- Category: Management and Leadership Resource Centre
Definition of Customer Relationship Management (CRM)...
Customer Relationship Management(CRM) is the science of retaining customers, through establishing, developing and maintaining effective relationships with those who sponsor the existence of your business or organisation. CRM begins with the attraction of customers (marketing), followed by the acquisition of customers (sales) and then creating a bonding relationship with such customers (relationship management).
History of Customer Relationship Management (CRM)...
The concept of customer relationship management was only coined in 1995, but the need to manage relationships with the people who sponsor your existence is as old as the concept of business itself. From the beginning anyone who sold something had to keep those who bought from him or her happy. It would be irrational to bite the hand that feeds you. In short, herewith a timeline of the history of customer service…
Early Times: Personal face to face relationships are used to keep customers happy – 'know thy customer' was the motto (literary).
1900’s: Handwritten databases is used to keep track of customers, and of course the famous Rolodex is on every desk.
Early 1980’s: The first electronic databases see the light.
Late 1980’s: Contact management software is introduced.
Early 1990’s: Relationship marketing becomes a concept and sales force automation is introduced.
1995: The term CRM is coined and it becomes an official concept.
2000 & beyond: Advanced CRM software is introduced.
Customer Relationship Management (CRM) Applications…
Business or B2B relationships is the interaction with other businesses or partners with the aim of establishing long term partnerships with relevant businesses. Some of the benefits relating to B2B relationships are collaborative projects, networking and inter-business activities.
A call centre is a centralised office used for receiving or transmitting a large volume of requests by telephone or web-based ‘chat box’ services. Inbound call centres work with incoming inquiries and outbound call centres are used for outgoing communication such as telemarketing, charity or political solicitation, debt collection, market research, etc.
Front Desk Service
Front desk CRM relates to all person to person interaction with customers. Such interaction is direct and mainly takes place at the customer premises, but could be anywhere. To date this is seen as the most influential form of CRM.
Web / Online Service
Online service management is website-based interaction with customers. Customers can interact with an organisation conveniently from any place and in their own time. This also presents the supplier organisation with data mining and general efficiency opportunities. A variety of website based interaction with customers is possible and many companies have replaced their entire front desk service with website based CRM.
Social media are web-based and computer-mediated tools that allow people to create, share or exchange information, interests, ideas, pictures and videos in virtual communities and networks. Social media content is user-generated. The CRM value of social media is that it presents a fun and real-time way to interact with their customers and in so doing establish customer communities.
Customer Management Process...
The basic customer management process relates to first attracting customers, then acquiring them and then retaining them over the longest term possible.
This is the ability to make customers aware of your product or service, get them to consider such and move them to take action. Promotion projects such as advertising and branding is mostly used for this purpose. Customer retention is managed through the organisational marketing function.
This is the ability to get customers to transact with your organisation. The difference between customer acquisition and retention is similar to the difference between hunting and farming. Customer acquisition is managed through the organisational sales function.
This is the ability to keep your customers. The aim of customer retention is to create a long term relationship where the organisation exceeds customer expectations, to the point where such customer becomes a brand advocate. Customer retention is managed through the organisational CRM function.
Key Concepts in Customer Relationship Management (CRM)...
This is an electronic database that stores all customer information and history. Advanced systems are able to categorise customers, predict profitability, suggest action to improve a customer’s relationship level, etc. Most systems can provide accurate real time reports and interlink with various branches so that customers can be served with precision, irrelevant of where they are. 24/7 Online systems are furthermore able to combine CRM systems with sales systems, thus outsourcing the CRM function to cyberspace.
Back Office CRM
These are CRM operations that take place behind the scenes. Crisis management, advertising and marketing are CRM dimensions that resort here.
The two main components of CRM are operational CRM that aims to automate all CRM functions, and customer intelligence that aims to use customer information with the purpose to predict and incite certain customer behaviour.
CRM metrics aim to understand the relationship between customer profitability and customer relationships. Where for instance both, profitability and relationships are low, marketing initiatives will be needed. Where relationships are strong but profitability is low, sales must be increased and where profitability is high and relationships are low, CRM initiatives must be strengthened.
Database management, data mining, target behaviour and success of CRM strategies are analysed. Analytics provide customer insight needed for customer interaction that ensures the right service offering for the right target market at the right time.
Customer Driven Culture
The aim of a customer driven culture is to ensure that customers are seen as the love blood of the business. In a customer driven culture, customers are literally placed in the driver seat and everything that we do revolve around customer satisfaction and retention.
Customer intelligence refers to capturing and processing customer data. The aim hereof is to predict customer behaviour. Effective customer intelligence should enhance the experience that a customer has during interaction with your organisation.
This refers to the experience that a customer has when interacting with your orgnanisation. Where a customer has a good experience, it will be regarded as good customer service and bad experiences will be related to as bad service.
Customer segmentation refers to categorising a measurable and accessible group of customers who are homogeneous within and heterogeneous between. This would typically involve the selection of a market, designing of a profile and then mapping products to specific customer profiles. Geographic’s, demographics, psychographics and behavioural patterns are used to segment customers.
The customer value proposition or CVP, as commonly abreviated, is the value which you offer to your customers and which they are prepared to pay for. Theoretically customers would have no problem in paying more for a product or service where they believe that the CVP is equal or higher than the money that they pay. This concept holds the belief that customers do not buy products or services, they buy value.
Customer vs. Client
A customer is a broad category of persons who sponsor the existence of your organisation through purchasing your goods or services. The products and services consumed by a customer is mostly generic. A client, on the other hand, is a person who directly receives professional services from a specific person, such as a lawyer, doctor, personal banker, accountant, etc. A client relationship is therefore more direct and customised than a customer relationship.
Customer vs. Stakeholder
Customers sponsor the existence of a business or a specific business process. This implies that customers determine the mission of a business or business process which means that without customers the organisation cannot exist. Thus, no customers = no mission = no processes. Unlike customers, stakeholders do not dictate mission but contribute to the processes that enable that mission. Therefore a board of directors, suppliers, business partners, politicians, etc., are stakeholders and not customers.
Working with difficult people, dealing with customer complaints and problems, ensuring customer satisfaction at the front desk are all aspects of interpersonal relationships during the CRM process.
Moment of truth
When the customer meets with the company, we call it a moment of truth. In other words any interaction between company and customer that will lead the customer to form an opinion about the company and its service levels or product quality. These moments mostly occur at the ‘front desk’, telephone or web site.
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