CRM - Customer Relationship Management

CRM - Customer Relationship Management

Definition

Customer relationship management, abbreviated as CRM, is understood to be a conceptual tool for managing the relationship of a company or organization to its customers. It is taken for granted that CRM also represents a marketing approach and an IT solution in addition to management, which combine sales, customer service, marketing and other customer-related functions. This concept requires a company-wide strategy that supports and demands the concept for realizing a company orientation according to the customer relationship. CRM can only be successful if the processes for marketing, sales and service as well as the underlying technology are solid and the departments understand the importance of cooperation.

CRM is defined as a process that enables customer relationships to be built, maintained and developed through solid value creation.

Occasionally we also speak of consumer relationship management. If the term customer is used for the buyer of a good or the user of a service, the end user or consumer is understood in a more experiencing way.

In contrast to the Customer Knowledge Management (CKM) described here, an essential aspect of CRM is the gathering and provision of knowledge about customers in order to maintain the often-cited 360-degree view of the customer and, from this, to promote sales activities.

In connection with this, the term big data often comes up, under which two focal points are summarized: On the one hand, masses of data that are growing very fast, on the other hand IT solutions and systems that support companies to manage the flood of information. Above all, unstructured data, for example from social networks, make up the majority of big data. In addition to mobile IT and social media, coping with the amount of data is one of the big and current IT megatrends for companies and is becoming the subject of more scientific research and economic discussions in which many companies are criticized, concretely or across the board, for their inability to make profitable use of the data.

Especially when using the term CRM as an IT solution, there is a breakdown in the literature according to operational, analytical and collaborative CRM systems. According to some analysts, this view cannot be maintained any longer with regards to the current development of customer experience management (CEM).

Objectives

The origin goal of a CRM strategy is to establish, develop and maintain long-term relationships with profitable customers. This main goal can be detailed in four areas:

  • The acquisition of potential new customers and the recruitment of competitors,
  • Encouraging new customers to make additional purchases,
  • The development of occasional customers to regular and reliable returning customers and
  • The provision of special products or services for long-term, loyal customers.

One maxim of the CRM strategy is that generating revenue with satisfied existing customers is much easier than acquiring new customers.

Typical Processes and Tasks

The following six core processes are seen in the three typical CRM functional areas of marketing, sales and service:

  • Campaign management (marketing),
  • lead management (as a transition from marketing to sales),
  • quote management (sales),
  • contract management (sales),
  • complaint management (as Transition from sales to service) and
  • service management (service).

The goal of campaign management is to generate leads through planning, implementing, controling and monitoring marketing activities provided for known recipients. Leads are value-adding sales opportunities, means contacts that show a measurable buying interest and thus enter the quoting process of the sales. The lead managers concentrate on qualifying the leads to best probable sales opportunities and support optimal use of the sales resources. In addition to qualified leads and sales opportunities, existing customers also flow into the quoting process as the central task of sales. This process ensures that quotes are created and tracked. To support both quotes and service management, contract management aims to create and maintain long-term contracts for the delivery of products or services with customers.

To cover the collaboration aspects of a CRM solution as an interface to the customers, the processes interaction and communication channel management are additionally included as CRM processes.