Customer Relationship Management (CRM)

Customer Relationship Management

Customer Relationship Management (CRM) is ways with which companies interact with clients. Information Technology has a significant role to play with CRM. For example, a company may record information about its customers in such a way that all the departments in the company may access this database, so as to match customer needs with new product offerings and other such services. Successful customer relationships can be built in three steps: Goals must be set such that both organization and the customer be satisfied A good customer relationship must be maintained There must be a positive vibe between the organization and its customers To an outsider CRM may seem like a simple interaction between a company and its customers. However, CRM is more complex than that. It attempts to merge customer interactions so that customer information may be recorded and tracked for future use. CRM consists of the following: Enabling a company to identify and target its best customers Generate marketing campaigns based on target customers One-on-one interaction with customers to be able to relate to customers and gain customer satisfaction. The different departments such as customer service or the sales department, for better serving the customer, can use the database maintained by the company. Data mining for CRM Data mining is processing and analysing data, to extract meaningful patterns and relationships. It is a powerful tool if used correctly. Data is only useful, if it is converted to information that can be used for the benefit of a company.  Data mining tools show customer behaviour patterns and can predict future trends, which is extremely useful information during strategic decision-making. The first step toward data mining begins with CRM. CRM ensures that you have enough data from sales and marketing departments that can be analysed for better understanding customer needs. Data mining helps correlate product, pricing and marketing techniques to customer needs, competition and other such external factors. The next step is to sort and process this huge amount of data, for that vital piece of information that will be useful to the business. A number or data mining techniques like statistical analysis, linear regression, cluster analysis, associations, classifications, etc are being used by businesses to sort their data. The data acquired from data mining techniques is the knowledge that can be put to use for strategic decision-making related to the launch of new products, increasing customer base, customer retention, etc. It can also help predict effective strategies to prepare successful marketing campaigns. According to the 80-20 rule, marketers know that 80% of their profits are because of the 20% of their customers. Thus, recognizing these customers and targeting them is one of the main goals of data mining. Need for CRM The ultimate need for CRM is to increase profit. An effective CRM can help a business in a number of ways such as reduce customer complaints, facilitate optimum usage of resources, reduce costs,  increase customers, etc. It also increases customer satisfaction, as they get exactly what they want. These satisfied customers, increase the number of new customers through referrals. CRM helps the long-term profitability and viability of a company. A company needs profits for survival, where as customers want a good service and a value-for-money product. Achieving good CRM CRM has shifted the focus of companies from the product to the customer.  Traditionally customer service was something you did for the customer. However, the modern CRM is done with the customer. Relationships with a customer must be cooperative and long term. The whole purpose of a business it to make new customers and keep the old ones. It is common knowledge that keeping existing customers costs very little compared to finding new customers. Thus organizations having difficulties keeping old customers, end up spending a lot of their profits on making new ones. The only way to know your customers is to ask. You cannot presume to know what a customer expects. This is an on-going process, as customer needs change from time-to-time. Each customer is an individual with different expectations, what satisfies one customer may not satisfy another. That’s why you must always know the reason why a customer does business with you. Is it quality, service, product, price, etc. Customer Satisfaction The way you represent your company to a customer is the way a customer will form an opinion about the company. Sometimes expectations of a customer are met, even exceeded however occasionally disappointed as well. In such situations, the quick damage control is vital. It shows the customer that they are important to the company. A satisfied customer is more likely to have greater loyalty to the company than he had before the problem arose. Traditionally a customer had a single point of contact with a company for any deal that took place between them. On the other hand, the new approach in CRM means satisfying not only the people of the customer organization but also the processes and systems. CRM software solutions CRM software solutions have attracted many organizations for managing their customer relationships. CRM technology can be on-premise, on-demand or through Software as a Service (SaaS) CRM, depending on the vendor. Recently, mobile CRM and the open source CRM software model have also become quite a rage in the market. Different approaches to CRM Operational CRM Operational CRM renders automated support for businesses that have a direct interaction with their customers, for e.g. sales, customer service, marketing, etc. Every interaction with a customer and their personal preferences are recorded for use by the different departments of an organization to retrieve customer information. Operational CRM can be broken down into three components Sales Force Automation (SFA) SFA, as the name suggests, is responsible for automating a company’s sales-force related tasks. Some activities that SFA could automate are Tracking customer preferences Maintaining a lead tracker Demographics Contact Management Performance Management Tracking customer transactions Many organizations set up call centres to maintain customer information. These call centres help customers with their queries about a product, purchases, etc. Several software companies offer CRM applications that allow an organization in the efficient tracking and maintenance of customer accounts. Customer Service and Support (CSS) Customer Service and Support automates processes that are related to service. This could include service requests, customer complaints, item returns, etc. Enterprise Marketing Automation (EMA) Enterprise Marketing Automation applications automate marketing tasks used for contact and lead generation. Enterprise Marketing Automation helps a company with information about the business environment, such as vital information about competitors and the different trends in the market. Relevant customer advertisement forms the basis of an effective EMA application. Analytical CRM For an effective and successful CRM strategy, it is necessary to thoroughly analyse and understand customer behaviour. Analytical CRM is about analyzing customer information in an attempt to build a stronger relationship with customers. The data obtained from analysis can be used to retain customers before they switch to a competitor. The more the information available to the software for these analyses, the more accurate its recommendations will be. Analytical CRM classifies customers according to their purchasing habits. This information can be used to cross-sell products to customers. A good Analytical CRM tool can analyze sales patterns, profits, etc which can be very useful in controlling and curbing fraudulent activities.  A company must periodically review its strategies or functions based on the information obtained using this tool. Collaborative CRM Collaborative CRM is an approach where the various departments of an organization share customer information among themselves.  This can be especially followed in the sales, service and marketing departments. This kind of information can be very helpful for these departments.  For example, the information obtained through customer feedback in the customer service, technical support, etc can be used by the marketing and sales departments for better perspective of customer needs. The CRM information can be also used for development of new products. Collaborative CRM also facilitates a better communication between an organization and its customers across different communication channels. Communication systems such as email, mobile, etc are used for communication between the customer and the various departments.  Online services are also provided to the customer in an attempt to cut service costs. A good collaborative CRM Increases efficiency Improves Customer satisfaction Improves Customer service Improves customer relationships Thus a good CRM solution can - not only help make a customer happy - but also benefit an organization in more ways than one.