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Customer relationship management

The generally accepted purpose of Customer Relationship Management (CRM) is to enable organizations to better serve its customers through the introduction of reliable processes and procedures for interacting with those customers.

In today's competitive business environment, a successful CRM strategy cannot be implemented by only installing and integrating a software package designed to support CRM processes. A holistic approach to CRM is vital for an effective and efficient CRM policy. This approach includes training of employees, a modification of business processes based on customers' needs and an adoption of relevant IT-systems (including soft- and maybe hardware) and/or usage of IT-Services that enable the organization or company to follow its CRM strategy. CRM-Services can even redundantize the acquisition of additional hardware or CRM software-licences.

The term CRM is used to describe either the software or the whole business strategy oriented on customer needs. The second one is the description which is correct. The main misconception of CRM is that it is only software, instead of whole business strategy.

Major areas of CRM focus on service automated processes, personal information gathering and processing, and self-service. It attempts to integrate and automate the various customer serving processes within a company.

There are three parts of application architecture of CRM:

  • operational - automation to the basic business processes (marketing, sales, service)
  • analytical - support to analyse customer behaviour, implements business intelligence alike technology
  • co-operational - ensures the contact with customers (phone, email, fax, web...)

Operational part of CRM typically involves three general areas of business. They are (according to Gartner Group) a Enterprise marketing automation (EMA), Sales force automation (SFA) and a Customer service and support (CSS). The marketing information part provides information about the business environment, including competitors, industry trends, and macroenviromental variables. The sales force management part automates some of the company's sales and sales force management functions. It keeps track of customer preferences, buying habits, and demographics, and also sales staff performance. The customer service part automates some service requests, complaints, product returns, and information requests.

Integrated CRM software is often also known as "front office solutions." This is because they deal directly with the customer.

Many call centers use CRM software to store all of their customer's details. When a customer calls, the system can be used to retrieve and store information relevant to the customer. By serving the customer quickly and efficiently, and also keeping all information on a customer in one place, a company aims to make cost savings, and also encourage new customers.

CRM solutions can also be used to allow customers to perform their own service via a variety of communication channels. For example, you might be able to check your bank balance via your WAP phone without ever having to talk to a person, saving money for the company, and saving you time.


Improving customer service

CRMs are claimed to improve customer service. Proponents say they can improve customer service by facilitating communication in several ways:

  • Provide product information, product use information, and technical assistance on web sites that are accessible 24 / 7
  • Help to identify potential problems quickly, before they occur
  • Provide a user-friendly mechanism for registering customer complaints (complaints that are not registered with the company cannot be resolved, and are a major source of customer dissatisfaction)
  • Provide a fast mechanism for handling problems and complaints (complaints that are resolved quickly can increase customer satisfaction)
  • Provide a fast mechanism for correcting service deficiencies (correct the problem before other customers experience the same dissatisfaction)
  • Identify how each individual customer defines quality, and then design a service strategy for each customer based on these individual requirements and expectations
  • use internet cookies to track customer interests and personalize product offerings accordingly
  • use the internet to engage in collaborative customization or real-time customization
  • Provide a fast mechanism for managing and scheduling followup sales calls to assess post-purchase cognitive dissonance, repurchase probabilities, repurchase times, and repurchase frequencies
  • Provide a fast mechanism for managing and scheduling maintenance, repair, and on-going support (improve efficiency and effectiveness)
  • 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 (reduces confusion)
  • The CRM can be integrated into other cross-functional systems and thereby provide accounting and production information to customers when they want it

Improving customer relationships

CRMs are also claimed to be able to improve customer relationships . Proponents say this can be done by:

  • CRM technology can track customer interests, needs, and buying habits as they progress through their life cycles, and tailor the marketing effort accordingly. This way customers get exactly what they want as they change.
  • The technology can track customer product use as the product progresses through its life cycle, and tailor the service strategy accordingly. This way customers get what they need as the product ages.
  • In industrial markets, the technology can be used to micro-segment the buying centre and help coordinate the conflicting and changing purchase criteria of its members
  • When any of the technology driven improvements in customer service (mentioned above) contribute to long-term customer satisfaction, they can ensure repeat purchases, improve customer relationships, increase customer loyalty, decrease customer turnover, decrease marketing costs (associated with customer acquisition and customer “training”), increase sales revenue, and thereby increase profit margins.

Technical functionality

A CRM solution is characterised by the following functionality:

  • scalability - the ability to be used on a large scale, and to be reliably expanded to what ever scale is necessary.
  • multiple communication channels - the ability to interface with users via many different devices (phone, WAP, internet, etc)
  • workflow - the ability to automatically route work through the system to different people based on a set of rules.
  • database - the centralised storage (in a data warehouse) of all information relevant to customer interaction
  • customer privacy considerations, e.g. data encryption and the destruction of records to ensure that they are not stolen or abused

Privacy and ethical concerns

CRMs are not however considered universally good - some feel it invades customer privacy and enable coercive sales techniques due to the information companies now have on customers - see persuasion technology. However, CRM does not necessarily imply gathering new data, it can be used merely to make "better use" of data the corporation already has. But in most cases they are used to collect new data.

Some argue that the most basic privacy concern is the centralised database itself, and that CRMs built this way are inherently privacy-invasive. See the commercial version of the debate over the carceral state, e.g. Total Information Awareness program of the United States federal government.

Setting up a framework for CRM

  • When you start setting up your CRM segment for your business you first want to see what profile aspects you feel are relevant to your business. Which information will provide you the keys to serve your customers in the best way possible? You can look to your financial history for this information what would you have liked to know about your customers in the past? What would have been the effects? And what information is not useful? Being able to eliminate unwanted information is a big aspect in implementing your CRM systems
  • One idea is to keep in mind of who you are thinking of, you want to be more extensive on your information because these are the high-margin customers. While you still want to keep you “low-margin” customers in mind you may not want to be so extensive in your relationships with them.

CRM in Business

In this day and age the use of internet sites and specifically e-mail, in particular, are touted as less expensive communication methods, compared to traditional methods like telephone calls. This revolutionary type of service can be very helpful, but it is completely useless if you are having trouble reaching your customers. It has been determined by some major companies that the majority of clients trust other means of communication, like telephone, more than they trust e-mail. Clients, however, are not the ones to blame because it is often the manner of connecting with consumers on a personal level making them feel as though they are cherished as customers. It is up to the companies to focus on reaching every customer and developing a relationship.

CRM software can run your entire business. From prospect and client contact tools to billing history and bulk email management. The CRM system allows you to maintain all customer records in one centralized location that is accessible to your entire organization through password administration. Front office systems are set up to collect data from the customers for processing into the data warehouse. The data warehouse is a back office system used to fulfill and support customer orders. All customer information is stored in the data warehouse. Back office CRM makes it possible for a company to follow sales, orders, and cancellations. Special regressions of this data can be very beneficial for the marketing division of a firm.

CRM suppliers

Siebel Systems pioneered the CRM industry and is one of the largest CRM vendors.

Many other companies supply CRM solutions, including:

There are many free and stable open source CRM projects at, including:

These pay varying degrees of attention to usability, integration and privacy concerns - it being widely acknowledged as impossible to fulfil all three constraints - thus it seems unlikely that any one vendor can dominate in the near term.

See also

External links

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