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What is CRM (Customer Relationship Management)
Customer Relationship Management - CRM is a management field that includes all comunication processes with customers, their coordination, harmonization and management.

CRM - Customer Relationship ManagementCustomer Relationship Management - CRM is a management field that includes all communication processes with customers, coordination and harmonization of sales and marketing activities. The aim is to build satisfied customers, long-term relationship with them and attract new ones.

Managing and building a relationship with customers is a key for all companies and organizations for which is the customer at the first place. Basic principles of CRM are common to all sectors. Creating loyal and satisfied customers, building long-term and meaningful relationship with them concerns the whole of their life cycle:

  • At the beginning there is a free market, the customer and the company don’t know about each other
  • Customer perception of the brand is the first awareness when a potential customer (called suspect) had heard of the brand, but still have not bought anything
  • It follows with an additional communication and addressing such potential customer with an offer (now called Prospect, potential customer or sales lead)
  • After the first purchase he is finally becoming a customer
  • If a customer buys frequently and prefers the brand over the other, it becomes a valued customer. Such a customer is the goal of all CRM efforts.
  • If you do not care about the customer, there is a decline of the relationship and possibly the end

Customers are for each company a key source of their existence, because they are a source of income for provided services or sold goods. Satisfied customer doesn’t consider leaving to the competition, he may be better to sell him more products or services. Satisfied customer is not the only one that gets a quality service or product, but the satisfaction is built also through additional services, customer communication and care of him. For companies it is difficult to obtain a new customer and therefore customer care is important. Satisfied customers will thus bring the company profit and reduce cost of sales.

Customers and information about them

In order to take care of customers, build relationships with satisfaction and trust, it is important to be thoroughly familiar with them. It is important to recognize, understand and anticipate their needs, desires, attitude, buying behavior, buying preferences and buying habits.

The basis of everything is correct and current identification and customer billing information, address, bank details, billing information, the contact person of the customer (i.e. the customer master data). Important is the history of mutual transactions and communication history with the customer. Thus, an overview of communication, mutual agreements, purchase orders, invoices, and review all relevant communication with the customer (all transaction data associated with the customer). From this the company can assess the reliability of the customer, allow his creditworthiness and obtain other important information.

Customers are usually divided into several groups (segments) in order to properly target, to distinguish processes and communication with different types of customers, manage differentiated overall communication including social networking or responsible traders.

Where do the customers come from? Market and information about them

The market is part of the company’s environment, which we also must know. Knowledge of its trends, size, growth, potential customers, or knowledge of the competitors also belongs to the broader perspective of what a customer relationship management includes. The market can be huge, and if we want our customers to be treated individually, so we should do it in its learning. This includes market analysis, knowledge of its structure and better targeting only those segments where our customers really are. With this, the company does not waste resources on those parts of the market where our customers aren’t. Companies should be able to monitor the growth potential of the market, sector or individual customers and be able to effectively set the correct marketing activity or communication.

Who are our customers and how to approach them?

The company can have 5 or even 20 million. In each of these cases it must naturally proceed otherwise. It will have a different marketing strategy. It will act in different ways with its customers. It will act differently if it will be the business customers (B2B) or if customers will be people, consumers (B2C). Crucial is also how big turnover every customer makes. Consequently, the company takes efforts and individual attention.

In a small number of customers who make us large amounts of turnover, we have to access each of them completely individually, mostly with a personal conduct. In contrast, if we have millions of small customers, we have to handle them in a completely different way. We must be able to classify, segment and target. Such a mass market does not allow always personal conduct, but that does not mean that it is not possible to access customers individually and friendly. In the mass market we can operate to our customers by completely different means and methods. Due to the strong development of the Internet and social networks of all kinds, companies have a lot more options to meet their customers in the mass market and, on the other hand, the Internet can provide a lot of information about the behavior and preferences of customers.

Anyway, it is necessary to take into account the differences in the needs of different customer segments and choose an appropriate strategy for a particular segment. Sometimes it is appropriate addressing of using telephone campaigns elsewhere, it is better to use traditional media such as television.

The dialogue and highest possible customer interaction is a current trend in the very competitive market.

Basic processes of customer relationship management

Marketing promotion processes and finding opportunities

Their main aim is to achieve positive influence on customer throughout its lifecycle. From the first awareness of brand to maintenance of long-term relationship and loyalty. Marketing uses various communication channels (e.g. TV, radio, websites, e-mails, postal mail,) which we combine to make us able to let customers know of our existence, the existence of our brands or to constantly improve their positive perception and to provide interaction. Marketing processes include addressing of market, of potential customers, specific new customers and effect on the present ones. Typically, the communication is divided into marketing campaigns (planning, design, implementation, evaluation).

Sales and business processes

Business processes are closely linked to marketing processes. Their main objective is to sell products or services to potential customers and clients. They include everything from business proposals to enter into a contractual relationship, ensuring the performance after sales service. They include a comprehensive dialogue with a particular customer from obtaining, a confirmation of contractual documents through implementation of the performance, and the care and resale. Just in business processes there is one of the focal points of building long-term customer relationship. Another important pillar is in the after-sales service and communication.

Provide a product or service

During customer relationship management, business activities and planning marketing campaigns, we must not forget the crux of the matter - if it is a bad product or poor service, you can have the best marketing and sales processes, but you won’t keep the customers. For products, of course, there is not only about their quality and price, the customer decides on the design, taste, image, and fashion trends. . For services, the situation is more complicated, but on both it is applied a great importance of additional services (see Kano model).

After-sales services and customer communication

It is actually the beginning of the beginning. Customer care is perhaps the most important part of CRM, because that is the creation of a trust and relationship and just after sales care can be “fixed” the customer dissatisfaction with the product or service. Or quite the opposite - in poor after-sales services and improper or poor quality care we can lose a customer, who has been very satisfied with our product. After-sales service and care are part of the ability to deliver and manage additional services to the main product (promotion, financing, transportation and logistics, convenient payment, etc.). They become the main competitive differences.

What the customer relationship management actually is

It is all marketing, sales and after-sales processes together. It’s keeping loyal customers. It is acquiring new customers. It is effective communication with customers through multiple communication channels. It is recognition of the priorities and needs of customers and it is a key to maintaining the company’s profit. It is an individual approach to customers.

It is building loyalty, trust and respect. Trust is a very important part of building a long-term relationship between the company and its customers. In a competitive environment where it is increasingly difficult to meet customer requirements, additional services and trust are just the ones that are the decisive factors in the competition.

In practice, customer relationship management differs if the customers are companies (so called B2B) or if the customer is a consumer (so called B2C). It also differ whether it is provided a service, its type or what product is provided, what distribution channels are used, etc. In short, there is a huge amount of effects, however, the basic characteristics and objectives of customer relationship management are similar in all sectors.

CRM Systems

Information technology is nowadays a necessary part of success. Various CRM systems are however only means to achieve a satisfied customer and must be selected and deployed appropriately to how satisfied and loyal customer company produces. Any tool that supports customer relationship management in the basis must be enable saving data on customers and the company’s activities towards them - a history of mutual transactions and history of communication with the customer. They help us unify a view on the customer and unify all processes associated with the customer.

CRM software can be very simple - in the form of a spreadsheet with a list of customers and their contracts, which we can do in the office software, up to the complex systems interconnected with other economic and ERP systems. CRM systems also help to plan tasks and activities for clients, watch and warn (e.g. date of the renewal contract, date of sending offers, birthday cards). Comprehensive CRM systems can plan and manage campaigns, segment customers, can manage the time consumption of people in the company, the effectiveness and success of the merchants. They are linked with economic systems and can generate analytical outputs and report the necessary data for customers and clients. It can be connected to the call center, billing system, analysis of the behavior of customers and their buying habits. CRM systems help manage the sales and marketing teams.

CRM systems typically contain three basic fields:

  • Support of sales processes, marketing and customer services, so called front office - sometimes called Operational CRM
  • Data analysis of customer behavior, e.g. marketing campaign analysis, finding new sales opportunities, customer behavior prediction - sometimes called Analytical CRM
  • Communication with customers through various channels, communication optimization, sharing information about customer within the company - called Collaborative CRM

Such a division, however, is not necessary. Typically, CRM systems help mainly to keep information about customer and about:

  • their business, procurement and activities, thus their loyalty
  • their behavior
  • business interactions (meetings, email communication, social communication)
  • fulfillment of obligations, business history
  • state of contracts
  • history of transactions or orders
  • effectiveness of sales channels

And what about value for the customer?

Not only companies but also customers benefit from good, mutually beneficial long-term relationship. The customer is not only spoils and a source of profit. He also benefit from improved access, offer of additional services or lower prices thanks to his loyalty. Many companies reward their customers with better price policy (the so-called loyalty programs) that allow customers to get discounts or use premium services. Customer may also be offered with better service because the company knows the information, which it already extracted once. The customer is not unnecessarily burdened by filling files or its repetition.

In building trust and loyalty it is important feedback from the customer. Many companies put emphasis on “customer view” - a comprehensive customer experience (CX) and the use of analytical outputs from various CRM applications for the most effective customer interaction.

Customer loyalty is therefore one of the most important things. The higher the loyalty is, the more successful the customer relationship management is - and that goes both ways.

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Last update: 29.06.2016

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