Customer Relationship Management
Customers have always been valuable for businesses, but today their importance is very much appreciated for the profitability of the enterprise. This is large because of rapid globalization and growing competition. Customers now have a variety of options available to them for purchasing a particular product. They can easily make comparisons, shop, or even switch companies in case they are not satisfied with the service.
As a result, today, the topmost strategy of a business is to become a customer-focused business in order to provide maximum satisfaction to the customers thereby establishing a long-term relationship with them. That is why many companies are turning to customer relationship management (CRM) that focuses on the ways of identifying and retaining profitable customers.
Customer relationship management (CRM) is defined as a business and technology discipline that manages the ways an organization deals with its customers in order to enhance revenue, profitability, customer satisfaction, and retention. It analyzes the different aspects of customer relationships, including customer services, sales, and marketing, to improve their customer focus.
It uses information technology to create a cross-functional information system called Customer relationship management (CRM) information system that integrates and automates a firm’s many customer-related business processes in sales, marketing, and customer services to provide quick, convenient, and consistent service to its customers.
Earlier, the business processes of different business functions were isolated from one another and, thus, various customer information was fragmented in different systems.
There was no provision for consolidating all the customer-related information in order to provide a unified view of a customer to the organization and its employees who need to interact with the customers. However, this problem was resolved with the help of CRM systems.
The customer relationship management systems comprise a set of tools that capture customer information from all customer touchpoints (methods of interacting with customers) like e-mail, telephone, fax, retail stores, company’s website, etc. This consolidated info is stored in a common customer database and made available across the organization via the Internet, intranet, or other network links.
Types of Customer Relationship Management (CRM ) Systems
Nowadays, three major types of customer relationship management systems, namely operational CRM, analytical CRM, and collaborative CRM are being used in many organizations.
It provides support to front-office business processes that involve direct interaction with customers through any communication channel, such as phone, fax, e-mail, etc. The details of every interaction with customers, including their requirements, preferences, topics of discussion, etc., are stored in the customers’ contact history and can be retrieved by the organization’s staff whenever required.
Thus, it presents a unified view of customers across the organization and across all communication channels. Examples of operational CRM applications are sales force automation (SFA), customer service, and support (CSS), enterprise marketing automation (EMA), etc.
It enables us to analyze customer data generated by operational CRM applications, understand the customers’ behavior, and derive their true value to the organization. This helps to approach the customers with pertinent information and proposals that satisfy their needs.
The analytical customer relationship management applications use analytical marketing tools like data mining to extract meaningful information like the buying patterns of the customers, target market, profitable and unprofitable customers, etc., that help to improve the performance of the business.
It allows easier collaboration with customers, suppliers, and business partners and, thus, enhances sales and customer services across all the marketing channels. The major goal of collaborative customer relationship management applications is to improve the quality of services provided to the customers, thereby increasing the customer’s loyalty. Examples of collaborative CRM applications are partner relationship management (PRM), customer self-service and feedback, etc.
Benefits of Customer Relationship Management (CRM)
Effective customer relationship management systems can realize the following benefits to an organization.
- Help organizations to determine their most profitable customers and establish a long-term relationship with them. This can increase the firm’s sales revenue.
- Results in reduced churn rate (the number of customers who stop buying or using products of a company) by enabling the firms to customize and personalize the products according to user needs, preferences. buying habits, etc.
- Enables provision of better customer service and support across all the touchpoints, whichever the customer uses.