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The systematic collection and utilization of business data to manage interactions with customers by identifying patterns and interests of customers as success factors in order to foster customer loyalty through individualized correspondence and tailored offers. Learn more in: Multimedia for Direct Marketing 7. Is a business strategy that optimizes revenue and profitability while promoting customer satisfaction and loyalty. CRM technologies enable strategy, and identify and manage customer relationships, in person or virtually. CRM software provides functionality to companies in four segments: sales, marketing, customer service and digital commerce. Learn more in: Entrepreneurship and Big Data 9. CRM is an IT-supported process that has as its objective to increase value to customers or citizens. There are two common ways in which public organizations are approaching CRM. The first of them involves improving customer support and service through one-step shopping through the Internet, toll-free numbers, or in some countries through service kiosks. The second approach consists of mining data to better understand citizens’ needs in areas such as health or education. Learn more in: Government Innovation Through Knowledge Management 17. CRM includes the methodologies, strategies, software, and Web-based capabilities that help an enterprise organize and manage customer relationships. It is the collection and distribution of all data to all areas of the business. The general purpose of CRM is to enable organizations to better manage their customers through the introduction of reliable systems, processes and procedures for interacting with those customers. Learn more in: Improving Customer Relations through E-Commerce 18. These are software packages that enable a business to develop knowledge of their customer’s needs and buying patterns. These systems “focus on the integration of externally based customer data for the organization to pursue more customer-oriented activities like targeted advertising, one-on-one marketing (Peppers et al., 1993), customer retention and building a real-time integrated view of the customer (Goodhue et al., 2002; Kos et al., 2001; Winer, 2001) ” (Pan, 2005, p. 66). Another definition is “a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and customers” (Parvatiyar and Sheth, 2001, p. 5). Learn more in: Implementing Best of Breed ERP Systems 21. An approach that recognizes that customers are the core of the business and that a company’s success depends on effectively managing its relationship with them. CRM is about locating and attracting customers and thereby building long-term and sustainable relationships with them. Learn more in: Trust in B2C E-Commerce Interface 37. The combination of sales and marketing activities that focus on fulfilling customer requirements. There are many standalone CRM software systems, but they may also be part of an integrated Enterprise Resource Planning system. Learn more in: House Builders 39. These are software packages that enable a business to develop knowledge of their customers’ needs and buying patterns. These systems “focus on the integration of externally based customer data for the organization to pursue more customer-oriented activities like targeted advertising, one-on-one marketing, customer retention and building a real-time integrated view of the customer” ( Pan, 2005 ). Learn more in: ERP and the Best-of-Breed Alternative The better a business can manage the relationships it has with its customers the more successful it will become. Therefore IT systems that specifically address the problems of dealing with customers on a day-to-day basis are growing in popularity. Customer relationship management (CRM) is not just the application of technology, but is a strategy to learn more about customers' needs and behaviours in order to develop stronger relationships with them. As such it is more of a business philosophy than a technical solution to assist in dealing with customers effectively and efficiently. Nevertheless, successful CRM relies on the use of technology. This guide outlines the business benefits and the potential drawbacks of implementing CRM. It also offers help on the types of solution you could choose and how to implement them.
Why CRM?In the commercial world the importance of retaining existing customers and expanding business is paramount. The costs associated with finding new customers mean that every existing customer could be important. The more opportunities that a customer has to conduct business with your company the better, and one way of achieving this is by opening up channels such as direct sales, online sales, franchises, use of agents, etc. However, the more channels you have, the greater the need to manage your interaction with your customer base. Customer relationship management (CRM) helps businesses to gain an insight into the behaviour of their customers and modify their business operations to ensure that customers are served in the best possible way. In essence, CRM helps a business to recognise the value of its customers and to capitalise on improved customer relations. The better you understand your customers, the more responsive you can be to their needs. CRM can be achieved by:
Benefiting from CRM is not just a question of buying the right software. You must also adapt your business to the needs of your customers. Business benefits of CRMImplementing a customer relationship management (CRM) solution might involve considerable time and expense. However, there are many potential benefits. A major benefit can be the development of better relations with your existing customers, which can lead to:
This can lead to better marketing of your products or services by focusing on:
Ultimately this could lead to:
Once your business starts to look after its existing customers effectively, efforts can be concentrated on finding new customers and expanding your market. The more you know about your customers, the easier it is to identify new prospects and increase your customer base. Even with years of accumulated knowledge, there's always room for improvement. Customer needs change over time, and technology can make it easier to find out more about customers and ensure that everyone in an organisation can exploit this information. Types of CRM solutionCustomer relationship management (CRM) is important in running a successful business. The better the relationship, the easier it is to conduct business and generate revenue. Therefore using technology to improve CRM makes good business sense. CRM solutions fall into the following four broad categories. Outsourced solutions Application service providers can provide web-based CRM solutions for your business. This approach is ideal if you need to implement a solution quickly and your company does not have the in-house skills necessary to tackle the job from scratch. It is also a good solution if you are already geared towards online e-commerce. Off-the-shelf solutions Several software companies offer CRM applications that integrate with existing packages. Cut-down versions of such software may be suitable for smaller businesses. This approach is generally the cheapest option as you are investing in standard software components. The downside is that the software may not always do precisely what you want and you may have to trade off functionality for convenience and price. The key to success is to be flexible without compromising too much. Custom software For the ultimate in tailored CRM solutions, consultants and software engineers will customise or create a CRM system and integrate it with your existing software. However, this can be expensive and time consuming. If you choose this option, make sure you carefully specify exactly what you want. This will usually be the most expensive option and costs will vary depending on what your software designer quotes. Managed solutions A half-way house between custom and outsourced solutions, this involves renting a customised suite of CRM applications as a tailored package. This can be cost effective but it may mean that you have to compromise in terms of functionality. How to implement CRMThe implementation of a customer relationship management (CRM) solution is best treated as a six-stage process, moving from collecting information about your customers and processing it to using that information to improve your marketing and the customer experience. Stage 1 - Collecting information The priority should be to capture the information you need to identify your customers and categorise their behaviour. Those businesses with a website and online customer service have an advantage as customers can enter and maintain their own details when they buy. Stage 2 - Storing information The most effective way to store and manage your customer information is in a relational database - a centralised customer database that will allow you to run all your systems from the same source, ensuring that everyone uses up-to-date information. Stage 3 - Accessing information With information collected and stored centrally, the next stage is to make this information available to staff in the most useful format. Stage 4 - Analysing customer behaviour Using data mining tools in spreadsheet programs, which analyse data to identify patterns or relationships, you can begin to profile customers and develop sales strategies. Stage 5 - Marketing more effectively Many businesses find that a small percentage of their customers generate a high percentage of their profits. Using CRM to gain a better understanding of your customers' needs, desires and self-perception, you can reward and target your most valuable customers. Stage 6 - Enhancing the customer experience Just as a small group of customers are the most profitable, a small number of complaining customers often take up a disproportionate amount of staff time. If their problems can be identified and resolved quickly, your staff will have more time for other customers. Potential drawbacks of CRMThere are several reasons why implementing a customer relationship management (CRM) solution might not have the desired results. There could be a lack of commitment from people within the company to the implementation of a CRM solution. Adapting to a customer-focused approach may require a cultural change. There is a danger that relationships with customers will break down somewhere along the line, unless everyone in the business is committed to viewing their operations from the customers' perspective. The result is customer dissatisfaction and eventual loss of revenue. Poor communication can prevent buy-in. In order to make CRM work, all the relevant people in your business must know what information you need and how to use it. Weak leadership could cause problems for any CRM implementation plan. The onus is on management to lead by example and push for a customer focus on every project. If a proposed plan isn't right for your customers, don't do it. Send your teams back to the drawing board to come up with a solution that will work. Trying to implement CRM as a complete solution in one go is a tempting but risky strategy. It is better to break your CRM project down into manageable pieces by setting up pilot programs and short-term milestones. Consider starting with a pilot project that incorporates all the necessary departments and groups but is small and flexible enough to allow adjustments along the way. Don't underestimate how much data you will require, and make sure that you can expand your systems if necessary. You need to carefully consider what data is collected and stored to ensure that only useful data is kept. You must also ensure you comply with Québec’s An Act respecting the protection of personal information in the private sector. Avoid adopting rigid rules which cannot be changed. Rules should be flexible to allow the needs of individual customers to be met. Questions for CRM suppliersFor many businesses customer relationship management (CRM) can be a large investment. Therefore it is vital to choose your supplier carefully. Making the wrong choice could be expensive and even jeopardise your business. Before implementing a solution based on CRM technology, you might want to ask any potential suppliers the following questions:
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2009 Our information is provided free of charge and is intended to be helpful to a large range of UK-based (gov.uk/business) and Québec-based (infoentrepreneurs.org) businesses. Because of its general nature the information cannot be taken as comprehensive and should never be used as a substitute for legal or professional advice. We cannot guarantee that the information applies to the individual circumstances of your business. Despite our best efforts it is possible that some information may be out of date. As a result:
What is one of the three major objectives of customer relationship management?The overall business goals of CRM systems are to help organizations 1) capture new leads and move them through the sales process; 2) support and manage relationships with current customers to maximize their lifetime value to the company; and 3) boost productivity and lower the overall costs of marketing, sales, and ...
What is the purpose of customer relationship management quizlet?What is the purpose of customer relationship management? To indentify and understand customers so that a strong relationship. What is an example of information utility?
What is customer relationship management based on quizlet?Customer Relationship Management. a means of managing all aspects of a customer's relationship with an organization to increase customer loyalty and retention and an organization's profitability.
How does customer relationship management help businesses employ the marketing concept?CRM helps businesses learn about their customers, including who they are and why they purchase your products, as well as trends in customers' purchasing histories. This allows businesses to better anticipate their customers' needs and, as a result, fulfill them.
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