CRM,
Customer Relationship
Management
01
Introduction
02
What is CRM?
03
A good strategy that
isn't always successful
04
CRM and technology,
an inseparable pair
05
Conclusions
2 / 7
The importance of customers for a company is nothing new: hasn't heard the expression, “the customer is always right” or “our aim is to satisfy the needs of our customers”? Such slogans have been the touchstone of advertising, marketing and sales professionals since time immemorial.
However, in today's commercial climate, this vision of the customers has almost become an illusion, as the market has become increasingly competitive. In the new commercial
environment, consumers have less time to shop, and have more access to huge amounts of information, enabling them to compare what is available. This information makes them more demanding, since the range of products and services on offer is broad and is usually of high quality. The situation represents a complete challenge for businesses, since it is becoming increasingly difficult for them to both attract, and keep customers.
CRM (http://en.wikipedia.org/wiki/Customer_relationship_management) is one solution to
transforming the critical mass of consumers into an opportunity to gain a competitive advantage. This report will examine the definition of CRM, the areas in which it can be useful, a few of the difficulties encountered by companies who use it, and the new technological tools available to help improve its effectiveness.
CRM is a business strategy which is focused on the customer. CRM stands for Customer Relationship Management.
The aim of a good CRM strategy is two-fold:
- To select, manage and cultivate the loyalty of the best customers, and
- To attract new potential customers
This way, the company can obtain a better idea of who it is selling its products or services to, and as a consequence, can improve its image, make its marketing actions more effective, increase sales, launch new products and services more effectively, etc.
Today, selling in itself is not enough. Rather, it is the customers themselves who hold the key to maximum possible profits. It is essential that we know who we are selling to, what their
purchasing power is, and what their real needs are. This is a way of counteracting the increased competition and current recession, factors which force many companies to enter a downward price race. Such factors oblige companies to enter a price reduction cycle, which ends up negatively conditioning both the future of the medium, and small businesses who do not have enough resources to compete in a “price war” with larger companies.
Selling is no longer an isolated act, but a complex process. The key to understanding the importance of CRM, lies in the ability to understand this change.
4 / 7
Taking care of the customers in the old, traditional sense of the word, is not enough in today's market. Don Peppers (http://en.wikipedia.org/wiki/Don_Peppers), the author of several books on the discipline, proposes a customer implementation strategy based on four different stages:
- Identifying customers individually.
- Differentiating each customer based on the actual yield and growth potential of each one (the market share of customers taken by rivals).
- Segmenting higher value customers according to groups of needs.
- Devising integration strategies of higher value customers in order to offer them a unique and personalised service.
It could be said, according to the teachings of Don Peppers, that CRM is a business philosophy based on offering a personalised service to customers, with the aim of developing their value. CRM is not about computer technology, but rather service, and a personal touch. In large companies, this requires the involvement of the entire organisation, and not just the computer, sales and marketing departments. In small companies, effective CRM requires the direct involvement of all the employees of the business. The key to the success or failure of CRM policies lies in the ability to adapt the business to the individual needs of the customers.
According to Peppers, “the goal is not to establish, but to adopt”. It is not a question of investing money on expensive management applications, but rather, of adopting a new way of acting that facilitates gaining increased knowledge about the customers. That is why the British author recommends investing more in the motivation and training of staff, than in software. It should be remembered that nowadays, any commercialized computer application is able to process endless data on customers and segment them into as many different criteria as required. However, this in itself is not enough. Someone must have the ability to analyse this information and adapt the strategy of the business accordingly, in order to gain higher profits. That is the reason why many surveys on CRM solutions reflect negative or disappointing opinions from manager and employers. These are people who have come face to face with the computer myth: “With a good computer application, increased sales are guaranteed instantly”.
03.
A good CRM policy must include the ability to manage huge amounts of data. Such
management converts technological tools into the key equipment to develop and implement CRM solutions. The range of products available is wide and includes features which suitable for any company, from large ones to solutions adapted to small and medium sized businesses. The customers, as already mentioned, are the basis of the business and we should obtain as much information about them as possible, in order that we can meet their purchasing needs. To do this, it is essential that we keep an updated database, which is constantly being improved. All the activities, carried out by any member of the company, which have a relation with the
customers will be registered in this tool, as well as the existing differences between customers, based on pre-established criteria: age, amount of business generated for the company,
preferences for a particular product or service, etc.
This database is normally accessible from a unique platform, where all the information on the customers and their relationship with the company is stored and accessed. In addition to the database, the applications usually include a data model which enables the incorporation of business norms based on information obtained from the customers.
6 / 7 CRM stands for Customer Relationship Management.
CRM is not a computer application, but a philosophy which should ideally penetrate every area of the company. It consists of focusing all the activity of the company on knowledge about the customers and the satisfaction of their needs.
Given that companies have many different kinds of customers and huge amounts of data to manage, computer applications are a very useful working tool. However, it should always be remembered that the results of CRM processes are not instantaneous, and that perseverance and persistence are essential for effective information management and thus, satisfaction of the needs which the products and services of a company aim to provide to their customers.
- The eLibrary of Professor Enrique Dans:
http://profesores.ie.edu/enrique_dans/biblio.htm
Written by the Barcelonanetactiva team from the following sources of information:
- Curry, Jay; Curry, Adam (2002) “CRM. Cómo beneficiarse de las relaciones con los
clientes”. Barcelona: Gestión 2000.
- Gajardo Ugas, Sergio “¿Qué es el CRM y cuál es el verdadero significado?” Gestipolis.com:
http://www.gestiopolis.com/canales/demarketing/articulos/43/crmmba.htm
- Wikipedia: "Customer relationship management"
http://en.wikipedia.org/wiki/Customer_Relationship_Management
