What is CRM? And What are the Real Benefits for Companies?
Building sustainable and successful relationships with a large customer base is not the easiest thing to do and will have a direct impact on many core operational processes from product development to debt recovery. It is not purely a technical issue. It is not only about software implementation. And it is not just about sales. It is about the interactions of the entire business with your customers.
Paul Greenberg, the Author of CRM at the Speed of Light, has his own classic definition about CRM:
“CRM is philosophy and a business strategy, supported by a system and a technology, designed to improve human interactions in a business environment. It is also a continuing business initiative that demands a dynamic, ongoing strategy of customer engagement”.
Scott Hornstein, the Principal of Hornstein Associates, defines CRM as:
“CRM is the delivery of customer care as a strategic product, with measurement and reward focused on generating happier customers that stay longer and buy more”.
In summary, Customer relationship management (CRM) covers methods and technologies used by companies to manage their relationships with clients. Information stored on existing customers (and potential customers) is analyzed and used to this end. Automated CRM processes are often used to generate automatic personalized marketing based on the customer information stored in the system.
What is All the Fuzz about Social CRM?
The latest evolution of CRM in today’s social customers, Social CRM is known as the use of social media channels, techniques and technology to support companies to build relationship with its customers. Social Customers want to interact with companies in different ways, this has been the rise of Social CRM. Let’s hear what Paul Greenberg says about Social CRM:
“Social CRM is a philosophy and a business strategy, supported by a technology platform, business rules, workflow, processes and social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent business environment. It’s the company’s response to the customer’s ownership of the conversation.”
Here are some samples of Social CRM applications available in the market: Salesforce.com, Coffee Bean Technology, Nimble, NetSuite, Kana, SageCRM.
There are three fundamental components in CRM:
Operational CRM: Automation of Basic Business Processes (Marketing, Sales and Service)
Operational CRM provides automated support to front office business processes (sales, marketing and service). Each interaction with a customer is generally added to a customer’s history and staff can retrieve information on customers from the database as necessary. According to Gartner Group, operational CRM typically involves three general areas:
- Sales Force Automation: Sales Force Automation automates some of a company’s critical sales activities and sales force management tasks, such as forecasting, sales administration, tracking customer preferences and demographics, performance management, lead management, account management, contact management and quote management. Some sample of Sales Force Automation software: Sales Nexus, Nimble.com, Salesforce.com, capsuleCRM
- Customer Service/Support and Contact Center. Customer Service/Support and Contact Center automates certain service requests, complaint, product returns and enquiries. Some samples in the market: Desk.com help desk, zendesk.com, freshdesk.com, etc.
- Marketing Automation. One key objective in marketing is to generate sales leads that in the end get converted into revenues. Marketing Automation automates activities in marketing planning and execution. Marketing Automation applications are used to improve marketing efficiency. Some samples of this application in the market: Campaigner (Email Marketing Software)., marketo, InTouch CRM, etc.
An integrated operational CRM software is often known as a ‘front office solution’ as it deals directly with customers. It’s a complete CRM suite covers at least 3 areas; Sales Force Automation, Customer Service/Support & Contact Center and Marketing Automation. This solutions seamlessly manage and consolidate the disparate and siloed processes that commonly happen across multiple customer-facing units. With this integrated CRM suite, all sales, marketing and service personnels can share and retrieve the same information and work in sync.
Some samples of CRM suite applications: SAP, Oracle Siebel, Pivotal (CDC Software), Salesforce.com, C2CRM, Front range, Lead Master, and many more.
Analytical CRM: Analysis of Customer Data and Behaviour using Business Intelligence
Analytical CRM analyzes data (gathered as part of operational CRM, or from other sources) in an attempt to identify means to enhance a company’s relationship with its clients. The results of an analysis can be used to design targeted marketing campaigns, for example:
- Acquisition: cross-selling, up-selling
- Retention: retaining existing customers
- Information: providing timely and regular information to customers
Other examples of the applications of analyses include:
- Contact optimization
- Evaluating and improving customer satisfaction
- Optimizing sales coverage
- Fraud detection
- Financial forecasts
- Price optimizations
- 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 analyses and decisions. Most analytical CRM projects use data warehouse to manage data.
Collaborative CRM: Communicating with Customers
Collaborative CRM focuses on the interaction with customers (personal interaction, letter, fax, phone, internet, email, etc). Collaborative CRM includes:
- Providing efficient communication with customers across various communication channels
- Providing online services to reduce customer service costs
- Providing access to customer information while interacting with customers
- Driven by authors from the Harvard Business School (Kracklauer/Mills/Seifert), collaborative CRM also seems to be the new paradigm to succeed the leading Efficient Consumer Response and Category Management concept in the industry/trade relationship.
CRM is a corporate level strategy, focusing on creating and maintaining relationships with customers. Several commercial CRM software packages are available which vary in their approach to CRM. However, CRM is not a technology itself, but rather a holistic approach to an organization’s philosophy, placing the emphasis firmly on the customer. CRM governs an organization’s philosophy at all levels, including policies and processes, front of house customer service, employee training, marketing, systems and information management. CRM systems are integrated end-to-end across Marketing, Sales and Service.
A CRM system should:
- Identify factors important to clients
- Promote a customer-oriented philosophy
- Adopt customer-based measures
- Develop end-to-end processes to serve customers
- Provide successful customer support
- Handle customer complaints
- Track all aspects of sales
- Automate marketing planning and execution.
Types of CRM Vendors
CRM vendors in the marketplace is wide and varied. Some vendors are focused on the enterprise solutions, the others focus on specific functional specialties such as Customer Service or Sales Automation. Some vendors offer full suite applications for large corporations, but there are also many vendors focus on providing solutions for small-medium size companies. Some vendors offer a monthly-subscription model also known as SAAS: software as a service, while others charge based on number of users. In term of deployment, some vendors offer on-premise solution while others are hosted service. This will be depending on the company’s requirements and needs and strategic direction.
In Hosted CRM; hardware, software and all components are maintained by third-party hosting provider or by the CRM vendors. The vendors store and manage customer data in their premises. Customers need not to do the hassle of IT things but concentrating on managing their own-business. To access the system, customers will only need an access to the internet and can enjoy the CRM hosted applications and all the functionalities. With Hosted CRM, customers can enjoy the advantage of latest technology tools in a more affordable price.
Welknown as a licensed-software or in-house CRM, in the contrary with Hosted CRM, in the On-premise CRM, customers purchase the CRM software license, manage all the data as well as all the maintenance aspects of owning a software package. Huge corporations that have a more complex business processes and requirements are typically suitable to choose this approach.
Some of On-Premise CRM applications: SAP, Pivotal (CDC Software), Amdocs, Maximizer, Microsoft Dynamics, Sage, Avidian Technologies, Infor, KANA, Clarity, SugarCRM, etc.
Uses of CRM
In its broadest sense, CRM covers all interaction and business with customers. A good CRM program allows a business to acquire customers, provide customer services and retain valued customers. Customer services can be improved by:
- Providing online access to product information and technical assistance around the clock
- Identifying what customers value and devising appropriate service strategies for each customer
- Providing mechanism for managing and scheduling follow-up sales calls
- Tracking all contacts with a customer
- Identifying potential problems before they occur
- Providing a user-friendly mechanism for registering customer complaints
- Providing a mechanism for handling problems and complaints
- Providing a mechanism for correcting service deficiencies
- Storing customer interests in order to target customer selectively
- Providing mechanisms for managing and scheduling maintenance, repair and on-going support
The following factors need to be considered:
- Scalability: the system should be highly scalable, as the volume of data stored in the system, grows over time.
- Communication channels: CRM can interface with a variety of different channels (phone, WAP, internet, etc)
- Workflow – a company’s business processes need to be represented by the system with the ability to track the individual stages and transfer information between steps
- Assignment – the ability to assign requests, such as service requests, to a person or group
- Database – the means of storing customer data and histories (in a data warehouse)
- Customer privacy considerations, such as data encryption and legislation
Improving Customer Relationship
CRM applications often track customer interests and requirements, as well as their buying habits. This information can be used to target customer selectively. Furthermore, the products a customer have purchased can be tracked throughout the product’s life cycle, allowing customers to receive information concerning a product or to target customer with information on alternative products once a product begins to be phased out. Repeat purchase rely on customer satisfactions, which in turn comes from a deeper understanding of each customer and individual needs. CRM is an alternative to the “one size fits all” approach. In industrial markets, the technology can be used to coordinate the conflicting and changing purchase criteria of the sector.
Privacy and Ethical Concerns
The data gathered as part of CRM raises concerns over customer privacy and enables coercive sales techniques. However, CRM does not necessarily involve gathering new data, but also includes making better use of customer information gathered as a result of routine customer interaction. The privacy debate generally focuses on the customer information stored in the centralized database itself, and fears over a company’s handling of this information, especially regarding third parties.
CRM for Non-Profit Organizations
CRM is also important to non-profit organizations, which sometimes use the terms “constituent relationship management”, “contact relationship management” or “community relationship management” to describe their information system for managing donors, volunteers and other supporters. (Source: gathered and compiled from many sources).