By : Prapanna Lahiri
Customer relationship management (CRM) refers to all strategies, practices and technologies adopted by companies to record, manage and evaluate interactions with current, past and potential customers with a view to deepen and enrich relationships with them. The most critical function of CRM is to record each instance of the company’s customer interaction via its website, telephone, live chat, direct mail, marketing tools and social media to consolidate customer information into a single CRM database. It employs many built-in tools (software) that can be applied to raw data pertaining to a customer or any given category of customers to use manage, store and disseminate customer information. For example, data may be analysed to segregate customers according to demography, occupation and age, etc. CRM solutions provides processed data to help business deliver services or products that the customers want
The CRM Strategy:
Customer relationship management is often explained as a business strategy that enables businesses to improve in certain areas. The CRM strategy allows a business to do the following:
- Understand the customer
- Retain customers through better customer experience
- Attract new customers
- Win new clients and contracts
- Increase profitability
- Diminish customer management costs
Logically following from the above it is evident that there are three parts to CRM – technology, processes and people.
- Technology: This part of CRM refers to the creation of the database – largely akin to the information that was previously stored ‘in the heads’ of Managers of small businesses. The Manager of the small business knew each of his customers, understood their behaviour, preferences and their value to the business in terms of how much and how often they spent. But good customer relationship as understood today is much more than that. Technology helped create tools like ‘Data Warehouse’ to take care of this.
- Processes: These are the key steps that have to be put into place to make sure that stored data is used effectively. In fact the processes hold the whole thing together.
- People: The people involved with the customer in any way have to be conversant with those processes and preferably should believe in those processes, so that a seamless service can be provided to customers. They should be suitably trained in the processes and technology used.
Important features of Customer relationship management:
- Relationship management is the key customer-oriented feature whereby service response is provided based on customer input through direct online communications to help customers solve their issues. It may also mean providing individual solutions to customers’ requirements
- Use of technology to make “up-to-the-second” customer data available with the help of Data Warehouse which is a collection of data that reflects all aspects of an organisation’s sales operations.
- CRM systems attempt to develop and maintain customer relationships by analysing customer data and even the customer experience
- Advantages of CRM solutions:
- All information about the customer is kept stored in databases.
- Businesses can analyse the stored data, look into customer preferences and understand their behaviour.
- The system enables easy access to the data across departments that may be geographically widely dispersed.
- It also enables easy access for customers in the form of online transactions.
- It makes speedy personalised communications possible that enables the customer to feel valued and special even though in reality the customer may be one amongst many.
How CRM helps Business Development:
- Long Term Value: Business development aims at creation of long term value. It is about creating opportunities for that value to persist over the long-term, to keep the floodgates open so that value can flow indefinitely. Since CRM uses various tools and technology to widen the customer base and retain the existing ones it seeks to add long term value to a business.
- Customers: Customers are the people who pay for products and services distributed by a business and without them there would be no business to develop. CRM aims at analysing database of customers to look into customer preferences and understand their behaviour in order to deepen and enrich relationships with them.
- Markets: Markets are defined by geography, demography, lifestyles and buying mindset. Identifying opportunities to reach new customers by entering into new markets is one important gateway to business development. CRM by aiming to store and retrieve customer data by geographical locations, demography, customer preferences and behaviour is a valuable marketing tool for business development.
- Relationships: Any successful business development effort relies on an underlying foundation of strong relationships. A long term flow of value is dependent on building, managing, and leveraging relationships. As the name suggests, relationship management is the key customer-oriented feature of CRM which relies on customer input and communications with customers to solve all customer issues. Looking from this angle CRM is an effective strategy for building and nurturing relationships.
Customer relationship marketing (CRM)
Though in the marketing literature the terms Customer Relationship Management and Customer Relationship Marketing are used interchangeably, the two terms should not be equated and confused. Customer relationship marketing, a related, but unique concept shares the acronym of CRM with Customer relationship management.
Customer relationship marketing (CRM) is a business process in which client relationships, customer loyalty and brand value are built through marketing strategies and activities. Customer relationship marketing allows businesses to develop long-term engagements with established and new customers focussing on customer loyalties, rather than achieving shorter-term marketing objectives like individual sales and customer acquisition. By doing so it helps streamline corporate performance. Customer relationship marketing employs commercial and client-specific strategies through employee training, marketing planning, relationship building and advertising.
Customer Relationship Marketing and Business Development: It has already been discussed above how Customer Relationship Management plays a profound role on Business Development. Likewise Customer Relationship Marketing also relates in the same way to the four defining features of Business Development viz. Long-term Value, Customers, Markets and Relationships. Hence, it can easily be concluded that the Customer relationship marketing has an equally important effect in development of business.