers or to identify potential to enhance client relationship. Customer analysis typically can lead to targeted campaigns to increase share of customer's wallet. Examples of Campaigns directed towards customers are:

  • Acquisition: Cross-sell, up-sell
  • Retention: Retaining customers who leave due to maturity or attrition.
  • Information: Providing timely and regular information to customers.
  • Modification: Altering details of the transactional nature of the customers' relationship.

Analysis typically covers but is not limited to:

  • Decision support: Dashboards, reporting, metrics, performance etc.
  • Predictive modelling of customer attributes
  • Strategy and research.

Analysis of Customer data may relate to one or more of the following analyses:

  • Campaign management and analysis
  • Contact channel optimization
  • Contact Optimization
  • Customer Acquisition / Reactivation / Retention
  • Customer Segmentation
  • Customer Satisfaction Measurement / Increase
  • Sales Coverage Optimization
  • Fraud Detection and analysis
  • Financial Forecasts
  • Pricing Optimization
  • Product Development
  • Program Evaluation
  • Risk Assessment and Management

Data collection and analysis is viewed as a continuing and iterative process. Ideally, business decisions are refined over time, based on feedback from earlier analysis and decisions. Therefore, most successful analytical CRM projects take advantage of a data warehouse to provide suitable data.

Business Intelligence is a related discipline offering some more functionality as separate application software.

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Collaborative CRM

Collaborative CRM facilitates interactions with customers through all channels (personal, letter, fax, phone, web, e-mail) and supports co-ordination of employee teams and channels. It is a solution that brings people, processes and data together so companies can better serve and retain their customers. The data/activities can be structured, unstructured,conversational, and/or transactional in nature.

Collaborative CRM provides the following benefits:

  • Enables efficient productive customer interactions across all communications channels
  • Enables web collaboration to reduce customer service costs
  • Integrates call centers enabling multi-channel personal customer interaction
  • Integrates view of the customer while interaction at the transaction level
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Purposes of Customer Relationship Management

CRM, in its broadest sense, means managing all interactions and business with customers. This includes, but is not limited to, improving customer service. A good CRM program will allow a business to acquire customers, service the customer, increase the value of the customer to the company, retain good customers, and determine which customers can be retained or given a higher level of service. A good CRM program can improve customer service by facilitating communication in several ways:

  • Provide product information, product use information, and technical assistance on web sites that are accessible 24 hours a day, 7 days a week.
  • Identify how each individual customer defines quality, and then design a service strategy for each customer based on these individual requirements and expectations.
  • Provide a fast mechanism for managing and scheduling follow-up sales calls to assess post-purchase cognitive dissonance, repurchase probabilities, repurchase times, and repurchase frequencies.
  • Provide a mechanism to track all points of contact between a customer and the company, and do it in an integrated way so that all sources and types of contact are included, and all users of the system see the same view of the customer (reduces confusion).
  • Help to identify potential problems quickly, before they occur.
  • Provide a user-friendly mechanism for registering customer complaints (complaints that are not registered with the company cannot be resolved, and are a major source of customer dissatisfaction).
  • Provide a fast mechanism for handling problems and complaints (complaints that are resolved quickly can increase customer satisfaction).
  • Provide a fast mechanism for correcting service deficiencies (correct the problem before other customers experience the same dissatisfaction).
  • Use internet cookies to track customer interests and personalize product offerings accordingly.
  • Use the Internet to engage in collaborative customization or real-time customization.
  • Provide a fast mechanism for managing and scheduling maintenance, repair, and on-going support (improve efficiency and effectiveness).
  • The CRM can be integrated into other cross-functional systems and thereby provide accounting and production information to customers when they want it.
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Improving customer relationships

CRM programs also are able to improve customer relationships. Proponents say this is so because:

  • CRM technology can track customer interests, needs, and buying habits as they progress through their life cycles, and tailor the marketing effort accordingly. This way customers get exactly what they want as they change.
  • The technology can track customer product use as the product progresses through its life cycle, and tailor the service strategy accordingly. This way customers get what they need as the product ages.
  • In industrial markets, the technology can be used to micro-segment the buying centre and help coordinate the conflicting and changing purchase criteria of its members.
  • When any of the technology-driven improvements in customer service (mentioned above) contribute to long-term customer satisfaction, they can ensure repeat purchases, improve customer relationships, increase customer loyalty, decrease customer turnover, decrease marketing costs (associated with customer acquisition and customer “training”), increase sales revenue, and thereby increase profit margins.
  • Repeat purchase, however, comes from customer satisfaction - which in turn comes from a deeper understanding of each customer, their individual business challenges and proposing solutions for those challenges rather than a "one size fits all" approach.
  • CRM software enables sales people to achieve this one on one approach to selling and can automate some elements of it via tailorable marketing communications. However, all of these elements are facilitated by or for humans to achieve - CRM is therefore a company-wide attitude as much as a software solution.
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Technical functionality

A CRM solution is characterised by the following functionality:

  • scalability - the ability to be used on a large scale, and to be reliably expanded to whatever scale is necessary.
  • multiple communication channels - the ability to interface with users via many different devices (phone, WAP, internet, etc)
  • workflow - the ability to trigger a process in the backoffice system, e. g. Email Response, etc.
  • assignment - the ability to assign requests (Service Requests, Sales Opportunities) to a person or group.
  • database - the centralised storage (in a data warehouse) of all information relevant to customer interaction
  • customer privacy considerations, e.g. data encryption and the destruction of records to ensure that they are not stolen or abused.
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Privacy and ethical concerns

CRM programs are not however considered universally good - some feel it invades customer privacy and enable coercive sales techniques due to the information companies now have on customers - see persuasion technology. However, CRM does not necessarily imply gathering new data, it can be used merely to make "better use" of data the corporation already has. But in most cases they are used to collect new data.

Some argue that the most basic privacy concern is the centralised database itself, and that CRMs built this way are inherently privacy-invasive. See the commercial version of the debate over the carceral state, e.g. Total Information Awareness program of the United States federal government.

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Setting up a framework for CRM

  • When setting up a CRM segment for a company it might first want to see what profile aspects it feels are relevant to its business, such as what information it needs to serve its customers, the customer's past financial history, the effects of the CRM segment and what information is not useful. Being able to eliminate unwanted information is can be a large aspect of implementing CRM systems.
  • When designing a CRM's structure, a company may want to consider keeping more extensive information on their primary customers and keeping less extensive details on the low-margin clients.
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CRM in Business

The use of internet sites and specifically e-mail, in particular, are often touted as less expensive communication methods in comparison to traditional ones such as telephone calls. These types of technologies service can be very helpful, but it is completely useless to a business that cannot reach its customers. Some major companies believe that the majority of their clients trust other means of communication, like telephone, more than they trust e-mail. Clients, however, are usually not the ones to blame because it is often the manner of connecting with consumers on a personal level making them feel as though they are cherished as customers. It is up to the companies to focus on reaching every customer and developing a relationship.

It is possible for CRM software to run an entire business. From prospect and client contact tools to billing history and bulk email management. The CRM system allows a business to maintain all customer records in one centralized location that is accessible to an entire organization through password administration. Front office systems are set up to collect data from the customers for processing into the data warehouse. The data warehouse is a back office system used to fulfill and support customer orders. All customer information is stored in the data warehouse. Back office CRM makes it possible for a company to follow sales, orders, and cancellations. Special regressions of this data can be very beneficial for the marketing division of a firm/company.

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See also

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External links

da:CRM de:Kundenbeziehungsmanagement es:CRM fr:Gestion de la relation client he:CRM it:Customer relationship management lt:CRM nl:Customer Relationship Management no:Kunderelasjonshåndtering pl:Zarządzanie relacjami z klientami pt:CRM ru:CRM sv:CRM zh:客户关系管理

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