Customer Relationship Managmenet (CRM): What is CRM?

Although CRM software can deliver a wealth of benefits, many companies fail to appreciate that technology is just one component of a successful CRM initiative. Our research has shown that the most successful companies approach CRM as a complete business strategy, focused on improving the way a company markets to, sells to, and provides service to customers. When implemented effectively, a CRM strategy results in greater employee, partner, and customer satisfaction and an improvement in an organization’s financial performance.

Our research identifies the following components as central to any CRM initiative:

Effective customer segmentation
Integrated multichannel strategy
Well-defined business processes
The right skill sets and mindsets
The right technology

Effective Customer Segmentation

Customer segmentation—the process of dividing a market into discrete customer groups that share similar characteristics— is a critical component of a CRM strategy. Customer segmentation enables an organization to understand which customers are most profitable and how to most effectively market to, sell to, and provide service to these customers. With this knowledge, a company can determine which investments will drive the greatest returns.

Segmentation begins with the development of the customer profile, which includes a rich description of key characteristics about each specific customer, including both basic data (demographics, purchasing history, and so on) and information derived from analyzing the customer’s life cycle process. The customer profile encodes, for example, observations about which offers appeal most to the customer, which channel(s) the customer prefers, which product attributes the customer values most, how much the customer has spent in the past and is likely to spend in the future, and other issues of strategic relevance.

By analyzing the customer life cycle process, organizations can pinpoint significant differences as well as significant similarities among customers. The job of segmentation is to sort out which differences and similarities are most significant across all customers and then to divide the customer base into groups based on relevant distinctions. Effective segmentation is greatly aided by the power of CRM technology, which enables organizations to capture and analyze large bodies of timely data to discern significant correlations among numerous customer attributes. In addition, CRM technology provides a single view of the customer across all company touchpoints. Having this holistic view is vital to segmentation efforts.

In the past, because organizations had no easy way to capture, consolidate, and analyze customer data, their segmentation strategies were limited and often based on criteria of little strategic value (such as geography).With CRM technology, on the other hand, organizations are able to segment customers according to far more complex and less obvious factors, such as channel preference, profitability, buying patterns, and other meaningful customer attributes.

Integrated Multichannel Strategy

For a CRM strategy to be successful, a company must offer its customers multiple ways of interacting with the organization. Companies today can no longer compete effectively with only one channel. Not so long ago, most organizations had one primary distribution channel. For example, consumers could buy General Electric refrigerators any way they wanted—as long as it was through a GE retailer during store hours. Customers could order products from L.L. Bean any way they wanted—as long as it was over the phone to the call center. In this world of fixed, single-channel distribution, customer relationships were relatively straightforward.

CRM Comparisone | Open Source Software | Car Donation