Customer relationship management explained

Customer Relationship Management (CRM) is a strategic approach, which focuses on the development of suitable relationships with key customer segments to deliver superior shareholder value. In doing so, it ties the potential of relationship marketing strategies with information technology aiming to create profitable, long-term, and mutually beneficial relationships with customers, employees and shareholders.

Modern organizations have realized that, over time, customers have become more sophisticated and more demanding. Today, directing customers towards specific purchase decisions requires enormous amounts of money to be spent in advertising campaigns, and addressing in-depth market segmentation. In order to adjust to the new market realities, organizations need to focus on a more balanced attention to customer acquisition and retention, which is achievable through customization and personalization.

Focusing primarily on customer knowledge, CRM aims to develop long-term relationships with the right customers and employ a broader and deeper interest in them. Within this context, relationship marketing suggests that the interest in the customer does not end when the transaction is completed like in transactional marketing. Instead, the purchase is the beginning of a relationship in which mutual trust and commitment must grow. To achieve that, CRM employs the concept of customer value, which requires organizations to instill a customer-centric approach in their organizational culture and invest in their customers to appreciate profit maximization. Customers have goals they seek to meet and the organization should assist them in achieving those goals through lifetime customer relationships.

CRM, as a strategic approach, is concerned with creating improved shareholder value through the development of appropriate relationships with key customer segments. In doing so, it unites the potential of relationship marketing strategies and IT to create profitable, long-term relationships with customers, employees and shareholders. Requiring a cross-functional integration of processes, people, operations, and marketing capabilities through IT, CRM uses information to both identify with customers and co-create value with them.

CRM, as a process of information use, increases the effective understanding of how to manage the firm’s customer relationships. It is a strategy to help organizations improve the profitability of their interactions with current and potential customers, while at the same time making those interactions appear friendlier through individualization and personalization.

CRM is more than an IT project and it should be viewed as a total business strategy. It is a dynamic process, associated to organizational vision and strategy and it functions within a customer-oriented organizational culture. CRM entails the cross-functional integration of processes, operations, marketing capabilities, and employees through information technology as a part of corporate strategic planning. Firms spend a lot of money in making the right choice of CRM software to support CRM implementation effectively. In this process CRM involves the automation of horizontally integrated processes to achieve strong customer relationship management at a relatively low cost. With the aid of technology, CRM focuses on developing faster time to market of products and services, increasing sales, revenue, and income, improving customer service and customer satisfaction, improving operational efficiency, while reducing operational costs and improving employee productivity and satisfaction.

Conclusively, CRM requires effective leadership which would promote continuous learning and knowledge sharing as an integral part of organizational culture. Viewing human capital as an intangible asset of the organization, effective CRM implementation requires well trained employees, who would be willing to take the extra mile and address professionalism to their interaction with the customers. No organization exists without people to support its strategic goals and objectives, to organize, control and maximize production and to increase profitability to ensure a sustained competitive advantage. In this context, CRM should direct its efforts towards the proper development and empowerment of the human element as to make the organization more powerful, and efficient.