Customer Relationship Management
Customer relationship management (CRM) is a combination of organizational strategy, information systems, and technology that is focused on providing better customer service. CRM uses emerging technology that allows organizations to provide fast and effective customer service by developing a relationship with each customer through the effective use of customer database information systems. The objectives of CRM are to acquire new customers, retain the right current customers, and grow the relationship with an organization’s existing customers. An integrated business model that ties together technology, information systems, and business processes along the entire value chain of an organization is critical to the success of CRM.
CRM can also be considered a corporate strategy because it is a fundamental approach to doing business. The goal is to be customer-focused and customer-driven, running all aspects of the business to satisfy the customers by addressing their requirements for products and by providing high-quality, responsive customer service. Companies that adopt this approach are called customer-centric, rather than product-centric.
To be customer-centric, companies need to collect and store meaningful information in a comprehensive customer database. A customer database is an organized collection of information about individual customers or prospects. The database must be current, accessible, and actionable in order to support the generation of leads for new customers while supporting sales and the maintenance of current customer relationships. Smart organizations are collecting information every time a customer comes into contact with the organization. Based on what they know about the individual customer, organizations can customize market offerings, services, programs, messages, and choice of media. A customer database ideally would contain the customer’s history of past purchases, demographics, activities/interests/opinions, preferred media, and other useful information. Also, this database should be available to any organizational units that have contact with the customer.
CRM has also grown in scope. CRM initially referred to technological initiatives to make call centers less expensive and more efficient. Now, a lot of organizations are looking at more macro organizational changes. Organizations are now asking how they can change their business processes to use the customer data that they have gathered. CRM is changing into a business process instead of just a technology process.
How does CRM work?
Although some people think of CRM as just a technology, it is so much more than that.
No technology, no matter how sophisticated – can be successful without a strategy to guide its implementation and use. Business strategy and technology must work together in order to bring a customer-centric plan to life.
Let’s take a look at the role CRM plays in customer-centricity, customer data management, and automation.
1. Supports a customer-centric strategy
A CRM system supports a strategy that says that the customer is at the center of everything that you do. This customer-centric strategy must be based on clear goals and a vision of what meaningful customer experience looks like.
Valuable customer experience is an integral part of CRM, according to Gartner’s report, “Improving the Customer Experience”.
Every time a customer comes in contact with an organization, through any of its channels, the customer has an opportunity to form an opinion – be it good, bad or indifferent. Through time, this collective set of customer experiences forms a picture in the customer’s mind, which in turn, forms the image of the brand its values.
Organizations that are serious about CRM design and maintain a quality customer experience because they recognize that poor customer experience is a step toward customer churn, whereas a good experience encourages loyalty.
2. Centralizes all your customer data
CRM software combines all sales, marketing, and customer service information into one central database.
With 92% of businesses collecting data on prospects and customers, having access to all data in a database means fewer silos within your organization – thus helping you achieve customer-centricity.
What kind of customer information is being collected?
Customer information includes, but is not limited to, phone numbers, addresses, and last contact made. The software also records what was discussed, what the next follow-up date is and even the status of an open item – all of these play an important part in being GDPR compliant.
This information can then be used to manage, measure, and keep track of marketing, sales and customer service activities as they relate to the customer. Overall, it builds greater customer loyalty and a better customer experience.
Since a CRM system centralizes all customer-facing information, silos and finger-pointing are significantly reduced. Sales can’t blame Marketing for not communicating with them. Marketing can’t blame Sales for not implementing their campaigns and Customer Service can’t blame Sales for disgruntled customers.
Everyone has the same access to the same customer information.
3. Automates customer-facing business processes
Companies have business-facing processes and customer-facing processes.
Business-facing processes are those which make the business run more efficiently such as budgeting and planning whereas customer-facing processes include sales, marketing, and customer service.
A CRM strategy focuses primarily on the customer-facing processes and makes them better in terms of meeting the needs of the customer.
The following chart explains a sample what is included in each process:
The whole CRM process begins with a lead – the name of someone you think you can sell something to.
Usually, a person has filled out a web form and provided you with their contact information.
Once the lead is put into the system, the software will then take it through to the sales process. It’s the CRM system that will remind the salesperson to call at an agreed-upon time, for example. Each time you interact with the prospect, you will record it into the CRM system. The same applies if someone else ends up talking to the prospect.
In a nutshell, CRM keeps track of all lead-related actions and what’s been said and done.
At the same time, CRM is a library of documents, phone calls and emails. When an interaction with a prospect is initiated, you get an instant, automated trail of communication. Because the information is in one central place, anyone in the company can help this person out.
Whether you’re in sales, marketing or customer support, a CRM system can help to automate a particular business process, as well as to automate the way each process works together with the other. But, it goes without saying that each business process must be well defined and efficient in order for a company to achieve good results.
Customer-facing process automation
1. Lead management
There’s an entire process before a lead becomes a customer.
You need to identify a lead, then qualify it and only then convert the lead into a sale.
A lead can come from many channels – a website, cold calling, social selling, an event/seminar, or it can be purchased (providing the purchase list is in line with GDPR).
With this number of channels, it must be clear which person or department is ultimately responsible for logging the lead-in, because this determines how the lead should be routed and how it will be followed upon. Without a clearly defined process (workflow), leads can end up lost or forgotten, which results in frustration, lost sales productivity and even bad customer experience.
2. Customer support
There should be clear rules for how customer service requests are managed.
These rules define whether a request goes to the first or second line of support, what resources will be used to solve a customer’s problem and how status updates will be shared to ensure that the issue is being addressed. Once the workflow and rules are defined, the CRM system can automate the whole flow.
At the same time, it keeps a record of all contacts’ history, so that customer service teams can view the information to get a better understanding of how to help the customer, which can then be used to improve customer satisfaction.
