Customer Relationship Management

Customer Relationship Management (CRM)

What Is It?
Customer Relationship Management (CRM) is a relatively new marketing term that has gotten a lot of attention in the past several years.

The Dictionary in the American Marketing Association website defines Customer Relationship Management as, “A discipline in marketing combining database and computer technology with customer service and marketing communications. Customer relationship management (or CRM) seeks to create more meaningful one-on-one communications with the customer by applying customer data (demographic, industry, buying history, etc.) to every communications vehicle. At the simplest level, this would include personalizing e-mail or other communications with customer names. At a more complex level, CRM enables a company to produce a consistent, personalized marketing communication whether the customer sees an ad, visits a Web site, or calls customer service.”

How Does It Work?
CRM has its roots in the concept of relationship marketing – which was based on the idea that marketing should not be defined only by the initial acquisition of a customer, but that every customer touch point represents a relationship-building opportunity. This idea served to broaden marketing to include every customer touch point and to define not only acquisition, cross-sell, and up-sell, but also create a powerful, loyalty-building customer experience that bonds the customer tightly to your organization. Unfortunately, when organizations tried to implement this concept, they discovered that they did not collect data at any of the customer touch points that were not sales-based, and often did not collect and analyze data when customers severed the relationship. As a result, the CRM movement evolved to include a strong focus on data collection and data warehousing.

CRM has, in fact, become so associated with data collection that the original intent of customer interaction and relationship-building has taken a back burner … and CRM has become all about software. Many companies have spent hundreds of thousands of dollars on CRM and have realized little gain in customer loyalty, share of wallet, or return on investment.

The concept of using the information that a customer supplies at every interaction to deliver more value to that customer by delivering relevant offers, avoiding generic communications, and recognizing their status as a customer is still a very viable concept. Whether it’s called one to one marketing, relationship marketing, CRM, or another new term like customer experience management … the idea that a current customer should not receive an acquisition mailing for a product they have already purchased, that you should focus marketing efforts on rewarding and recognizing current customers by cross-selling relevant products, offering coupons and discounts, and thanking them for their business is logical and makes sense if you realize that such efforts can definitely increase profit margins. However, the need for expensive CRM software – and the dream of a fully automated process that identifies opportunities and delivers highly tailored communications to the right customer right at the time they are most reception – is still a dream in progress. A handful of companies have gotten it right, but many more are still struggling to create the vision.

Why Do I Need It?
The obvious answer for the small to mid-sized business is that you don’t need it. You certainly wouldn’t need to invest hundreds of thousands of dollars in CRM software. But the answer to the need for CRM isn’t quite as obvious as it appears.

Firstly, if you go back to the original concepts behind CRM – the idea that you should be customer-focused in your business approach and consider the customer experience at every touch point … and the idea that you should put in place processes to recognize customers with whom you have a relationship and treat them accordingly – well, I would argue that any business, no matter how small, should be thinking in these terms.

Secondly, CRM doesn’t have to mean highly sophisticated, automated customer touches across multi-media. In a small to mid-sized company CRM might mean implementing some simply ideas that use a much more low-tech approach. And, overall it means setting business objectives, measuring success, hiring and evaluating employees, and building marketing strategies with the customer experience fully integrated and foremost in mind. For example, every employee that interacts with a customer, no matter how mechanical that interaction, is an opportunity to reinforce the customer relationship, make relevant up-sell and cross-sell offers, and ask for feedback.

Finally, any sized business can build your processes to seize those opportunities, and track and measure the impact on your business … you just have to be motivated to do so. And, you have to think in terms of an ongoing customer relationship and customer value over time – not just one isolated sale.

Can I Do It Myself?
Yes, and No.

Yes -- You can certainly implement the principles of CRM by yourself. And, to a certain extent, you can execute marketing campaigns and customer-focused communications on your own that reflect the CRM philosophy.

No -- If you really want to implement full-scale CRM as a driving factor in your business, you will need to consult a professional.

Tips for Do-It-Yourself CRM:

Identify every customer touch point. Every customer interaction, from initial acquisition through the first billing, product fulfillment, collections, renewals, customer service communications, calls into your call center – and most especially every personal interaction in a retail store – is a customer experience opportunity. Sit down and think through every step in your business process and where those steps touch a customer – then write down every one of those customer touch points.

Add customer contact data requests to every form and communication that goes out at each stage. You want to collect email address, mailing address, and phone numbers every chance you get – these are the enablers of a CRM strategy. Make them an unobtrusive addition to your emails (at the bottom), any online purchase forms, collect the information at the cash register (even if you have to just write it in a notebook manually). One note of caution – only ask for what you don’t have. If you can’t customize each communication to reflect this, then be clever how you phrase it – make it a request to UPDATE their personal information so you can serve them better. You don’t want to annoy customers by asking for information they already gave you, but it’s easy to manage this issue by being clever about how you ask for it. Also, it’s a good idea to offer some type of reward in exchange for providing this data – a coupon or discount, free shipping – something of value to the customer.

Where Can I Go for Help?
If you read the 'Can I do it myself?' section and found yourself saying, “Huh?” … you probably need to consider hiring a professional to help you implement CRM in your organization. However, be very careful when you interview potential CRM experts. Many “CRM Experts” are really software salespeople selling CRM software – and you don’t need software to implement some very effective strategies. You might try working with a traditional advertising agency that specializes in direct response and “one-to-one” marketing … these kinds of professionals typically are focused on a more relationship-building orientation.

You can learn more about CRM by visiting this site: www.crmguru.com. This website, as well as many others, provides information about CRM in the industry, the latest happenings, and advice on how to implement a CRM strategy.