Customer Relationship Management (CRM) combines business strategy and technology to identify, acquire and retain profitable customer relationships. CRM creates a comprehensive picture of a customer across all channels by analyzing information collected during every transaction and interaction (such as purchases, support calls, returns, and other activities).
This multi-dimensional analysis reveals a wealth of customer information. Some customers are more valuable than others, so organizations must maximize their marketing, product and service investments based on a customer's
true value to the company. Better Management presents extensive resources on Customer elationship Management topics to help you develop strategies for optimizing your customer relationships.
Goals of Customer Relationship Management
1) Grow customer revenue and profitability over time.
2) Increase customer satisfaction and loyalty by providing better customer service.
3) Optimize management of customer life cycles.
4) Improves the efficiency of your sales and technical staff.
5) It allows easy access to customer service records, contact information, assigned assets and sales development.
Customer Relationship Lifecycle
There are three major areas that focus on customer satisfaction,
1) Sales.
2) Marketing.
3) Service.
The professional sales force predicts and proposes the real-time analysis of information and distributes this information to the company and business partners.Marketing concentrates on personalizing customer preferences and offering them satisfying experiences.Service is associated with the companies' call centers and coordinates interaction between web, e-mail, and other communication Medias.
Customer Management Tools
1) E-mail, telephone, and postal mail.
2) The Internet should be one of your primary tools for sales research. News articles, financial statements, and the company web site are often excellent indicators of what kind of business your customer is really doing.
3) Promotional materials like a mouse pad or t-shirt with your company name will serve as a subtle of your relationship.
How much does Customer Relationship Management cost?
A recent (2001) survey of more than 1,600 business and IT professionals, conducted by The Data Warehousing Institute found that close to 50% had Customer Relationship Management project budgets of less than $500,000. That would appear to indicate that Customer Relationship Management doesn't have to be a budget-buster. However, the same survey showed a handful of respondents with Customer Relationship Management project budgets of over $10 million. License fees for a typical web-based Customer Relationship Management solution range from 60-$80/month per user.
However, the major costs associated with Customer Relationship Managementre not the license fees, but the time an organization spends keeping the CRM system current. With many CRM solutions, the value of the time invested keeping the system current is 10X the CRM license fees. Low user acceptance is often challenging as it is difficult to get teams to give up existing processes. This is particularly true when the alternative requires an additional 30-60 minutes of data entry each
day.
What causes Customer Relationship Management projects to fail?
The lack of a communication between everyone in the customer relationship chain can lead to an incomplete picture of the customer. Poor communication can lead to technology being implemented without proper support or buy-in from users. For example, if the sales force isn't completely sold on the system's benefits, they may not input the kind of demographic data that is essential to the program's success.
One Fortune 500 company is on its fourth try at a CRM implementation, primarily because its sale force resisted all the previous efforts to share customer data.
Current Developments and news of Customer Relationship Management
*Quantum Corp., a storage provider, announced it has received two distinguished awards for achieving excellence across all key aspects of the customer experience through its service and support programs.
*For the second year in a row, Quantum has won a NorthFace ScoreBoardSM Award for exemplary customer service from Omega Management Group Corp.
*Quantum also has been honored as the winner of a Service & Support Professionals Association (SSPA) 2006 STAR Award for Best Practices.
*COMET Group Selects Kaidara to Enhance Customer Service and Support.
Conclusion
Customer relationship management today is about tracking and analyzing explicit information on current customers as well as sales prospects. CRM software needs to be deployed in a rigorous, disciplined, coordinated manner to achieve any promised potential.
CUSTOMER RELATIONSHIP MANAGEMENT
No organization is secure today unless its every action is processed through the customer's eyes. Today's businesses are facing fierce and too aggressive competition while operating in both domestic and global markets. Traditional marketing methods have failed to deliver results in recent times. Customer Relationship Management is the establishment, development, maintenance and optimisation of long-term mutually valuable relationships between consumers and organisations. The focus of relationship marketing is on developing long-term relationships and improving corporate
performance through customer loyalty and customer retention.
Types/variations of Customer Relationship Management
There are several different approaches to CRM, with different software packages focusing on different aspects. In general,Customer Service, Campaign Management and Sales Force Automation (SFA) form the core of the systematic
Operational Customer Relationship Management
Operational CRM provides support to "front office" business processes, e.g. to sales marketing and service staff. Interactions with customers are generally stored in customers' contact histories, and staff can retrieve customer information as necessary.
The contact history provides staff members with immediate access to important information on the customer (products owned, prior support calls etc.), eliminating the need to individually obtain this information directly from the customer. Reaching to the customer at right time at right place is preferable.
Operational Customer Relationship Management processes customer data for a variety of purposes:
- Managing campaigns
- Enterprise Marketing Automation
- Sales Force Automation
- Sales Management SysteM
- Analytical CRM
Analytical Customer Relationship Management analyzes customer data for a variety of purposes:
Designing and executing targeted marketing campaigns
Designing and executing campaigns, e.g. customer acquisition, cross-selling up-selling, addon-selling
Analyzing customer behavior in order to make decisions relating to products and services (e.g. pricing, product development)
Management information system (e.g. financial forecasting and customer profitability analysis)
Analytical Customer Relationship Management generally makes heavy use of data mining and other techniques to produce useful results for decision-making. It is at the analytical stage that the importance of fully integrated CRM software becomes most apparent. Logically speaking, the more information that the analytical software has available for analysis, the better its predictions and recommendations will be.
Sales Intelligence Customer Relationship Management
Sales Intelligence CRM is similar to Analytical CRM, but is intended as a more direct sales tool. Features include alerts sent to sales staff regarding:
- Cross-selling/Up-selling/Switch-selling opportunities
- Customer drift
- Sales performance
- Customer trends
- Customer margins
- Customer alignment
- Campaign Management
Campaign management combines elements of Operational and Analytical Customer Relationship Management Campaign management functions include:
Target groups formed from the client base according to selected criteriaSending campaign-related material (e.g. on special offers) to selected recipients using various channels (e.g. e-mail, telephone, SMS, post)Tracking, storing, and analyzing campaign statistics, including tracking responses and analyzing trends
Collaborative Customer Relationship Management
Collaborative CRM covers aspects of a company's dealings with customers that are handled by various departments within a company, such as sales, technical support and marketing. Staff members from different departments can share information collected when interacting with customers. For example, feedback received by customer support agents can provide other staff members with information on the services and features requested by customers.
Collaborative CRM's ultimate goal is to use information
collected by all departments to improve the quality of services provided by the company. CRM also plays a role of data distributor within customers, producers and partners. Producers can use CRM information to develop products or find new market.
Customer Relationship Management facilitates communication between customers, suppliers and partner by using new information system such email, link and data bank.
Consumer Relationship CRM
Consumer Relationship System (CRS) covers aspects of a company's dealing with customers handled by the Consumer Affairs and Customer Relations contact centers within a company. Representatives handle in-bound contact from anonymous consumers and customers. Early warnings can be issued regarding product issues (e.g. item recalls) and current consumer sentiment can be tracked .
Benefits of CRM
The benefits of customer relationship management are abounding. It allows organizations not only to retain customers, but enables more effective marketing, creates intelligent opportunities for cross selling and opens up the possibility of rapid introduction of new brands and products. To be able to deliver these benefits, organizations must be able to customize their product offering, optimize price,
integrate products and services and deliver the service as promised and demanded by the customer base. Keeping the customer happy is obviously one way of ensuring that they stay with organization. However, by maintaining an overall relationship with customer, companies are able to unlock potential of their customer base and maximize contribution to their business. Based on successful CRM implementations, the following benefits seem reasonable:
Increased sales volume: Increased sales result from spending more time with customers and gathering more and more information about their preferences about the products and services.
Increased margin: Increased margin resulting from knowing customers better, and providing a value product on discounting prices.
Improved customer satisfaction ratings: Customer will be more satisfied if he finds the company to be more responsive and better in touch with their specific needs.
Decreased marketing administrative costs: Since the company has specified its target segment customers, it knows their needs better so it is not wasting unnecessary time and money which result into decreased marketing costs.
CUSTOMER Strategy
Several CRM software packages are available, and they vary in their approach to CRM.
However, as mentioned above, CRM is not just a technology but rather a comprehensive, customer-centric approach to an organization's philosophy of dealing with its customers. This includes policies and processes, front-of-house customer service employee training, marketing, systems and information management. Hence, it is important that any CRM implementation considerations stretch beyond technology toward the broader organizational requirements.
The objectives of a CRM strategy must consider a company's specific situation and its customers' needs and expectations. Information gained through CRM initiatives can support the development of marketing strategy by developing the organization's knowledge in areas such as identifying customer segments, improving customer retention , improving product offerings (by better understanding customer needs), and by identifying the organization's most profitable customerCRM strategies can vary in size, complexity, and scope. Some companies consider a CRM strategy only to focus on the management of a team of salespeople. However, other CRM strategies can cover customer interaction across the entire organization.
Many commercial CRM software packages provide features that serve the sales, marketing, event management, project management, and finance industries.From this perspective, CRM has for some time been seen to play an important role in many sales process engineering effort.
Implementation issues
Many CRM project "failures" are also related to data quality and availability . Data cleaning is a major issue. If a company's CRM strategy is to track life-cycle revenues, costs, margins, and interactions between individual customers, this must be reflected in all business processes. Data must be extracted from multiple sources (e.g., departmental/divisional databases such as sales, manufacturing, supply chain, logistics, finance, service etc.), which requires an integrated, comprehensive system in place with well-defined structures and high data quality. Data from other systems can be transferred to CRM systems using appropriate interfaces.
Because of the company-wide size and scope of many CRM implementations, significant pre-planning is essential for smooth roll-out. This pre-planning involves a technical evaluation of the data available and the technology employed in existing systems.
This evaluation is critical to determine the level of effort needed to integrate this data.
Equally critical is the human aspect of the implementation. A successful implementation requires an understanding of the expectations and needs of the stakeholders involved. An executive sponsor should also be obtained to provide high-level management representation of the CRM project.
An effective tool for identifying technical and human factors before beginning a Customer Relationship Management project is a pre-implementation checklist. A checklist can help ensure any potential problems are identified early in the process.
The Future of Customer Relationship Management
With the increased penetration of CRM philosophies in organizations and the concomitant rise in spending on people and products to implement them, it is clear we will see improvements in how companies work to establish long-term relationships with their customers. However, there is a big difference between spending money on these people and products and making it all work: implementation of CRM practices is still far short of ideal. Everyone has his or her own stories about poor customer service and e-mails sent to companies without hearing a response.
Despite several years of experience, Web-based companies still did not fulfill many Christmas orders in 2000 and customers continue to have difficulties returning unwanted or defective products. More companies are recognizing the importance of creating databases and getting creative at capturing customer information. Real-time analyses of customer behavior on the Web for better customer selection and targeting (e.g., Net Perceptions) which permits companies to anticipate what customers are likely to buy. Companies will learn how to develop better communities around their brands giving customers more incentives to identify themselves with those brands and exhibit higher levels of loyalty.
One way that some companies are developing an improved focus on CRM is through the establishment or consideration of splitting the marketing manager job into two parts:
one for acquisition and one for retention. The kinds of skills that are need for the two tasks are quite different. People skilled in acquisition have experience in the usual tactical aspects of marketing: advertising, sales, etc. However, the skills for retention can be quite different as the job requires a better understanding of the underpinnings of satisfaction and loyalty for the particular product category.
In addition, time being a critical scarce resource makes it difficult to do an excellent job on both acquisition and retention. As a result, some companies have appointed a chief customer officer (CCO) whose job focuses only on customer interactions.
CEM, Customer Experience Management. . Marketing managers for frequently-purchased products like toothpaste are not as likely to find CRM investments paying out to the extent they will for, say, computer servers given the differences in difficulties of reaching customers and the profit margins of the respective products.
However, even companies in the former areas are using the Web to attempt to differentiate their brands from the myriad others appearing in supermarkets and discount stores. This is some evidence that there are perhaps few companies that cannot benefit from the CRM structure provided in this paper.
Conclusion
Customer relationship management does not enable a quick win. It is a long-term approach that has to be adopted at a strategic level. Whilst the value of customer relationship management has been identified by organizations, they are yet to look at the bigger picture and understand all of associated benefits that would enable their business strategies to be successful. Those responsible for delivery are perhaps the most informed about these strategic benefits yet the transformation is long-drawn-out
process.
The competencies required to deliver these customer benefits are: to deliver on its service promise, integrate products and service channels effectively, customize products & service and their respective prices, create opportunities for cross selling and delivery mechanisms for the onward promotion of these products and services and reduce the gestation period to market by allowing quick and effective introduction of new products and services.
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