Customer Relationship Management (CRM)
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Introduction
Customer Relationship Management is the strategy for managing and nurturing a company’s interactions with clients/customers and sales prospects. If customer acquisition is broadly about gaining new business, then CRM is the way companies keep existing customers and unlock more value from them, as well as attracting new ones.
CRM involves using technology to organise, automate, and synchronize business processes—principally sales activities, but also those for marketing, customer service, and technical support. The overall goals of CRM are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service.
Interestingly CRM was once simply a label for a category of software tools; today, it generally denotes (at its best) a company-wide business strategy embracing all client-facing departments and beyond.
The Evolution of CRM
Since the arrival of the internet 15 years ago, CRM has gained in importance. As recently as the late 1990s it took thousands upon thousands of unhappy customers before a company lost enough business to change its ways. Today, just ONE disgruntled client, through access to the internet, can cause a company to lose millions of pounds, and hundreds or thousands of customers, in a matter of few days.
This growing power of the customer is seen most clearly in the backlash against companies with poor CRM strategies. A company’s help center (sometimes a call center, sometimes an email address) is the first point of contact that a customer has with the firm. Customer retention, satisfaction and loyalty, all depend on how well the person at the other end of the line handles the customer.
The Building Blocks of a Successful CRM Strategy
Some years ago research company Gartner published a set of eight “CRM basics” which still apply today.
Vision
The board must take leadership in creating a CRM vision for the whole enterprise. The CRM vision should be used as the guide to the creation of a CRM strategy.
Strategy
The CRM strategy is all about how to build and develop a company’s most valuable asset: the customer base. It must set objectives and metrics for attaining that goal. It directs the objectives of other operational strategies and the CRM implementation strategy.
Customer Experience
The customer experience must be designed in line with the CRM vision and must be constantly refined, based on actively sought customer feedback and measurement.
Organisational Collaboration
Changes to organisational structures, processes, metrics, incentives, skills, and even the enterprise culture must be made to deliver the required external customer experience. Ongoing change management will be key.
Process
Successful customer process re-engineering should create processes that not only meet customers' expectations and support the customer value proposal, but also provide competitive differentiation and contribute to a designed customer experience.
Information
Successful CRM demands the creation of a customer-information blood supply that flows around the organisation, as well as tight integration between operational and analytical systems.
Technology
CRM technologies form a fundamental part of any enterprise's application portfolio and architecture. CRM application needs should be considered as the provision of integrated functionality that supports seamless customer-centric processes across all areas of the enterprise and its partners.
Metrics
Enterprises must set measurable CRM objectives and monitor all levels of CRM indicators to turn customers into assets. Without performance management, a CRM implementation will fail. Metrics is regarded by Gartner as the most important of the eight building blocks.
See Also