What Is Customer Relationship Management?
Customer Relationship Management (CRM) encompasses activities and processes intended to help an organisation understand, communicate with, and service the needs of, customers and prospects.
The main driver for CRM is the underlying philosophy that successful customer engagement, and therefore successful business, is based on the ability to build ‘meaningful relationships’ with customers.
Of course, different companies have very different ideas about what a meaningful relationship is. Nike doesn’t know the names of all their millions of customers, but they have a very good idea of their preferences across different market segmentations. They probably also know a lot about shoe size distribution curves in different countries around the world. They don’t call people up and try to sell them a pair of shoes. They engage through mass market media, and measure consumer responses to different marketing campaigns.
On the other hand a company that sells expensive sports cars to the super rich is likely to have strong personal relationships with each individual customer, and not just related to the cars they buy, built up through face to face interaction.
CRM helps a business understand who their customers are, how they like to interact with the company, how profitable they are, and what their future value might be. In this way it helps an organisation make critical decisions about how to do business, such as what new products or services they should be developing, and what sales and marketing channels they should invest in, or discard.
Effective CRM therefore is about gathering information about customers, then analysing and interpreting it. This is the role played by CRM software systems.
What should you expect CRM software to do for you?
There are many different CRM products on the market. These range from:
• Free, open source products. • Out of the box solutions costing a few hundred GBP. • Fully integrated systems requiring a high degree of customisation, and costing hundreds of thousands, or even millions of GBP.
There are of course many shades in between these three, and the option you choose will depend on both the needs of your organisation, as well as your budget.
What all CRM systems do is provide a central database where customer related information is stored, functions to retrieve and display that information and reporting tools to interrogate it and answer questions critical to the business.
Here is a brief overview of the features and functions to consider.
Contact Management At the heart of any CRM system is a customer database, designed to be used as a central repository of everything you know about your customer. Out-of-the-box solutions should give a central database that can be viewed and edited by several users. Not only storage of contact information, but also a history of communications with the customer (see below).
A customisable solution is likely to synchronise or share contact data with other applications like accounts software and product inventory systems. The more specialised the systems or applications involved, the more costly such integration becomes.
Communications Expect the ability to integrate with products like Microsoft Outlook and Word to access past communications, as well as generate both mass and targeted new communications.
However, the data in a simple system is only as accurate as the people responsible for entering it. Records of phone calls made by sales people are likely to rely on manual data input.
If you operate a call centre however, a top end solution will fully integrate with your telephone system – automatically recording all instances of conversations with customers, and even the conversations as well.
Activity Scheduling This is the ability to both plan future customer interactions, and remind people when those activities fall due. This might be according to a pre-determined template, for example when managing a standardised sales cycle or marketing campaign, or it might be manually input, e.g. customer A asks you to call back next Thursday at 3pm when he will be free to speak to you.
Sales and Opportunity Management All CRM software enables you to categorise customers according to where they are in your sales cycle – new leads, qualified opportunities, closed customers, lost business. This will include recording the value of any piece of business, and the likelihood of successfully closing the deal.
Integrated solutions will link into customer fulfilment systems for product delivery, contracts records and accounts/invoicing software – automating as far as possible the process of getting paid and delivering the product or service to the customer.
Reports and Data Analysis In the simplest solutions you should be able to look at the data in your CRM system in a number of different ways. This enables you to answer questions like: How many leads, at each stage of the sales cycle, does each account manager have? How much business are we forecasting to close in the next three months?
Expect to be able to export reports information into other common file formats, such as Microsoft Excel, which will then enable further data analysis and sharing.
The more you spend on your CRM system, the more you should expect it to be able to analyse data internally. Many of the most valuable questions a company can ask itself will be specific to its own needs, so this area of functionality may well often require the highest level of individual customisation.
Sophisticated analysis would enable you to monitor the accuracy of sales volume predictions against actual business, and relating it back to the volume and types of activity required to close that business. This is the kind of data that enables organisations to closely monitor and refine the way they do business – for increased profitability or market share.