How to Establish Customer Relationship Management system

Customer Relationship Management defined:

Customer relationship management is a discipline as well as a set of discrete software and technologies, which focuses on automating and improving the business processes associated with managing customer relationships in the areas of sales, marketing, customer service and support.

Key performance indicators

A CRM key performance indicator is a standard measurement used to evaluate the process of delivering satisfaction to all the customer needs from the organization.

These include

Automation

The use of automatic equipment in a manufacturing or other process or facility

System

A set of principles or procedures according to which something is done; an organized scheme or method

Software

The programs and other operating information used by a computer

Customer relationship management systems are assessed based on customer ‘s expectations

Needs of Customer Relationship Management

The need of CRM arises because of the following reasons:

a. To enable the company to identify, contact, attract and acquire new customers.

b. To obtain a better understanding to the customers- their wants and needs.

c. To define the appropriate product and service offering and match it to the unique needs of the customer.

d. To manage and optimize company ‘s sales cycle.

e. To increase retention of existing customers through improved sales, service and support.

f. To identify cross selling and up selling opportunities.

The scope of Customer Relationship Management

CRM is about acquiring, developing and retaining satisfied loyal customer, achieving profitable growth, and creating economic value in a company ‘s brand. CRM is not a new concept but an age-old practice, which is on the rise because of the benefit it offers, especially in the present market scenario.

Customer relationship management strategies are developed based on organizational strategies Relationship Marketing was first defined as a form of marketing developed from direct response marketing campaigns which emphasizes Customer retention and Satisfaction rather than a dominant focus on Sales transactions. According to Liam Alvey, Relationship marketing can be applied when there are competitive products alternatives for customers to choose from and when there is an ongoing and periodic desire for the product or service.

CRM is a tool for servicing the customer.

Firms of late are making use of technology to serve the customers by using and application of latest development in information technology.

Galbreath defines ―CRM has activities of an enterprise performed to identify, to select, acquire, develop and retain loyal and profitable customers. CRM aims at developing new customer base by designing marketing and its product to suit their need.

CRM is an approach that integrates people, processes and technology to maximize the relations of an organization with its customers. Firms make use of the development in communication and technology to collect information regarding product and its marketing to meet expectations of people. Firms keep on developing customer ‘s data base to update their need and designing marketing strategy to satisfy such needs.

Customer relationship management software is developed as per customer relationship management strategy.

The concept CRM is the methodology which enables the organization to understand the customers needs and behavior better. It introduces reliable processes and procedures for interacting with customers and develops stronger relationships with them.

The process helps organization in assimilating information about customers, sales, marketing effectiveness, responsiveness and market trends. Then this information is used to give insight into behavior of customers and value of retaining those customers.

The whole process is designed to reduce cost and increase profitability by holding on to the customer loyalty.

A simple installation and integration of the software package does not ensure success. It has to be absorbed into the system. Employees have to be convinced about its positive attributes and then they have to be trained.

The existing business processes have to be modified.

The company has to decide what kind of information is to be collected about the customers, what is to be done with the information and priorities this accumulated information.

The company must drill into this database of its customers and ascertain their buying patterns, product preferences, the potential for add-on sales etc.

A good strategy will be to integrate every area of touch point with customers like marketing, sales, customer service, and field support. This is achieved with the integration of the people, process, and technology in the business.

Customer relationship management software is implemented as per customer relationship strategy

The role played by Customer Relationship Management in an enterprise

(i) Helping an enterprise to enable its marketing departments to identify and target their best customers, manage marketing campaigns and generate quality leads for the sales team.

(ii) Assisting the organization to improve tele sales, account and sales management by optimizing information shared by multiple employees and streamlining existing processes (for example- taking orders using mobile devices).

(iii) Allowing the formation of individualized relationships with customers, with the aim of improving customer satisfaction and maximizing profits; identifying the most profitable customers and providing them the highest level of service.

(iv) Providing employees with the information and processes necessary to know their customers understand and identify customer needs and effectively build relationships between the company, its customer base and distribution partners.

Types of Customer Relationship Management:

There are several types of CRM. Among the most common are Sales force, Automation, Customer Service, Marketing Automation and Analytics Automation.

1. Sales Force Automation (SFA): In sales force automations, software is used by the company to improve the efficiency of the sales process. This results in sales representatives having to spend less time on different parts of the sales process, which allow them to spend more of their available time pursuing clients.

It allows the company to track or record each stage of the sales process and pay attention to each client served by the company. Additionally, SFA software applications may also provide information on territories, opportunities, workflow automation, sales forecasts and knowledge of products.

2. Customer Service:

In customer services technology may be used by companies to improve the quality of service they can offer customers, while at the same time increasing the efficiency and minimizing the cost of that service. Comprehensive call center solutions are commonly applied here, such as computer telephone integration (CTI) and intelligent call routing (ICR).

3. Marketing Automation: In marketing system the automation assists the company in locating and reaching its best customers, as well as in finding leads the sales team can pursue. A valuable feature in marketing is the ability to not only track but also measure diverse campaigns, including domains such as social media, direct mail, email and searching. Data monitored by marketing include deals, responses, revenue and leads.

4. Analytics Automation: System involving analytics are typically integrated with applications related to service, sales and marketing. The purpose of sales analysis is to allow companies to develop a more comprehensive understanding of why clients do what they do and hold the preferences they do.

Web analytics for example, have increased in complexity from their initial functions as means to track mouse clicks to their current implementations as methods of predicting likely purchases and identifying difficulties of customers facing in making purchases.

5. Small Business:

Small business solutions that assist both individuals and organizations in monitoring and documenting interactions such as jobs, emails, faxes, documents and scheduling. Tools for small businesses generally focus on account management. Small businesses are increasing turning toward online solutions, particularly for workers who travel and telecommunicate, to solve their business needs.

6. Integrated and Collaborative Practices: Integrated and Collaborative practices refers to interaction and collaboration between department inside companies and enterprises, the goal here is to increase levels of cooperation among different departments such as marketing, sales and service. Collaborative systems involve the use of technology to bridge distances between departments.

7. Non-Profit Organizations: Non-Profit Organizations are used to track constituents, as well as the actions they take related to the org itself. Such systems typically include capabilities for tracking features such as fund-raising membership levels, volunteering demographics and communications with target individuals.

Objectives of Customer Relationship Management:

CRM, the technology, along with human resources of the company, enables the company to analyze the behavior of customers and their value.

The main areas of focus are as the name suggests customer, relationship and the management of relationship and the main objectives to implement CRM in the business strategy are:

(i) To simplify marketing and sales process.

(ii) To make call center‘s more efficient.

(iii) To provide better customer service.

(iv) To discover new customers and increase customer revenue.

(v) To cross sell products more effectively.

Reasons for Adopting Customer Relationship Management Processes:

(i) Develop better communication channels.

(ii) Collect customer related data.

(iii) Create detailed profiles of individual customers.

(iv) Increase in customer satisfaction.

(v) Access to customer account history, order information and customer information at all touch points.

(vi) Identity of new selling opportunities.

(vii) Increased market share and profit margin.

(viii) Increased revenues.

(ix) More effective reach and marketing.

(x) Improved customer service and support.

(xi) Improved response time to customer requests for information.

(xii) Enhanced customer loyalty.

(xiii) Improved ability to meet customer requirements.

(xiv) Improved quality communication and networking.

(xv) Reduced costs of buying and using product and services.

(xvi) Better stand against global competition.

Features of Customer Relationship Management:

A well- designed CRM has the following characteristics:

(1) Customer Based: Customer Relationship Management is a customer-oriented feature with service response based on customer input, one-to-one solutions to customer‘s requirements, direct online communications with customer and customer service centers that help to solve customers‘ questions.

(2) Automation of Sales: Every sale transaction can be recorded, by tracking sales records that is name of a customer, purchase details etc. Firms have to install automation system to record such transactions. This function can implement sales promotion analysis tracking of a client‘s account history for repeated sales or future sales and also coordinate sales. Helpline and call centers may be installed to keep record of customers.

(3) Use of Technology: Firms make use of technology to keep detail information of customer needs. Use of ICT, Computer to store information, e-mail Systems, Mobile phone data and even paper note cards etc. storing all the data from all departments (ex- Sales, Customer service, marketing and HR) in a central location gives, management and employees immediate access to the most recent data when they need it.

It applies data warehouse technology in order to aggregate transaction information, to merge the information with CRM solutions and to provide key performance indicators (KPI). Such information is used to revise product and its marketing to match to need of customer and ensure effective CRM.

(4) Opportunity Management: This feature helps the company to manage unpredictable growth and demand and implement a good forecasting model to integrate sales history with sales projections.

Functions of Customer Relationship Management:

CRM performs various functions for the marketing department of the organization.

These functions are as follows:

Managing Leads – It refers to generating and retaining potential customers.
Qualifying and Converting Leads – It refers to the assessment of generated leads to know potential and profitable customers.
Managing Opportunities – It refers to utilize every possible opportunity to get long-term benefit from customers.
Keeping a Track on Activities – It refers to capture information, such as customers‘ buying pattern, quantity purchased, and time spent by customers in the store.
Managing Reporting and Forecasting – It refers to process input data, such as average time spent by the customers in the store and their preferences for the product.
Identify Customers – It refers to differentiate between profitable and non-profitable customers.
Differentiate the Needs of Customers – It refers to finding variation in the requirements of customers. The organization makes different groups of customers as per the needs of customers.
Customize Products and Services – It refers to the products and services produced as per the requirements of individual customers.
Build Stronger Relationship – It refers to establish a relationship between an organization and customers by facilitating a personalized way of communication.

Importance of Customer Relationship Management:

Looking at some broader perspectives given as below we can easily determine why a CRM System is always important for an organization:

1. A CRM system consists of a historical view and analysis of all the acquired or to be acquired customers. This helps in reduced searching and correlating customers and to foresee customer needs effectively and increase business.

2. CRM contains each and every bit of details of a customer, hence it is very easy to track a customer accordingly and can be used to determine which customer can be profitable and which not.

3. In CRM system, customers are grouped according to different aspects according to the type of business they do or according to physical location and are allocated to different customer managers often called as account managers. This helps in focusing and concentrating on each and every customer separately.

4. A CRM system is not only used to deal with the existing customers but is also useful in acquiring new customers.

The process first starts with identifying a customer and maintaining all the corresponding details into the CRM system which is also called an ‗Opportunity of Business‘.

The Sales and Field representatives then try getting business out of these customers by sophistically following up with them and converting them into a winning deal. All this is very easily and efficiently done by an integrated CRM system.

5. The strongest aspect of Customer Relationship Management is that it is very cost effective. The advantage of decently implemented CRM system is that there is very less need of paper and manual work which requires lesser staff to manage and lesser resources to deal with. The technologies used in implementing a CRM system are also very cheap and smooth as compared to the traditional way of business.

6. All the details in CRM system is kept centralized which is available anytime on fingertips. This reduces the process time and increases productivity.

7. Efficiently dealing with all the customers and providing them what they actually need increases the customer satisfaction. This increases the chance of getting more business which ultimately enhances turnover and profit.

8. If the customer is satisfied they will always be loyal to you and will remain in business forever resulting in increasing customer base and ultimately enhancing net growth of business

Relationship Marketing Strategies:

1. Make Every Customer Interact: The first strategy to build a strong customer relationship and make every customer interact. Each and every interaction with a customer is a gift and should be valued. Getting into the mind of customers and knowing their needs will help know what the customer want and try to give that.

2. Follow through on Commitments and Claims about Products or Services: The business must make a specific promise to the customer and deliver on that promise if it intends to win the heart of the customer. False claims however should be avoided at all cost as it can harm the credibility. Promise made must be fulfilled.

3. Offer Benefits and Product Value that Responds to the Customer‘s Desires:

Another positive step to build a strong customer relationship is to offer value to the customer. Customers should know that firms provide the best quality.

4. Treat Customers as Individuals who are Respected and Valued: A retailer knows how difficult it is to find a customer and further retain such customer. Each customer is an individual his needs and preferences differ. His tastes and likings differ. Retailer has to understand such individual differences and try to meet each individual customers need.

5. Listen to Customers: If complaints are handled properly and quickly then they become a gift to the retailer. Retailer should be available and accessible when customers have questions, concerns or comments. If the shopkeeper can listen to the customers, that itself will help to develop a bond and relationship between them.

6. Build a Strong Brand Identity: The customers should identify the products in the midst of the crowd and that is possible by creating a winning slogan, tagged with a catchy logo and a unique theme. Most important, if a specific promise is made they have to deliver on that promise.

7. Surround your Customers with Valuable Information:

Keep the customers informed on the latest trend, price or development by using emails, website content, social media and other methods of outreach. The firm must also make it easy for customers to reach them. Customer should be regularly updated with product its marketing and any change in that.

8. Business must have a Website: The firms should consider making their website user – friendly and easy to navigate for new and existing customers. The World Wide Web (www) is making it easier for businesses to build a strong customer relationship with their customers.

9. Reward Loyal Customers: Most of the business goes after new customers while forgetting that the existing customers need to be taken care of. Introducing a loyalty program is an effective relationship marketing strategy. Nothing strengthens a bond more than appreciation.

Thanking the customers for sticking to the brand will go a long way to make them know that they are very important. A simple thank you package might be all the business needs to connect personally with the existing customers.

Benefits of Customer Relationship Management:

A complete view of all customer information, knowledge of what customers and the general market want and integration with existing product and services to verify how much does it match with customer‘s needs. To consolidate all business information and gather feedback from customers, understand their needs and improve product or services and enable a firm to design and deliver the products as dreamed by the existing and prospective customers.

CRM system will gather data from a huge variety of source social media, online chat, customer‘s calls etc. This allows the company to get a complete picture of what the customer wants and how they feel about the products services. This gives the firm the opportunity to improve the offerings based on what the customers are saying.

Provide Better Customer Service:

CRM system gives advantages such as the ability to personalize relationship with customers. CRM maintains Customer Profiles, there by treating each client as an individual and not as a group. This way every employee can be better informed about each customer‘s specific needs and transaction profiles.

Better Customer Service improves the responsiveness and understanding which helps in building Customer loyalty. It also helps the company in getting continuous feedback from the Customers on the Product they have brought.

For Example: LG Company always make a follow- up with its Customers on the items the, Customers have bought, so as to rectify the problem (if any) even before it gets logged as a complaint.

Increase Customers Revenues:

Regular updating of customer information will help a firm to keep on revising its product and marketing strategy. Adaptation of product and its marketing to match the changing needs of a customer make the organisation customer friendly resulting in increase the sales and revenue.

Discover New Customers: CRM systems help the organization in identifying potential Customers by keeping a track of the profiles of their existing client, the business can easily come up with a strategy to determine the kind of people they should target so that it returns them maximum revenue.

―Cross Sell‖ and ―Up Sell‖: CRM system facilitates Cross-selling (offering customers complimentary products based on their previous purchases) and Up-Selling (offering customers premium products in the same category) It helps them to gain a better understanding of customers and anticipate their purchases.

For Example- (Cross sell – A Bluetooth head set along with the smart phone and up sell – Surf Detergent has introduced Surf Excel a better quality product.

Help Sales Staff Close Deals Faster:

CRM helps the business in closing deals faster through quicker and more efficient responses to customer needs and customer information. The organizations have to implement CRM Systems effectively.

Customer Loyalty: Firms can gain loyalty of the customer by regularly understanding their needs and meeting their needs. Customer develops regular association with the firm due to the products and marketing style of a firm that is of customers liking.

Sales Revenue increase: Increased sales result from spending more time with customers, which results from spending less time chasing needed information, (i.e., productivity improvement).

Growth in Win Rates: Win rates improve since companies can withdraw from unlikely or bad deals earlier on in the sales process.

Increased Margins:

Improved customer satisfaction rating: This increase occurs since customers find the company to be more responsive and better in touch with their specific needs.

Increased margins resulting from knowing customer better, providing a value-sell and discount prices.

Decreased General Sales and Marketing Administrative Costs: This decrease occurs since the company has specified its target segment customers, it knows their need better, and thus it is not wasting money and time, for example, on mailing information to all customers in all existing and potential target segments.

Disadvantages of Customer Relationship Management:

Implementation of CRM system has following limitations for an organization:

(1) Investment: A firms has to invest capital in developing the CRM system and technology to gather information about the customer regularly. Small firms with the limited capital may find difficult to install the CRM system in their organization.

(2) Technology: Collection of information regarding the customer ‘s needs and its regular updating requires use of modern information technology. A firm must not only have adequate capital but needs necessary knowledge to install and implement the technology.

(3) Liaison between Production Marketing and CRM Team:

CRM is undertaken to understand to needs of customer and accordingly device product and its marketing. It needs cooperation between manufacturer, retailer and their infraction with the final customer to know customers‘needs and accordingly market the product.

Lack of coordination between them will make the task of CRM unsuccessful. That is information collected must be communicated to manufacturer. Manufacturer must redesign product based on such communication. If the communication is not proper or manufacture does not respond to communication CRM will be ineffective.

(4) Regular Exercise:

CRM is a regular activity it is not a one-time affair. Firms have to regularly monitor to under and customer ‘s needs. The CRM system has to work 24×7 to regularly get feedback from the customers. In such case use of technology like, Website, Toll free communication, email may be effective.

(5) Wrong CRM Tool: A mistaken tool choice may make CRM more complicated. So the companies need to consider in advance what kind of tools would be appropriate in order to follow its relationship with its customers.

Customer relationship management system is reviewed and monitored in accordance with CRM strategies CRM measurement frameworks. How a company measures its CRM activities depends on who is doing the measuring and what activities are being measured.

Below are the common Customer Relationship Management measurement frameworks:

1. Brand-building

2. Customer equity building

Customer behavioral modeling
Customer value management

3. Customer-facing operations

Marketing operations
Sales force operations.

c. Service center operations.

Field service operations
Supply chain and logistic operations.
Web site operations

4. Leading indicator measurement

Balanced scorecards
Customer knowledge management

Self-Assessment

1. In what ways does a company benefit form effective customer relationship management

2. A newly established restaurant has sought your advice on ways of building better customer relationships. Prepare a report and submit it to them with recommendations.

3. What are the challenges of phone surveys

Sample answers for self-assessment

1. Ways in which a company benefits form effective customer relationship management

Enhanced ability to target profitable customers.
Integrated assistance across channels.
Enhanced sales force efficiency and effectiveness.
Improved pricing.
Customized products and services.
Improved customer service efficiency and effectiveness.
Individualized marketing messages also called campaigns.
Connect customers and all channels on a single platform.

2 A newly established restaurant has sought your advice on ways of building better customer relationships. Prepare a report and submit it to them with recommendations.