(an excerpt from Wikipedia and other sources)
Customer Relationship Management (CRM)
Customer Relationship Management (CRM) is an information industry term for methodologies,
software, and usually Internet capabilities that help an enterprise manage customer
relationships in an organized and efficient manner. In many cases, an enterprise builds a
database about its customers. This database describes relationships in sufficient detail so
that management, salespeople, and customer service reps can access information; match customer
needs with product plans and offerings; remind customers of service requirements; know what
other products a customer had purchased; etc.
CRM consists of the processes a company uses to track and organize its contacts with its current
and prospective customers. CRM software is used to
support these processes; information about customers and customer interactions can be entered,
stored and accessed by employees in different company departments. Typical CRM goals are to
improve services provided to customers, and to use customer contact information for targeted
marketing.
While the term CRM generally refers to a software-based approach to handling customer
relationships, most CRM software vendors stress that a successful CRM effort requires a
holistic approach. CRM initiatives often fail because implementation was limited to
software installation, without providing the context, support and understanding for employees
to learn, and take full advantage of the information systems.
Other problems occur when failing to think of sales as the output of a process that itself
needs to be studied and taken into account when planning automation.
From the outside, customers interacting with a company perceive the business as a single entity, despite often interacting with a number of employees in different roles and departments. CRM is a combination of policies, processes, and strategies implemented by an organization to unify its customer interactions and provide a means to track customer information. It involves the use of technology in attracting new and profitable customers, while forming tighter bonds with existing ones.
CRM includes many aspects which relate directly to one another:
 Front office operations - Direct interaction with customers, e.g. face to face meetings, phone calls, e-mail, online services etc.
Back office operations - Operations that ultimately affect the activities of the front office (e.g., billing, maintenance, planning, marketing, advertising, finance, manufacturing, etc.)
Business relationships - Interaction with other companies and partners, such as suppliers/vendors and retail outlets/distributors, industry networks (lobbying groups, trade associations). This external network supports front and back office activities.
Analysis - Key CRM data can be analyzed in order to plan target-marketing campaigns, conceive business strategies, and judge the success of CRM activities (e.g., market share, number and types of customers, revenue, profitability).
There are several different approaches to CRM, with different software packages focusing on
different aspects. In general, Customer Service, Campaign Management and Sales Force Automation
form the core of the system (with SFA being the most popular.
There are three parts of application architecture of CRM.
1. Operational CRM
Operational CRM means supporting the so-called "front office" business processes, which
include customer contact (sales, marketing and service). Tasks resulting from these processes
are forwarded to employees responsible for them, as well as the information necessary for
carrying out the tasks and interfaces to back-end applications are being provided and
activities with customers are being documented for further reference.
2. Analytical CRM
In analytical CRM, data gathered within operational CRM are analyzed to segment customers or
to identify cross- and up-selling potential. Data collection and analysis is viewed as a
continuing and iterative process. Ideally, business decisions are refined over time, based on
feedback from earlier analysis and decisions. Business Intelligence offers some more
functionality as separate application software.
3. Collaborative CRM
Collaborative CRM facilitates interactions with customers through all channels (personal,
letter, fax, phone, web, e-mail) and supports co-ordination of employee teams and channels. It
is a solution that brings people, processes and data together so companies can better serve
and retain their customers. The data/activities can be structured, unstructured,
conversational, and/or transactional in nature.
Collaborative CRM provides the following benefits:
Enables efficient productive customer interactions across all communications channels.
Enables web collaboration to reduce customer service costs.
Integrates call centers enabling multi-channel personal customer interaction.
Integrates view of the customer while interaction at the transaction level.
CRM has to two typical implementation methods: on-premise and on-demand/hosted. Each method has
its advantages and disadvantages as described below.
On-premise CRM is appropriate for:
Companies seeking to implement highly customized customer-management practices
Companies that need specialized data structures
Companies with complex or real-time integration requirements
Companies with available in-house IT resources and support systems
Companies who can afford the up-front capital investment and fixed costs
Companies who deal with sensitive data that don't want other parties to see
On-demand/hosted CRM is appropriate for:
Customers seeking to implement standard processes from a variety of industries and companies
Companies that are able to use standard data structures
Companies with more basic integration requirements
Companies with limited technical resources and support personnel
Companies seeking variable pricing and lower up-front costs
Companies dealing with non-proprietary data
Several CRM software packages are available, and they vary in their approach to CRM. However,
as mentioned above, CRM is not just a technology but rather a comprehensive, customer-centric
approach to an organization's philosophy of dealing with its customers. This includes policies
and processes, front-of-house customer service, employee training, marketing, systems and
information management. Hence, it is important that any CRM implementation considerations
stretch beyond technology toward the broader organizational requirements.
The objectives of a CRM strategy must consider a company’s specific situation and its customers'
needs and expectations. Information gained through CRM initiatives can support the development
of marketing strategy by developing the organization's knowledge in areas such as identifying
customer segments, improving customer retention, improving product offerings (by better
understanding customer needs), and by identifying the organization's most profitable
customers.
CRM strategies can vary in size, complexity, and scope. Some companies consider a CRM strategy
only to focus on the management of a team of salespeople. However, other CRM strategies can
cover customer interaction across the entire organization. Many commercial CRM software
packages provide features that serve the sales, marketing, event management, project
management, and finance industries.
From this perspective, CRM has for some time been seen to play an important role in many sales
process engineering efforts.
Implementation Issues
Many CRM project "failures" are also related to data quality and availability. Data cleaning
is a major issue. If a company's CRM strategy is to track life-cycle revenues, costs, margins,
and interactions between individual customers, this must be reflected in all business processes.
Data must be extracted from multiple sources (e.g., departmental/divisional databases such as
sales, manufacturing, supply chain, logistics, finance, service etc.), which requires an
integrated, comprehensive system in place with well-defined structures and high data quality.
Data from other systems can be transferred to CRM systems using appropriate interfaces.
Because of the company-wide size and scope of many CRM implementations, significant pre-planning
is essential for smooth roll-out. This pre-planning involves a technical evaluation of the data
available and the technology employed in existing systems. This evaluation is critical to
determine the level of effort needed to integrate this data.
Equally critical is the human aspect of the implementation. A successful implementation
requires an understanding of the expectations and needs of the stakeholders involved. An
executive sponsor should also be obtained to provide high-level management representation of
the CRM project.
An effective tool for identifying technical and human factors before beginning a CRM project is
a pre-implementation checklist. A checklist can help ensure any potential problems are
identified early in the process.
Privacy And Data Security
One of the primary functions of CRM software is to collect information about customers. When
gathering data as part of a CRM solution, a company must consider the desire for customer
privacy and data security, as well as the legislative and cultural norms. Some customers
prefer assurances that their data will not be shared with third parties without their prior
consent and that safeguards are in place to prevent illegal access by third parties.
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