CRM - Customer Relationship Management

What is CRM?

It is the general thought which arises when we hear someone talk about CRM, it can be defined as follows

CRM “is a business strategy that aims to understand, anticipate and manage the needs of an organisation’s current and potential customers”.

It is a “comprehensive approach which provides seamless integration of every area of business that touches the customer- namely marketing, sales, customer services and field support through the integration of people, process and technology”.

CRM is a shift from traditional marketing as it focuses on the retention of customers in addition to the acquisition of new customers.

•       “CRM is the approach implemented by an organisation, which integrates strategy, business processes and functionalities to build up , to maintain and expand relationships with customers.”

Figure 1: Integrated Approach of CRM

The purpose of CRM

•       The focus [of CRM] is on creating value for the customer and the company over the longer term”.

•       When customers value the customer service that they receive from suppliers, they are less likely to look to alternative suppliers for their needs .

•       CRM enables organisations to gain ‘competitive advantage’ over competitors that supply similar products or services .

OBJECTIVES OF CRM

•       CRM aims at integrating all business strategies that places the customer at the centre of a business consciousness.

•       Aligning of organisation towards customers.

•       Integrating your customer touch points.

•       Knowing and understanding your customers and potential customers.

•       Establishing and managing relationship with customers.

Principles of CRM

•       Differentiate customers:

                - all customers are not equal; recognize and reward best customers disproportionately.

                - understanding each customer becomes particularly important, and the same customers reaction to a cellular company operator may be quite different  as compared to a car dealer.

                - besides for the same product or the service not all the customers can be treated alike and CRM needs to differentiate between a high value customer and a low value customer.

•       While differentiating customer is

                - sensitiveness, preferences and personalities

                - lifestyle and age

                - culture background and education

                - physical and psychological characteristics.

•       Differentiating offerings

                - low value customer requiring high value customer offerings.

                - low value customer with potential to become high value in nature.

                - high value customer requiring high value service.

                - high value customer requiring  low value service.

•       Keeping existing customers:

                -Grading customer from very satisfied to very disappoint should help the  

        organization in improving its customer satisfaction levels and scores.

                -Satisfaction level for each customer improves as well as customer   

        retention with the organization.

•       Increase loyalty:

                - loyal customers are more profitable.

                - company has to invest in terms of its product and service offerings to its customers.

                - it has to innovate and meet the very needs of its clients/ customers so that they remain as advocates on the loyalty curve.

                - referral sales invariably low cost high margin sales.

•       Relationships and interaction with customers:

                - with the new marketing approach it becomes an imperative for businesses to formulate their marketing activities to and build relationships, networks and interaction with a number of different, but often equally important markets.

                -the importance for a business of retaining its customers, with  evidence suggesting that retention of customers leads to increased market share and eventually bigger profits.

Why is CRM important?

•       Today’s businesses compete with multi-product offerings created and delivered by networks, alliances and partnerships of many kinds. Both retaining customers and building relationships with other value-adding allies is critical to corporate performance”.

•       “The adoption of C.R.M. is being fuelled by a recognition that long-term relationships with customers are one of the most important assets of an organisation”.

Types of CRM

·         Proactive versus Reactive CRM

·         Operational, Collaborative and Analytical CRM