Overview | Customer Relationship Management (CRM) is a process companies use to understand their customer groups and respond quickly—and at times, instantly—to shifting customer desires. CRM technology allows ﬁrms to collect and manage large amounts of customer data and then carry out strategies based on that information. Data collected through focused CRM initiatives helps ﬁrms solve speciﬁ c problems throughout their customer relationship cycle—the chain of activities from the initial targeting of customers to efforts to win them back for more. CRM data also provides companies with important new insights into customers’ needs and behaviors, allowing them to tailor products to targeted customer segments. Information gathered through CRM programs often generates solutions to problems outside a company’s marketing functions, such as Supply Chain Management and new product development
Methodology | CRM requires managers to:
1. Start by deﬁning strategic “pain points” in the customer relationship cycle. These are problems that have a large impact on customer satisfaction and loyalty, where solutions would lead to superior ﬁnancial rewards and competitive advantage.
2. Evaluate whether—and what kind of—CRM data can fix those pain points. Calculate the value that such information would bring the company.
3. Select the appropriate technology platform, and calculate the cost of implementing it and training employees to use it.
4. Assess whether the beneﬁ ts of the CRM information outweigh the expense involved.
5. Design incentive programs to ensure that personnel are encouraged to participate in the CRM program. Many companies have discovered that realigning the organization away from product groups and toward a customer-centered structure improves the success of CRM.
6. Measure CRM progress and impact. Aggressively monitor participation of key personnel in the CRM program. In addition, put measurement systems in place to track the improvement in customer proﬁtability with the use of CRM. Once the data is collected, share the information widely with employees to encourage further participation in the program.
Application | Companies can wield CRM to:
• Gather market research on customers, in real-time if necessary
• Generate more reliable sales forecasts
• Coordinate information quickly between sales staff and customer support reps, increasing their effectiveness
• Enable sales reps to see the ﬁnancial impact of different product conﬁgurations before they set prices
• Accurately gauge the return on individual promotional programs and the effect of integrated marketing activities, and redirect spending accordingly
• Feed data on customer preferences and problems to product designers
• Increase sales by systematically identifying and managing sales leads
• Design effective customer service programs and improve retention