CRM stands for Customer Relationship Management. It is a strategy used to learn more about customers' needs and behaviors in order to develop stronger relationships with them. Good customer relationships are at the heart of business success. There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake. The more useful way to think about CRM is as a strategic process that will help you better understand your customers’ needs and how you can meet those needs and enhance your bottom line at the same time. This strategy depends on bringing together lots of pieces of information about customers and market trends so you can sell and market your products and services more effectively.
Customer relationship management (CRM) is a set of practices that provide a consolidated, integrated view of customers across all business areas to ensure that each customer receives the highest level of service. CRM enables an on going one-to-one relationship with the customer. When relationship management is enhanced by technology, a “seamless integration of every area of business that touches the customer” is provided (Seeman & O’Hara, 2006).
CRM alone can't build the close relationships companies promised—those long term relationships that couldn't be broken. Instead, CRM should be called CSM, for customer service management. That more faithfully represents what companies are trying to do—manage and improve poor customer service. Even companies that get it—like customer-friendly Amazon—don't offer the model for a close "relationship." (Weiss, A. 2007)
CRM should be integrated into everything a company does, everyone it employs, and every place it transacts business. CRM efforts are not restricted to for-profit companies. Government agencies use it to improving customer service and nonprofit organizations use it for fund-raising efforts.
Part of CRM’s goal is to increase opportunities by improving the process so as to communicate with the right customer and provide the right offer (product and price), through the right channel, and at the right time. CRM attempts to segment, existing and potential customers so that the right products and services reach them at the right price in the right way at the right time (Turban, 2006).
CRM is an information system that tracks customers’ interactions with the firm and allows employees to instantly pull up information about the customers such as past sales, service record, outstanding records and unresolved problem calls (Nguyen H. T. , Sherif S. J. and Newby M., 2007) .
CRM can be interpreted as a process of digitizing a staff’s knowledge about his or her customers. CRM concepts and technologies have been widely accepted by many companies in different industries because they recognize that keeping strong customer relationships is likely to bring profitability in the future (Nguyen H. T., Sherif S. J. and Newby M., 2007) .
Benefits of CRM
Customer loyalty is important. In competitive markets, if a company does not maintain customers’ loyalty, another firm will take them away. In the mobile phone industry, for example, between 20 and 30 percent of customers change their provider every year.
Identifying who is likely to churn and maintaining even a small percentage of them can generate millions of dollars in sustained revenue. Loyal customers are typically more profitable customers. If an organization can accurately predict future sales based on customer behavior, it will lead to cross-selling. CRM enables customer retention and higher profits by knowing the customer and using cross-selling. It enables accurate target marketing by helping identify customers and their needs via customer segmentation.
While CRM efforts are often daunting, the benefits achieved are impressive. Firms who successfully implement CRM systems report improved customer data and process management, increased number of transactions and improved analysis and reporting.