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The ABCs of CRM

Jun 14

Written by: host
6/14/2009 8:53 AM 

The ABCs of CRM

What is CRM?
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.
 
What is the goal of CRM?
The idea of CRM is that it helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers. With an effective CRM strategy, a business can increase revenues by:
  • providing services and products that are exactly what your customers want
  • offering better customer service
  • cross selling products more effectively
  • helping sales staff close deals faster
  • retaining existing customers and discovering new ones
 
 
That sounds rosy. How does it happen?
It doesn't happen by simply buying software and installing it. For CRM to be truly effective, an organization must first understand who its customers are and what their value is over a lifetime. The company must then determine what the needs of its customers are and how best to meet those needs. For example, many financial institutions keep track of customers' life stages in order to market appropriate banking products like mortgages or IRAs to them at the right time to fit their needs.
Next, the organization must look into all of the different ways information about customers comes into a business, where and how this data is stored and how it is currently used. One company, for instance, may interact with customers in a myriad of different ways including mail campaigns, Web sites, brick-and-mortar stores, call centers, mobile sales force staff and marketing and advertising efforts. CRM systems link up each of these points. This collected data flows between operational systems (like sales and inventory systems) and analytical systems that can help sort through these records for patterns. Company analysts can then comb through the data to obtain a holistic view of each customer and pinpoint areas where better services are needed. For example, if someone has a mortgage, a business loan, an IRA and a large commercial checking account with one bank, it behooves the bank to treat this person well each time it has any contact with him or her.
 
Are there any indications of the need for a CRM project?
You need CRM when it is clear you don’t have an accurate view of who your customers are and what their needs or desires are or will be at any given stage in their lives. If you are losing customers to a competitor, that’s a clear indication that you should improve your understanding of your customers.
 
How long will it take to get CRM in place?
It depends. If you decide to go with a hosted CRM solution from an application service provider and you are planning to use the software for a specific department like sales, the deployment should be relatively quick – perhaps 30-90 days. However, if you are deploying either a hosted application or an on-premise package (involving the purchase of software licenses upfront) on an enterprise-wide basis (that involves different departments like sales, marketing and operations), you should expect the implementation and training to take months, if not years. The time it takes to put together a well-conceived CRM project depends on the complexity of the project and its components and how well you manage the project.
 
How much does CRM cost?
Again it depends. A hosted sales automation application can cost between $65 and $150 a month for a basic sales automation package. If you want more sophisticated functionality and a greater level of support, you pay a lot more. An enterprise on-premise CRM package can cost anywhere between several thousand to several millions of dollars, depending again on how many functions you purchase and how many computers or “seats” have access to the software. For instance, one company or department might purchase an email marketing management application or a salesforce automation application, while a larger firm might want to purchase an integrated package that includes a database as well as applications for marketing, sales and customer service and support (via call centers and online). Obviously, the integrated software package is much more expensive.
 
What are advantages of hosted or on-demand CRM vs. on-premise and vice versa?
In the last few years, the market for on-demand CRM has soared particularly among small and mid-sized companies, largely because of fears about the expense and complexity of large-scale on-premise CRM implementations. And indeed, on-demand CRM is often a good choice for companies that want to implement standard CRM processes, are able to use out-of-the-box data structures, with little or no internal IT support, and don’t require complex or real-time integration with back office systems.
However, on-demand CRM software is not always as simple as the vendors would have you believe. For instance, customization can be problematic and hosted CRM vendors’ API tools cannot provide the degree of integration that is possible with on-site applications. Getting a hosted CRM system working shouldn’t take as long as a traditional software package, but larger and more complex rollouts can still take a year or more. And while the hosted option reduces the need for in-house technical support, upgrades can still sometimes be technically tricky. In addition, some companies with particularly sensitive customer data, such as those in financial services and health care, may not want to relinquish control of their data to a hosted third party for security reasons. As a result, AMR Research predicts that even by 2009, hosted CRM applications will account for only 12 percent of the total U.S. CRM market. [For more on on-demand vs on-premise, read "The Truth about On-Demand CRM."]
 
What are the keys to successful CRM implantation?
  • Develop your customer-focused strategy first before considering what kind of technology you need.
  • Break your CRM project down into manageable pieces by setting up pilot programs and short-term milestones. Start with a pilot project that incorporates all the necessary departments but is small enough and flexible enough to allow tinkering along the way.
  • Make sure your CRM plans include a scalable architecture framework. Think carefully about what is best for your enterprise: a solution that ties together “best of breed” software from several vendors via Web Services or an integrated package of software from one vendor.
  • Don't underestimate how much data you might collect (there will be LOTS) and make sure that if you need to expand systems you'll be able to.
  • Be thoughtful about what data is collected and stored. The impulse will be to grab and then store EVERY piece of data you can, but there is often no reason to store data. Storing useless data wastes time and money.
 
Which division should run the CRM project?
The biggest returns come from aligning business, CRM and IT strategies across all departments and not just leaving it for one group to run. In fact, it’s best for the business departments who actually use the software to take ownership of the project, with IT and the CIO playing an important advisory role.
 
What causes CRM projects to fail?
Many things. From the beginning, lack of a communication between everyone in the customer relationship chain can lead to an incomplete picture of the customer. Poor communication can lead to technology being implemented without proper support or buy-in from users. For example, if the sales force isn't completely sold on the system's benefits, they may not input the kind of demographic data that is essential to the program's success. One Fortune 500 company is on its fourth try at a CRM implementation, because it did not do a good job at getting buy-in from its sale force beforehand and then training sales staff once the software was available.
 
What industries are leading the way in CRM implementations?
As in most leading-edge technology implementations, the financial services and telecommunications industries set the pace in CRM. Other industries are on the CRM bandwagon include consumer goods makers and retailers and high tech firms.
Which industry is behind the curve?
Heavy manufacturing. As a rule, the further an industry is away from the end customer, the less important CRM is.
CRM, or Customer Relationship Management, is a company-wide business strategy designed to reduce costs and increase profitability by solidifying customer loyalty. True CRM brings together information from all data sources within an organization (and where appropriate, from outside the organization) to give one, holistic view of each customer in real time. This allows customer facing employees in such areas as sales, customer support, and marketing to make quick yet informed decisions on everything from cross-selling and up selling opportunities to target marketing strategies to competitive positioning tactics.
Once thought of as a type of software, CRM has evolved into a customer-centric philosophy that must permeate an entire organization. There are three key elements to a successful CRM initiative: people, process, and technology. The people throughout a company-from the CEO to each and every customer service rep-need to buy in to and support CRM. A company's business processes must be reengineered to bolster its CRM initiative, often from the view of, How can this process better serve the customer? Firms must select the right technology to drive these improved processes, provide the best data to the employees, and be easy enough to operate that users won't balk. If one of these three foundations is not sound, the entire CRM structure will crumble.
It's a strategy used to learn more about customers' needs and behaviors in order to develop stronger relationships with them. After all, 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 process that will help bring together lots of pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends.
If customer relationships are the heart of business success, then CRM is the valve the pumps a company's life blood. As such, CRM is best suited to help businesses use people, processes, and technology gain insight into the behavior and value of customers. This insight allows for improved customer service, increased call center efficiency, added cross-sell and upsell opportunities, improved close rates, streamlined sales and marketing processes, improved customer profiling and targeting, reduced costs, and increased share of customer and overall profitability.
This sounds like a panacea, but CRM is not without its challenges. For CRM to be truly effective, an organization must convince its staff that change is good and that CRM will benefit them. Then it must analyze its business processes to decide which need to be reengineered and how best to go about it. Next is to decide what kind of customer information is relevant and how it will be used. Finally, a team of carefully selected executives must choose the right technology to automate what it is that needs to be automated. This process, depending upon the size of the company and the breadth of data, can take anywhere from a few weeks to a year or more. And although some firms are using Web-based CRM technologies for only hundreds of dollars per month per user, large companies may spends millions to purchase, install, and customize the technology required to support its CRM initiative.
verybody who profits from CRM has their own definition of what it is, but they're agreed as to what it is not: CRM isn't about technology any more than hospitality is about throwing a welcome mat on your front porch.
Liz Shahnam, CRM analyst with the META Group, says CRM is "a buzzword that's really not so new. What's new is the technology is allowing us to do what we could do at the turn of the century with the neighborhood grocer. He had few enough customers and enough brainpower to keep track of everyone's preferences. Technology has allowed us to go back to the future to this model."
Properly understood, CRM is "a philosophy that puts the customer at the design point, it's getting intimate with the customer," in Shahnam's words. Mike Littell, president of the CRM Division of EDS agrees: "We view CRM more as a strategy than a process. It's designed to understand and anticipate the needs of the current and potential customer base a company has." Once you nail that, Littell says, there's "a plethora of technology out there that helps capture customer data and external sources, and consolidate it in a central warehouse to add intelligence to the overall CRM strategy."
Jim Dickie, managing partner of Boulder-based Insight Technology Group says that while the basic idea behind CRM is simple, implementations are often bollixed because "CEOs are suffering from techno lust, in love with shortcuts, and are operating with a sense of urgency. As soon as anyone in any industry does this right, everyone else wants to jump on the bandwagon and have an instant solution." When a CEO sees the technology her competitor's using to bash her brains out, she simply orders the same stuff for her company. "There's so much pressure on CEOs to do it now that they usually manage to avoid doing it right," Dickie says.
Buying technology before you have your CRM business goals clearly in mind leads to disaster. Dickie told of one CEO who had both a failed and a successful CRM. Dickie asked him why the first one had tanked, and the man told him "I went out hunting with the wrong dog." Of course: if you're hunting badgers you take a basset hound, they're built for that, but they'll die if you try hunting foxes with them. You don't take a foxhound duck hunting, he'll drown, you get a retriever. Identify your quarry, pick your dog.
CRM and marketing expert Dick Lee, principal of Minneapolis-based High- Yield Marketing and author of The Customer Relationship Management Planning Guide and the soon to be released Customer Relationship Management Survival Guide agrees. Lee describes CRM as "a customer- centric business strategy, which drives changes in functional roles in the company, which demand re-engineering of work processes, which is supported, not driven, by CRM technology." Translation: First you change your business approach, then you re-engineer the roles in your company to support that new approach, then—and only then—do you start talking to vendors.
Front Line Solutions President Bob Thompson even maintains that "none of the elements of successful CRM necessarily has to include technology. CRM is simply a process with the goal of making relationships profitable. To reach this goal, marketing, sales and service must work more as a team and share information. Computerized CRM applications make this possible."
While Lee agrees that the most prevalent misconception among CEOs is that CRM is about the software, "you can show the CEO he's wrong about this-because beneath the idea that CRM is software is the idea that your company can become more customer-friendly without changing the organization." Lee cited the recent Wall Street Journal article on the General Motors audit on what the company would have to change to be able to make cars to order. The answer? "We'll have to change everything."
If it sounds like we're picking on the CEO, it's because we are. Simply put, successful CRM is a painful, fundamental changes in how a company is organized, the sort of changes that need the CEO's backing. No handing it off to some terrified vice-president to run with until she fails, she doesn't have the clout to make the enterprise-wide changes across divisions the CEO does, and which is crucial to CRM's success.
Bill Brendler, president of Houston-based Brendler & Associates says bluntly "successful CRM always starts with top management. If they don't lead the charge, it won't happen." Change in an organization that's established is difficult. That's where the real heavy work comes in. "People want to slam-dunk the technology, but we try to tell them it's not about tech it's about a new way of doing things, a new way of doing business," Brendler says. However, "most of them don't have a clue. They just have no idea what I'm talking about."
Not that we expect perfections. META's Mike Gotta reminds us that when it comes to CRM, "we're babes in the woods, we're experimenting. Does the customer want to talk to us through e-mail? Does the Green Stamps model apply? We're learning."
But "the vision thing" is indispensable, Brendler says—along with a healthy dose of commitment and guts to lead the charge. As a wise man once said, where there's no vision the people perish. If a CEO doesn't really get what CRM means for the company, Brendler says, "I know it's going to fail. One CEO told me 'we're turning the vision over to the employees.' Then he stood up there and gave a speech someone else wrote and everyone in the company knew it. He thought it was just a matter of slam-dunking some technology, oh and by the way someone told me this'll get us on the Internet."
Corporate boards are rarely all on the same page when it comes to CRM. One consultant recounted two corporate board members throwing coffee at each other when discussing CRM ("but one went to Ohio State and the other went to Michigan," he added by way of explanation.) Brendler himself says "I've seen fistfights among top management in a conference room in an organization that's a household name."
Whichever CRM definition you prefer, one wit's assessment of CRM as practiced in the real-life business world today, that of being like a high school locker room, unfortunately rings true: lots of talk, but not much real action. •
 
What Is a Customer Relationship Management (CRM) System?
IT'S IMPOSSIBLE TO state precisely what customer relationship management (CRM) means to everyone. The term has been applied to almost every element of business that even remotely interacts with a customer. In its infancy, CRM systems were a series of mainframe or server-based applications specific to sales, marketing and support business functions. The applications were lightweight by today's standards and did little more than capture and file critical data. But as cultural boundaries within organizations weakened, individual fiefdoms of information gave way to sophisticated applications that could span business functions. By doing so, these applications created the vision of a single view of the customer. For the first time, organizations could track and analyze shifting customer needs, link marketing campaigns to sales results, and monitor sales activities for improved forecasting accuracy and manufacturing demand.


CRM's Evolution
CRM has evolved since its earliest incarnation, originally driven by an inside-out focus, through three phases of evolution: technology, integration and process. Recently have we seen a major leap forward to a fourth phase: customer-driven CRM — an outside-in approach that has intriguing financial promise.
1.   Technology: In its earliest incarnation, CRM meant applying automation to existing sales, marketing, support and channel processes as organizations attempted to improve communications, planning, opportunity and campaign management, forecasting, problem solving, and to share best practices. To some degree, it worked. However, automating poorly performing activities or processes rarely improves the quality of the outcome. So, for the most part, the quality of the return on investment (ROI) was meager — if measurable at all. The promise of the technology was there, but few organizations were realizing the pinnacle of performance. The metric of success was increased efficiency in sales, marketing, support and channel processes.
2.   Integration: By developing cross-functional integration, supported by data warehousing and shared roles and responsibilities, organizations began to create a customized view of the customer. Support issues, Web hits, sales calls and marketing inquiries started building a deeper understanding of each customer and allowed aggressive organizations to adapt their tactics to fit individual needs. Integration focused around two primary components:
o    Make it easier to do business with the seller: Instead of operational silos that inhibited superior customer relationships, the organization as a whole took ownership and responsibility for customer satisfaction. With a single view of the customer, it was much easier for anyone to respond to sales opportunities or impending support issues and take appropriate steps. Expected benefits are to improve retention and lower support costs.
o    Predictive modeling: Data mining of an aggregate of corporate knowledge and the customer contact experience was used to improve operational and sales performance. By applying complex algorithms to a history of purchasing or inquiry characteristics, it became practical to predict the demands of individual customers. Up-selling, cross-selling, even the ability to preempt potential problems, was now possible for all customer-facing representatives. Expected benefits are to have better cross-selling/up-selling and improved product offerings or delivery.
3.   Process: By rethinking the quality and effectiveness of customer-related processes, many organizations began to eliminate unnecessary activities, improve outdated processes, and redesign activities that had failed to deliver the desired outcomes. Then, by re-creating the process through an understanding of the capabilities of the technology, the outcomes were more predictable and the promises for a meaningful ROI more substantial and realistic. The metrics for success became the improved effectiveness in serving the customer.
Thus far, almost everything about CRM has focused on improving the effectiveness and efficiency of the seller's organization. Organizations have evolved from sales representatives working from paper notebooks, or a card system, to a tightly integrated network that sees movement in sales activity, predicts product demand on manufacturing, and manages the logistics of complex teams to serve the buyer and seller. Marketing, support services, channel management, revenue management, resource allocation/management, forecasting, manufacturing, logistics and even research and development have all seen the benefits of a well-designed CRM strategy.

However, the past decade of CRM and its associated improvements have been based on three assumptions:
1.   The past would be a logical foundation to predict future customer needs and profitability.
2.   Demand for traditional value propositions would remain constant.
3.   Better customer relationships would deter attrition.

All three of these assumptions have failed — or at least become unstable — in a post-September 11 environment. Historical purchases or inquiries are not a clear indication of future needs as buyers are rapidly redefining requirements to satisfy their current business, market or shareholder demands. Value propositions are changing in highly competitive markets as sellers are working aggressively to reestablish structural bonds. And, driven by sensitive financial markets, buyers move to whichever supplier can provide the best aligned, most cost effective solution that promises to stabilize, or improve, their business performance. These factors are driving CRM into a fourth phase.


Customer-Driven CRM — The Fourth Phase
Today, revenue performance has become the central theme for CRM as organizations seek to achieve and maintain expected financial results. Leading executives are asking:
  • Which of my customers have the potential for a high-profit, sustainable relationship?
  • What defines profitable and unprofitable customer segments?
  • What must change to realize that optimal potential?
  • Where's my opportunity for growth?
  • Where's my risk for loss?
  • Am I making the right decisions related to balancing acquisition, cross-selling and upselling — and for the right customer groups?

The epiphany isn't in the questions themselves, but in the fact that we're asking them after a decade of CRM investments — investments intended to provide just those very answers.

It is important to understand that a disruptive change has occurred causing large segments of customer organizations to reassess many of their basic needs, values and assumptions. Research indicates that this event was triggered by the uncertain complexities of the post-September 11th world. Organizations are now challenging everything from how they create value, to how they serve their markets, to how they meet shareholder expectations. It is the answers to these questions that create the framework for phase four CRM.

Without a deep understanding of what's going on in the customer's head — specifically what will influence buying behavior — it is difficult to establish customer strategies that mutually serve the needs and expectations of the buyer and seller communities.


Understanding the Difference
In the past, CRM has followed a basic balanced scorecard technique involving four categories: customer, financial, operations, and people. (See What Is a Balanced Scorecard?.) From an inside-out perspective, organizations first analyzed the needs and capabilities of operations and their people to determine what could be delivered to the customer. From that, they drew conclusions and predictions to determine the impact on the financial category.

As this has changed, so have the priorities. Now the focus is first on the customers:
  • What will they buy, when, why and for how much?
  • What creates value for them, and does this create a structural bond?
  • What services can we perform that merit premium margins?
  • Can we establish a new market segmentation strategy focused on potential profitability and willingness to purchase?
  • Do we understand their business drivers, financial metrics, buying process and decision criteria?

Customer driven CRM means that organizations first understand the customer, then move inward to operations. Within the context of the customer, the systems and infrastructure capabilities needed to serve those customers and segmentation-based requirements must be reassessed. Next, it's imperative to explore the skills and competency requirements for the people component of the CRM design. A decade of CRM has taught us that nothing happens until your people interact with the customer in a manner consistent with new CRM customer strategies and systems. And, finally, you should be well positioned to apply predictive modeling algorithms to establish a financia model with exceptional accuracy. Not an easy task, but case studies are proving financial predictions that can demonstrate account-level forecasting with over 80 percent accuracy.


Summary
Developing a CRM strategy isn't an easy task. Complex organizational design, comprehensive technologies and ever-changing customer demands are just the beginning. The lessons learned are monumental but we know that the promises of customer driven CRM are worth the journey.

Here's a simple framework for fourth-generation CRM:
  • Focus on financial results: Learn how to identify existing profitable customer segments and determine what will establish a profit-based profile for moving forward. Then develop the business requirements to support sustained, and structurally bonded, relationships.
  • Find cost effective alternatives for nonbuyers or low-margin customers: Not all customer relationships are profitable and very few companies can afford to pay to deliver an equal level of services. Control costs and save your best resources for premium accounts — while working to bring low performers into an acceptable profit portfolio
Implementing CRM
Customer Relationship Management is a corporate level strategy which focuses on creating and maintaining lasting relationships with its customers. Although there are several commercial CRM software packages on the market which support CRM strategy, it is not a technology itself. Rather, a holistic change in an organisation's philosophy which places emphasis on the customer.
A successful CRM strategy cannot be implemented by simply installing and integrating a software package and will not happen over night. Changes must occur at all levels including policies and processes,front of house customer service, employee training, marketing, systems and information management; all aspects of the business must be reshaped to be customer driven.
To be effective, the CRM process needs to be integrated end-to-end across marketing, sales, and customer service. A good CRM program needs to:
  • Identify customer success factors
  • Create a customer-based culture
  • Adopt customer-based measures
  • Develop an end-to-end process to serve customers
  • Recommend what questions to ask to help a customer solve a problem
  • Recommend what to tell a customer with a complaint about a purchase
  • Track all aspects of selling to customers and prospects as well as customer support.
When setting up a CRM segment for a company it might first want to identify what profile aspects it feels are relevant to its business, such as what information it needs to serve its customers, the customer's past financial history, the effects of the CRM segment and what information is not useful. Being able to eliminate unwanted information can be a large aspect of implementing CRM systems.
When designing a CRM's structure, a company may want to consider keeping more extensive information on their primary customers and keeping less extensive details on the low-margin clients
Architecture of CRM
There are three parts of application architecture of CRM:
  • Operational - automation to the basic business processes (marketing, sales, service)
  • Analytical - support to analyze customer behavior, implements business intelligence alike technology
  • Collaborative - ensures the contact with customers (phone, email, fax, web, sms, post, in person)
Operational CRM
Operational CRM means supporting the "front office" business processes, which include customer contact (sales, marketing and service). Tasks resulting from these processes are forwarded to employees responsible for them, as well as the information necessary for carrying out the tasks and interfaces to back-end applications are being provided and activities with customers are being documented for further reference.
Operational CRM provides the following benefits:
  • Delivers personalized and efficient marketing, sales, and service through multi-channel collaboration
  • Enables a 360-degree view of your customer while you are interacting with them
  • Sales people and service engineers can access complete history of all customer interaction with your company, regardless of the touch point
According to Gartner Group, the operational part of CRM typically involves three general areas of business:
Sales force automation (SFA) 
SFA automates some of the company's critical sales and sales force management functions, for example, lead/account management, contact management, quote management, forecasting, sales administration, keeping track of customer preferences, buying habits, and demographics, as well as performance management. SFA tools are designed to improve field sales productivity. Key infrastructure requirements of SFA are mobile synchronization and integrated product configuration.
Customer service and support (CSS) 
CSS automates some service requests, complaints, product returns, and information requests. Traditional internal help desk and traditional inbound call-center support for customer inquiries are now evolved into the "customer interaction center" (CIC), using multiple channels (Web, phone/fax, face-to-face, kiosk, etc). Key infrastructure requirements of CSS include computer telephony integration (CTI) which provides high volume processing capability, and reliability.
Enterprise marketing automation (EMA) 
EMA provides information about the business environment, including competitors, industry trends, and macroenvironmental variables. It is the execution side of campaign and lead management. The intent of EMA applications is to improve marketing campaign efficiencies. Functions include demographic analysis, variable segmentation, and predictive modeling occur on the analytical (Business Intelligence) side.
Integrated CRM software is often also known as "front office solutions." This is because they deal directly with the customer.
Many call centers use CRM software to store all of their customer's details. When a customer calls, the system can be used to retrieve and store information relevant to the customer. By serving the customer quickly and efficiently, and also keeping all information on a customer in one place, a company aims to make cost savings, and also encourage new customers.
CRM solutions can also be used to allow customers to perform their own service via a variety of communication channels. For example, you might be able to check your bank balance via your WAP phone without ever having to talk to a person, saving money for the company, and saving your time.
Analytical CRM
In analytical CRM, data gathered within operational CRM and/or other sources are analyzed to segment customers or to identify potential to enhance client relationship. Customer analysis typically can lead to targeted campaigns to increase share of customer's wallet. Examples of Campaigns directed towards customers are:
  • Acquisition: Cross-sell, up-sell
  • Retention: Retaining customers who leave due to maturity or attrition.
  • Information: Providing timely and regular information to customers.
  • Modification: Altering details of the transactional nature of the customers' relationship.
Analysis typically covers but is not limited to:
  • Decision support: Dashboards, reporting, metrics, performance etc.
  • Predictive modelling of customer attributes
  • Strategy and research.
Analysis of Customer data may relate to one or more of the following analyses:
  • Campaign management and analysis
  • Contact channel optimization
  • Contact Optimization
  • Customer Acquisition / Reactivation / Retention
  • Customer Segmentation
  • Customer Satisfaction Measurement / Increase
  • Sales Coverage Optimization
  • Fraud Detection and analysis
  • Financial Forecasts
  • Pricing Optimization
  • Product Development
  • Program Evaluation
  • Risk Assessment and Management
Data collection and analysis is viewed as a continuing and iterative process. Ideally, business decisions are refined over time, based on feedback from earlier analysis and decisions. Therefore, most successful analytical CRM projects take advantage of a data warehouse to provide suitable data.
Business Intelligence is a related discipline offering some more functionality as separate application software.
Collaborative CRM
Collaborative CRM facilitates interactions with customers through all channels (personal, letter, fax, phone, web, e-mail) and supports co-ordination of employee teams and channels. It is a solution that brings people, processes and data together so companies can better serve and retain their customers. The data/activities can be structured, unstructured,conversational, and/or transactional in nature.
Collaborative CRM provides the following benefits:
  • Enables efficient productive customer interactions across all communications channels
  • Enables web collaboration to reduce customer service costs
  • Integrates call centers enabling multi-channel personal customer interaction
  • Integrates view of the customer while interaction at the transaction level
Purposes of Customer Relationship Management
CRM, in its broadest sense, means managing all interactions and business with customers. This includes, but is not limited to, improving customer service. A good CRM program will allow a business to acquire customers, service the customer, increase the value of the customer to the company, retain good customers, and determine which customers can be retained or given a higher level of service. A good CRM program can improve customer service by facilitating communication in several ways :
  • Provide product information, product use information, and technical assistance on web sites that are accessible 24 hours a day, 7 days a week.
  • Identify how each individual customer defines quality, and then design a service strategy for each customer based on these individual requirements and expectations.
  • Provide a fast mechanism for managing and scheduling follow-up sales calls to assess post-purchase cognitive dissonance, repurchase probabilities, repurchase times, and repurchase frequencies.
  • Provide a mechanism to track all points of contact between a customer and the company, and do it in an integrated way so that all sources and types of contact are included, and all users of the system see the same view of the customer (reduces confusion).
  • Help to identify potential problems quickly, before they occur.
  • Provide a user-friendly mechanism for registering customer complaints (complaints that are not registered with the company cannot be resolved, and are a major source of customer dissatisfaction).
  • Provide a fast mechanism for handling problems and complaints (complaints that are resolved quickly can increase customer satisfaction).
  • Provide a fast mechanism for correcting service deficiencies (correct the problem before other customers experience the same dissatisfaction).
  • Use internet cookies to track customer interests and personalize product offerings accordingly.
  • Use the Internet to engage in collaborative customization or real-time customization.
  • Provide a fast mechanism for managing and scheduling maintenance, repair, and on-going support (improve efficiency and effectiveness).
  • The CRM can be integrated into other cross-functional systems and thereby provide accounting and production information to customers when they want it.
Improving customer relationships
CRM programs also are able to improve customer relationships. Proponents say this is so because:
  • CRM technology 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 technology 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.
  • In industrial markets, the technology can be used to micro-segment the buying centre and help coordinate the conflicting and changing purchase criteria of its members.
  • 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 rather than a "one size fits all" approach.
  • CRM software enables sales people to achieve this one on one approach to selling and can automate some elements of it via tailorable 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.
Technical functionality
A CRM solution is characterised by the following functionality:
  • scalability - the ability to be used on a large scale, and to be reliably expanded to whatever scale is necessary.
  • multiple communication channels - the ability to interface with users via many different devices (phone, WAP, internet, etc)
  • workflow - the ability to trigger a process in the backoffice system, e. g. Email Response, etc.
  • assignment - the ability to assign requests (Service Requests, Sales Opportunities) to a person or group.
  • database - the centralised storage (in a data warehouse) of all information relevant to customer interaction
  • customer privacy considerations, e.g. data encryption and the destruction of records to ensure that they are not stolen or abused.
Privacy and ethical concerns
CRM programs are not however considered universally good - some feel it invades customer privacy and enable coercive sales techniques due to the information companies now have on customers - see persuasion technology. However, CRM does not necessarily imply gathering new data, it can be used merely to make "better use" of data the corporation already has. But in most cases they are used to collect new data.
Some argue that the most basic privacy concern is the centralised database itself, and that CRMs built this way are inherently privacy-invasive. See the commercial version of the debate over the carceral state, e.g. Total Information Awareness program of the United States federal government.
CRM in Business
The use of internet sites and specifically e-mail, in particular, are often touted as less expensive communication methods in comparison to traditional ones such as telephone calls. These types of technologies service can be very helpful, but it is completely useless to a business that cannot reach its customers. Some major companies believe that the majority of their clients trust other means of communication, like telephone, more than they trust e-mail. Clients, however, are usually not the ones to blame because it is often the manner of connecting with consumers on a personal level making them feel as though they are cherished as customers. It is up to companies to focus on reaching every customer and developing a relationship.
It is possible for CRM software to run an entire business. From prospect and client contact tools to billing history and bulk email management. The CRM system allows a business to maintain all customer records in one centralized location that is accessible to an entire organization through password administration. Front office systems are set up to collect data from the customers for processing into the data warehouse. The data warehouse is a back office system used to fulfill and support customer orders. All customer information is stored in the data warehouse. Back office CRM makes it possible for a company to follow sales, orders, and cancellations. Special regressions of this data can be very beneficial for the marketing division of a firm/company.
CRM for nonprofit organizations
CRM is also important to non-profit organizations, which sometimes use the terms "constituent relationship management," "contact relationship management" or "community relationship management" to describe their information systems for managing donors, volunteers and other supporters. CRM tools and services available to nonprofit organizations include the following:
  • CiviCRM is an open source software package that is designed to integrate directly with some open source website content management systems, including Drupal and Mambo.
  • eBase, a series of Filemaker database templates, was developed in the 1990s with support from a number of nonprofit foundations and is currently maintained by Groundspring, a nonprofit organization that offers internet fundraising services to other nonprofit organizations.
Why is CRM Important?
"Every one of our sales people has increased their sales, which increases their commission, and they absolutely love it. They feel more professional, they have all their data in place. It's proven to be extremely effective."
— Peter Polus, CEO, Fiberdyne Labs
 
The benefits of CRM are clear: by streamlining processes and providing sales, marketing, and service personnel with better, more complete customer information, CRM allows organizations to build more profitable customer relationships and decrease operating costs.
 
Sales:
Automating the sales process can be as simple as implementing simple contact, account, and opportunity management to forecasting, territory management, and pipeline management. These tools allow sales organizations to shorten the sales cycle by having all relevant customer information at their fingertips—working smarter, not harder.
This process automation also enables management to see how their sales teams are performing in real time. By providing a common frame of reference for every opportunity at each stage in the sales cycle, management can see what—and who—is working and not working in their sales process. Armed with this information, management can easily alter the flow of their sales processes in the system to eliminate bottlenecks, resulting in more accurate revenue forecasts and predictable sales cycles. Siebel CRM On Demand's innovative Sales Coach capabilities then enable sales teams to easily and dependently follow the organization's proven selling practices to close more deals and more revenue per deal.
 
Marketing:
By automating marketing functions such as campaign design and management, email marketing, and lead assignment and management, organizations can increase the efficiency of their marketing organization and target their resources to the most effective marketing programs. Marketing automation captures important customer, lead source, and demographic information that carry forward throughout the sales cycle.
Management can understand what programs created the leads that closed the most revenue. With this insight, organizations can understand which marketing programs are most effective and continually improve the successful targeting of their marketing investment.
·         Identify new markets and opportunities
·         Simplify marketing processes
·         Quantify ROI on marketing spend
·         Improve marketing productivity while lowering customer acquisition costs
 
 
Customer Service:
Customer service and call center operations can use Siebel CRM On Demand to provide agents with the most up-to-date information on all customer service transactions. By automating service request management, knowledge bases, and call routing, agents become more productive by ensuring service requests do not fall through the cracks and solving customer issues faster. And because agents have immediate access to complete customer records, they can quickly identify cross-sell and up-sell opportunities as possible solutions to service issues.
For customers, they in turn receive superior customer service-resulting in higher customer retention and loyalty rates. Now that's good business, because it's much more cost-effective to retain existing customers than to acquire new ones.
·         Enable higher cross-sell and up-sell rates
·         Increase customer retention
·         Reduce response times and request-resolution times
·         Increase call center efficiency and lower costs
 

 

 

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