What is CRM?
Short for customer relationship management. CRM entails all aspects of interaction a company has with its customer, whether it be sales or service related. Computerization has changed the way companies are approaching their CRM strategies because it has also changed consumer buying behavior. With each new advance in technology, especially the proliferation of self-service channels like the Web and WAP phones, more of the relationship is being managed electronically. Organizations are therefore looking for ways to personalize online experiences (a process also referred to as mass customization) through tools such as help-desk software, e-mail organizers and Web development apps.
CRM (customer relationship management) is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way. For example, an enterprise might build a database about its customers that described relationships in sufficient detail so that management, salespeople, people providing service, and perhaps the customer directly could access information, match customer needs with product plans and offerings, remind customers of service requirements, know what other products a customer had purchased, and so forth.
According to one industry view, CRM consists of:
- Operational – automation or support of customer processes that include a company’s sales or service representative
- Collaborative – direct communication with customers that does not include a company’s sales or service representative (self service)
- Analytical – analysis of customer data for a broad range of purposes
Operational
Operational CRM provides support to “front office” business processes, including sales, marketing and service. Each interaction with a customer is generally added to a customer’s contact history, and staff can retrieve information on customers from the database when necessary.
One of the main benefits of this contact history is that customers can interact with different people or different contact channels in a company over time without having to describe the history of their interaction each time.
Consequently, many call centers use some kind of CRM software to support their call center agents.
Collaborative
Collaborative CRM covers the direct interaction with customers, for a variety of different purposes, including feedback and issue-reporting. Interaction can be through a variety of channels, such as web pages, email, automated phone (Automated Voice Response AVR) or SMS.
The objectives of collaborative CRM can be broad, including cost reduction and service improvements.
Analytical
Analytical CRM analyzes customer data for a variety of purposes:
- Design and execution of targeted marketing campaigns to optimise marketing effectiveness
- Design and execution of specific customer campaigns, including customer acquisition, cross-selling, up-selling, retention
- Analysis of customer behavior to aid product and service decision making (e.g. pricing, new product development etc.)
- Management decisions, e.g. financial forecasting and customer profitability analysis
- Prediction of the probability of customer defection (churn).
Analytical CRM generally makes heavy use of predictive analytics.
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