"The purpose of business is to create and keep a
customer." --Peter Drucker
Customer Relationship Management (CRM) enables businesses to do
exactly that – to create and keep a customer. Customer Relationship
Management Systems are technology assisted systems, which enables
enterprises to create and retain customers.
In this blog post, we will have a look at some of the
basic concepts of Customer Relationship Management.
There are several definitions for Customer
Relationship Management but the most common one seems to be: CRM System
involves the alignment of people, processes and technologies that help
an enterprise manage customer relationships in an organized way. The aim
of CRM is to build a stronger relationship with customers, which will
lead to build both customer loyalty and increased profits.
Customer Relationship Management helps an
organization to:
a) assist its marketing department in identifying their best
customers for repeat business, manage marketing campaigns, and generate
leads, which have a high chance of conversion into sales, for the sales
team.
b) improve telesales, account management, and sales
management by optimizing information shared by multiple employees
c) develop personalized relationships with customers,
with the aim of improving customer satisfaction and maximizing profits;
to identify the most profitable customers and provide them the highest
level of service.
d) equip employees with the information and processes
necessary to know their customers, understand and identify customer
needs and effectively build relationships between the company, its
customer base, distribution partners, and vendors.
The marketing department plans and runs marketing campaigns,
which are programs and activities by which companies advertise products
and services to potential customers. Different types of marketing
campaigns include:
(i) Awareness Campaigns – used to increase awareness of a brand
(ii) Brand Campaigns – generally used by new
companies to connect brand with services and offerings
(iii) Lead Generation Campaigns – used to collect
contact information for use in direct marketing
(iv) Customer Loyalty Campaigns – used to recognize
and reward regular customers
The leads generated by marketing campaigns is shared within the
sales and marketing team. These leads will be contacted separately and
depending on the response of the contact, the leads will be classified
based on their probability of becoming a potential customer or prospect
customer.
Once the lead gets elevated to the status of a potential
customer or prospect customer[criteria as decided by the organization],
the sales team aggressively keeps in touch with the contact until the
potential customer is won (potential customer becomes a customer) or
lost(potential customer decided not to go with the offering). The sales
team is also responsible for providing details of the products/services
offered by the organization. They also manage quotes/estimates and
related negotiations. Other terms and conditions of the deal are also
tracked and managed by the sales team. All information pertaining to
activities carried out in relation to a lead/potential customer like
e-mails, telephone calls and meetings and tracked by the sales team.
Appropriate follow-up actions are also carried out and monitored by the
sales team. If the potential customer or prospect customer is lost the
circumstances are noted and will be analyzed later to avoid repeating
such losses.
Once a potential customer agrees to buy a
product/service from the company, the potential customer gets elevated
to the status of ‘customer’ or ‘client’. In some organizations, the
first time customers are referred to as ‘customer’ and from the second
time, the customers are referred to as ‘client’.
Developing personalized relationship with customers is a key
focus area for any CRM system. For this, every customer is assigned to a
team member within the organization who is primarily responsible for
maintaining the customer relationship in a cordial fashion. This
involves major tasks like keeping track of resolution of customer
complaints to relatively minor tasks like sending wishes/gifts to the
customer on his/her birthday, wedding anniversary and during other
events which have a personal significance for the customer. Such notes
from the organization, though relatively minor from a CRM perspective,
can often have profound impact on the customer in terms of ‘feel good’
factor.
Keeping a customer satisfied is not only good for repeat
business from the same customer, but also in terms of ‘word of mouth’
publicity. Customer Relationship Management enables organizations to
understand their customers better, identify customer needs, and build
effective relationships between the organization, customers, vendors,
and distribution partners. In order to derive full benefits from
Customer Relationship Management Systems, they need to be tuned to
specific needs of the industry. Studies have shown that careful
implementation of CRM System and their diligent use has resulted in
increase of sales volumes of up to and even more than 30%. ["On
average, sales and marketing costs average from 15% - 35% of total
corporate costs. So the effort to automate for
more sales efficiency is absolutely essential. In cases reviewed, sales
increases due to advanced CRM technology have ranged from 10% to more
than 30%." --Harvard Business Review]
There are quite a few CRM Systems in use across different
industry verticals. Open source CRM Systems are also becoming popular.
We will not go into the details here as it is beyond the scope of this
blog post.
Let us conclude this blog post with another quote by
Peter Drucker:
“We've spent
the last 30 years focusing on the ‘T’ in IT[Information Technology], and
we'll spend the next 30 years focusing on the ‘I’. ”
And CRM is all about focusing on the ‘I’ –
Information.