Customer Relationship Management or CRM: what it is and how it works as a company's strategy for achieving lasting, valuable relationships with its customers.
CRM, or Customer Relationship Management, is the set of tools, strategies, and processes designed to establish and enhance relationships with a given company's customers in order to cultivate lasting interactions.
Customer Relationship Management: meaning and objectives
When people talk about CRM in a business environment, they often refer to a program or software that allows them to manage and track their customer base.
However, even before being a tool, Customer Relationship Management is a real business strategy for establishing lasting customer relationships. The goal of CRM is to build customer loyalty or acquire new customers.
Its importance within companies has grown especially in the last couple of years as a result of the Covid pandemic, which has shifted the sale of goods and services primarily online.
While many companies have equipped themselves with e-commerce in order to continue their business even during lockdown periods, systems to store information about customers and purchasing processes have also become increasingly important.
CRM, in fact, is mainly based on data analysis: everything about the customer, such as habits and needs, can be studied in order to improve Customer Satisfaction.
The primary means of tracking this information is through databases: purchase preferences, repeat orders, demographics, and contact information are examples of useful data to collect.
How to build CRM
As already mentioned, Customer Relationship Management is not just a tool, but a real strategy to be adopted in the company. The elements with which it is built are mainly three:
Culture: it is represented by the values of the company, through which the objectives to be achieved and the ways to do it are identified. Therefore, when you choose to adopt a CRM strategy, culture is the basis for building an efficient methodology.
All company departments must, in fact, be aligned according to the same vision, which in this case can be represented by Customer Centricity.
A "customer-centric" approach is one that pays attention and care to the customer, gathering information about their needs and developing products and services to meet those needs.
Processes: represent the set of interrelated activities necessary for the functioning of the company, and therefore the achievement of objectives. Processes can be defined as all the inputs that enable a given product or service to be provided to customers.
In order to implement a CRM strategy, it is necessary, for example, to establish where to look for new potential clients, who and how to relate to them, what information about the client to record, and where, to whom to make it accessible and how, etc.
IT infrastructure: The technology, program, or CRM software that assists a firm in managing all the data shared in databases. With Customer Relationship Management software, it will be possible to control all aspects of customer relationships, both in Sales and Marketing and Help Desk.
Types of Customer Relationship Management
After outlining the main components that contribute to the implementation of a CRM strategy, we can identify 4 macro-areas of Customer Relationship Management, based on the activities and methods of application of this strategy.
Operational CRM: is aimed at providing technology solutions and processes to automate and improve all customer-business contact activities. For example, it can make use of software that integrates marketing, sales, and service functions, which use the data and information collected at all these stages about a customer.
Access to this data is in fact fundamental for Sales and Marketing departments, as it allows them to segment customers, manage promotional campaigns, automate sales processes and manage customer services such as after-sales and customer care;
Analytical CRM: is based on the storage, analysis, and processing of information collected by the operational CRM, relating to current and potential customers.
Data can also come from sources outside the company and can be collected in databases made available to various company departments to facilitate decision-making processes;
Collaborative CRM: leverages communication tools (phone, fax, email, etc.) to connect the different players involved in the supply chain.
Information about suppliers, distributors, customers, and partners is shared between departments and groups, or within the entire organization, to foster collaboration;
Strategic CRM: it develops from a corporate culture that puts the customer at the center of every process. The goal is to build customer loyalty by gathering information on specific needs in order to be able to propose new solutions to those needs.
It is important that this culture is spread throughout the company - from leadership style to brand identity - and that all resources allocated can increase customer value as much as possible.
5 benefits of CRM
CRM allows you to collect and analyze all customer data such as master data, source of acquisition, negotiation status, products and services adopted, active marketing campaigns, open or closed support tickets, etc.
For this reason, the implementation of a Customer Relationship Management strategy can bring significant benefits to the entire organization.
Among these, we highlight five in particular:
making this information available to multiple business departments will speed up their work and increase business productivity;
it will also be possible to manage data in an advanced way, for example by focusing on potential and valuable clients, with ad hoc programs, in order to personalize the offer with "tailor-made" products and services enriched with added value;
sharing information helps improve collaboration across teams, such as the sales and marketing teams, including in managing follow-up and customer inquiries, driving Customer Retention;
thanks to the many data available, it is possible to make increasingly accurate sales forecasts, as well as to have an overview based on analysis and reports, which can also offer a complete overview to top management;
finally, CRM enables the successful identification and management of sales opportunities, decreasing the risks associated with the mismanagement of a client or the use of obsolete processes, with a consequent potential increase in sales and, therefore, profits and revenues.
Implementing a CRM Strategy can therefore represent a competitive advantage for the company: it is an important tool for connecting departments and divisions that often work separately and risk dispersing valuable information.
Leveraging Customer Relationship Management allows you to stimulate innovation, bringing benefits at all levels of the company.
Do you want to know more? Contact an expert of Knowledge Management from Pigro.