Customer relationship management or CRM software is a system that allows a business to maintain all customer records in one centralized location that is accessible to an entire organization. CRM software is essentially meant to address the needs of marketing, sales and customer service and support divisions within an organization and allow the three to share data on clients to improve sales and customer service.
How can I benefit from CRM software?
A good CRM program will allow a business to effectively manage a large number of customers, increase the value of each customer to the company, retain good customers, and determine how customers can be given a higher level of service. CRM software is able to improve sales and customer relationships because:
- CRM system can track customer interests, needs, and buying habits as they progress through their life cycles, and tailor the marketing effort accordingly. This way customers get exactly what they want as they change.
- The system can track customer product use as the product progresses through its life cycle, and tailor the service strategy accordingly. This way customers get what they need as the product ages.
- When any of the technology-driven improvements in customer service (mentioned above) contribute to long-term customer satisfaction, they can ensure repeat purchases, improve customer relationships, increase customer loyalty, decrease customer turnover, decrease marketing costs (associated with customer acquisition and customer "training"), increase sales revenue, and thereby increase profit margins.
- Repeat purchase, however, comes from customer satisfaction - which in turn comes from a deeper understanding of each customer, their individual business challenges and proposing solutions for those challenges.
- CRM software enables sales people to achieve this one on one approach to selling and can automate some elements of it via tailor-made marketing communications. However, all of these elements are facilitated by or for humans to achieve - CRM is therefore a company-wide attitude as much as a software solution.
A strategic framework for CRM
"Power and choice are moving to the customer as never before and leading to the commoditisation of products and services in most situations. In this environment, product quality and features are a given, and in many industries are now so undifferentiated as to provide no significant competitive advantage. As a company, you must choose whether to compete on the basis of price in a cutthroat commodity market, or on the basis of customer relationships created through a superior value proposition." This paper proposes a framework from which a CRM strategy can be developed or analysed from a business perspective. The framework highlights the linkages between specific CRM initiatives and desired outcomes. It shows, at a high level, how CRM can contribute to increased revenues, decreased costs, and ultimately to increased profits.