CRM Is a Business Strategy
CRM is a business strategy focused on maximizing shareholder value through winning, growing, and keeping the right customers. It employs practices, methodologies, software, and Internet capabilities that help an enterprise manage customer relationships in an organized way.
For example, when a business traveler approaches the service counter at the airport, most major airlines are able to access information that tells them who that customer is. They know whether he travels coach or first class, and how frequently he travels. They can also examine the profitability of the relationship with a particular customer to determine if that customer's travel habits make him a very desirable customer to retain. This knowledge determines, at least in part, what priority that traveler will receive and the level of additional services he can expect.
Major financial institutions regularly develop similar information on banking clients so that when you speak to a customer service representative (CSR) your account information and your ranking as a customer are at their fingertips. This information helps your CSR know what products you currently use and what new products in which you might be interested. If you have a checking account, but no savings account, CRM information would inform the CSR of that, and would suggest that they offer to open a new savings account for you.
As a business strategy, CRM helps a company stay focused on delivering the best services and products to the appropriate target customer. It enables any representative of a company, whether sales representative or service person, to remember who they are talking to, no matter what the transaction might be.
CRM introduces the following innovations:
Focuses on customers rather than products— Traditional marketing approaches focused on defining products for mass consumption and rolling out marketing campaigns to sell them. In the late eighties and early nineties it became both technically feasible and commonly recognized that shifting from product to customer-focused marketing allowed for a more tailored, focused approach. Subsequent developments have seen the rise of marketing to the customer segment of one. One-to-one marketing, championed by Peppers & Rogers, authors of Enterprise One to One: Tools for Competing in the Interactive Age. Enterprise One to One (Currency/Doubleday, 1997), extends the customer-focused paradigm to deal with the market of one. The latest CRM systems make it easy to track and build relationships with one customer at a time.
Entails changing your processes, systems and culture— The shift to customer-centricity has implications for the entire organization, requiring changes in your business culture, processes, and supporting systems. When organizations are configured on a product-focused basis, they tend to align the organization along product lines, usually deployed geographically, and the supporting processes and systems revolve around those product lines. Shifting to a customer-centered approach requires realigning everything around the customer and retooling processes and systems accordingly.
Encompasses the “front-office” functions of sales, marketing, and customer service as well as back-office operations and new product development— CRM concentrates on “front-office” functions such as sales, marketing, and customer service. Microsoft CRM begins by delivering support for sales and customer service primarily. But it is important to note that these front-office components are supported by back-office operations and new product development, and fully developed CRM systems will embrace these functions as well, tying in information from the related systems as needed. Although initial implementation goals might focus on the front office, ongoing planning should address how these other areas will cooperate with your CRM initiative.
Encompasses all channels and media from the Internet to field sales— CRM originated in the field sales arena, but was soon enhanced to embrace all product delivery channels and media, particularly the Internet with its information-intensive customer interface. Ideally, customer information is captured and analyzed at every step of the business process in each of the related channels.
Involves sales partners both up and down the supply chain— A truly comprehensive picture of your customer might include information collected by sales partners and possibly from partnering organizations, whether discrete suppliers or collaborative service deliverers.
CRM Is Comprehensive
CRM affects all aspects of customer interaction, whether marketing, sales, or service related. At every step of your business process, from initial customer contact, to placing an order, service delivery, and managing the ongoing relationship, there are opportunities for managing the customer relationship more effectively.
CRM promotes focusing on retention of profitable customers through the utilization of a Customer-Centric business model. As all business processes come to revolve around customer requirements, your business can become more streamlined to the specific needs of customers.
CRM Helps You Put the Customer First
Customer-centricity, or organizing the entire enterprise around putting the customer first, will drive redesign of company processes and workflow and is enabled through the use of the appropriate CRM technology solution to meet the new objectives of the organization.
CRM consists of certain key factors including the following:
Enabling the identification and targeting of a company's most profitable customers, supporting the management of marketing campaigns with clear goals and objectives, and generation of quality leads for the sales team.
Improving telesales, account, and sales management by optimizing information shared by multiple employees, and streamlining existing processes (for example, establishing workflow rules for the routing of sales and service information).
Individualizing relationships with customers with the aim of improving customer satisfaction and maximizing profits, through one-to-one marketing and mass customization. CRM creates a two-way dialogue between you and each individual customer.
Providing employees with the information and processes necessary to know their customers, understand their needs, and effectively build relationships between the company, its customer base, and distribution partners.
CRM Measures Business Performance
CRM helps a company understand and expand its relationship with a customer by measuring not only market share, but also “share of wallet.” For instance, a checking account customer might utilize many other financial services offered by a banking institution, such as savings account, time deposit, money market, and so forth. CRM enables the financial institution to determine which of the offered services the customer currently has, what she might buy, which ones should be offered, and in what order.