What is CRM?
One of the ways in which organizations large and small have sought to make the most of their customer interactions and online customer databases in recent times is to capture data about customers and create data analysis systems to help guide future marketing and service activities. Initially, this was done as a relatively loose and often informal process. However, because customers interface with an organization of any size or type in many places, in best-practice enterprises the task has become the job of almost every leader, and is now typically done much more systematically. In fact, this task is usually now termed “Customer Relationship Management” or CRM for short.
Customer Relationship Management
CRM, in its broadest sense, means managing all interactions and business with customers. This includes, but is not limited to, improving customer service as an overall goal. A good CRM program will allow a business to:
- acquire customers in the first place
- service the customer efficiently and effectively
- increase the value of the customer to the company
- retain good customers (prevent them from going to competitors), and
- determine which customers can be retained or given a higher level of service
Is CRM a software-driven approach?
CRM has come to be associated with complex software systems that produce lots of facts on customers (and certainly computers have a lot to tell us about customers at a raw data level). But, CRM is not simply technology. It’s not even a “solution” in itself (as data needs to be turned into useful information that can be acted upon of course).
CRM is a resource management activity or part of a coordination process that can help bring together many pieces of information about customers, sales, marketing effectiveness and product or service buying or use patterns and trends so that we can make better decisions about how to provide effective customer service.
A successful and complete CRM system or strategy cannot consequently be implemented by simply installing a software package. In addition, any well-designed system will take a considerable amount of time and effort to implement in most cases. Changes typically need to occur at all levels including overall policies and processes, front of house customer service, employee training, sales, marketing, systems and information management. In other words, all aspects of a given business must be reshaped to be customer driven.
How can a CRM effort be most effective?
To be really effective, any CRM process needs to be integrated in an end-to-end fashion across marketing, sales, and customer service. A good CRM program therefore needs to:
- Identify customer success factors
- Create a customer-based culture across the enterprise
- Adopt customer-based measures or key performance indicators
- Develop an overall or end-to-end process to serve customers
- Recommend how to respond positively to customer with a complaint about a purchase
- Track all aspects of selling to customers and prospects as well as monitoring all customer support that is subsequently offered.
How can a CRM process improve customer satisfaction?
A good CRM program can improve customer satisfaction (usually in the medium to long term) by facilitating communication in several ways. It can:
- Provide product or service information, product/service use information, and technical assistance. These should ideally be accessible 24 hours a day, 7 days a week.
- Identify how each individual customer defines quality, and then design a service strategy for each customer based on these individual requirements and expectations.
- Provide a system for managing and scheduling follow-up sales calls to assess post-purchase problems when they occur, repurchase probabilities, repurchase times, and repurchase frequencies (many enterprises have used sales force automation to help do this in the most efficient way possible).
- Provide a mechanism to track all points of contact between a customer and the company, and do it in an integrated way so that all sources and types of contact are included, and all users of the system see the same view of the customer. This helps to reduce misunderstandings and confusion.
- Help to identify potential problems quickly, before they occur.
- Provide a user-friendly and fast mechanism for recording and handling problems and complaints (complaints that are resolved quickly can increase customer satisfaction).
- Provide a fast way for correcting service deficiencies (correct the problem before other customers experience the same dissatisfaction).
- Use the Internet to engage in collaborative tailoring or real-time customization.
- Provide a solid process for managing on-going support (to improve efficiency and effectiveness).
The long-term goal of any CRM based approach is to build better and closer partnerships with customers so that mutual benefits can be derived. This is best thought of as a progressive or “pyramidic” effort in which we move customers from being relatively anonymous contacts (and prospects of course) at the base of the pyramid to becoming partners, then loyal consumers and finally to full advocates (or customers who are ready and willing to refer other customers at no cost because they are happy to share their positive experience with other people and companies with which they have contact).
US President Thomas Jefferson once said, “The possession of facts is knowledge, the use of them is wisdom.” If we apply this thinking to our goal of progressively trying to achieve customer loyalty and advocacy, this means that we need to convert our facts or data about customers to wisdom about them. This is another hierarchy or pyramid as follows:
This is perhaps the best illustration of what the journey to having a good CRM system is all about (especially if we can recruit he whole organization to the cause).