Customer Relationship Management
Overview
Customer Relationship Management (CRM) is a strategy for managing an organization's relationships and interactions with customers and potential customers. It involves using technology to organize, automate, and synchronize sales, marketing, customer service, and technical support. CRM systems can also give customer-facing staff detailed information on customers' personal information, purchase history, buying preferences and concerns.
History
The concept of CRM first began when customer satisfaction was evaluated using annual surveys or by front-line asking. At that time, businesses had to rely on standalone mainframe systems to automate sales, but the extent of technology allowed them to categorize customers in spreadsheets and lists. In 1982, Kate and Robert D. Kestnbaum introduced the concept of Database marketing, which is a form of direct marketing using databases of customers or potential customers to generate personalized communications in order to promote a product or service for marketing purposes. The term was coined by Robert and Kate Kestnbaum, pioneers of the direct response marketing.
Types of CRM
There are three main types of CRM: operational, analytical, and collaborative.
Operational CRM
Operational CRM is mainly concerned with automating and improving business processes associated with customer-oriented activities such as selling, marketing, and customer service. This type of CRM provides support to "front office" business processes, which include customer contact (sales, marketing and service).
Analytical CRM
Analytical CRM systems use techniques such as data mining, correlation, and pattern recognition to analyze customer data and generate business intelligence. The goal of analytical CRM is to improve customer satisfaction by analyzing customer behavior and value.
Collaborative CRM
Collaborative CRM is an approach to customer relationship management in which the various departments of a company, such as sales, technical support, and marketing, share any information they collect from interactions with customers. For example, feedback received from a technical support center can inform marketing staff about services and product features clients are asking for.
Benefits of CRM
CRM systems can provide a number of benefits to organizations, including improved customer service, increased customer satisfaction, and retention, more targeted marketing, and better understanding of customer behavior.
Improved Customer Service
By using a CRM strategy for their business, companies can improve their customer service by providing their staff with up-to-date customer information. This can help to ensure that all customer interactions are informed and personalized, leading to a better experience for the customer.
Increased Customer Satisfaction and Retention
By providing a consistent and personalized customer experience, CRM can help to increase customer satisfaction. This in turn can lead to increased customer retention, as satisfied customers are more likely to remain loyal to the company.
More Targeted Marketing
CRM systems can help companies to better understand their customers and their needs. This can enable them to target their marketing efforts more effectively, leading to increased sales.
Better Understanding of Customer Behavior
By collecting and analyzing customer data, CRM systems can help companies to better understand their customers' behavior. This can provide valuable insights that can be used to improve products and services, as well as to identify new business opportunities.
Challenges and Criticisms
Despite the numerous benefits of CRM, the implementation of these systems is not without its challenges. These can include the high cost of implementation, the need for ongoing training and support, and the potential for misuse of customer data.
High Cost of Implementation
Implementing a CRM system can be a costly endeavor, particularly for small and medium-sized businesses. In addition to the cost of the software itself, businesses may also need to invest in hardware, training, and ongoing support.
Need for Ongoing Training and Support
To ensure that staff are able to effectively use a CRM system, ongoing training and support may be required. This can add to the overall cost of implementing a CRM system.
Potential for Misuse of Customer Data
While CRM systems can provide businesses with valuable customer data, there is also the potential for this data to be misused. This can lead to privacy concerns and potential legal issues.
Future Trends
The future of CRM lies in mobile applications, social media, and artificial intelligence. Mobile CRM apps take advantage of features that are unique to mobile devices, such as GPS and voice recognition capabilities, to give sales and marketing employees access to customer information from anywhere.
Social CRM involves the use of social media for CRM purposes. Businesses may link social media platforms with their CRM systems to connect with their customers and receive instant feedback about their products and services.
Artificial intelligence technologies, such as chatbots and machine learning, can be used to automate tasks, help identify trends and make more efficient use of data.