Customer relationship management (CRM)

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Customer relationship management - ToolsHero

This article explains customer relationship management (CRM) methodology in a practical way. After reading you will understand the basics of this powerful marketing tool.

Introduction

It is important for companies to build up a good relationship with their customers. Customer relationship management helps companies to gain an insight into their customers and their buying behaviour.

It engages in the application and use of technology to promote the relationship with new and current customers. All information that is related to (potential) customers is recorded within customer relationship management. In addition, this methodology offers (technical) support for other customer-oriented departments such as marketing and customer service.

Customer relationship management advantages

By using this methodology, a company can increase sales and therefore profitability and reduce operational costs. The advantages of customer relationship management:

  • a good customer relationship management enables companies to achieve their objectives
  • streamlined sales and marketing processes
  • higher turnover and profitability
  • added cross-selling and up-selling opportunities
  • improved customer service and call centre efficiency
  • reduced costs
  • increases market share

Customer relationship management software

It is important that CRM runs on a software system in which departments have good contacts with each other and these can deliver an added value to the customer relationship management. Contact management is of the utmost importance; monitoring and registration of interaction and communication with all customers.

Furthermore, all stages of the sales process must be streamlined and it must be possible to automatically enter (customer) data into the system. As a result, potential customers will be monitored from their first contact until the final order and their buying behaviour will be updated.

Marketing

A good CRM system is indispensable for the marketing department; who are the best customers, what do they buy and what do the potential customers look like? The so-called multi-channel campaigns such as e-mail, social media and direct mail help measure how many leads and deals are generated.

Depending on these data, sales prognoses and turnovers can be calculated. Through this predictive analysis customers and target groups can be segmented better as a result of which marketing campaigns can be tailored to the customers demands.

Customer service

Although customer service mainly focuses on helping customers, it is also a source to document customer experience. In a customer relationship management system useful information can be recoded. The information from the system can also be used to answer possible questions.

From that same customer relationship management, customer service can be extended with a call centre so that potential customers can be approached through a so-called ‘cold’ call.

Cooperation

A good system encourages cooperation between various departments such as sales, customer service and marketing. The common objective is to share as much information as possible so that the customer can be serviced even better. A marketeer can therefore respond to a product demand of a customer.

A well-integrated system will prevent different departments from contacting the customer with the same information. A central application will make customer contact easier and saves time. In addition, information must be extracted and collected from several sources and they must be integrated in a comprehensive system.

By using suitable interfaces, data from other systems can be transferred to the customer relationship management system.

Social media

Customers use social media more and more often to voice their opinions or share the experiences about companies, products and services. Sometimes this has far-reaching and major consequences for companies. This is why companies want to take part in the dialogue via social media to influence their customers.

On-line communities are now seen as a customer relationship management source of high-quality leads, crowd sourcing, solutions and customer support.

Customer relationship management strategy

Apart from being a technology, customer relationship management is also an extensive customer-oriented approach with which a strategy can be adopted for customer contact. What are the customers’ needs and expectations? This makes it possible to identify various customer groups, improve customer retention and adjust product supply.

Privacy

The primary function of a system is to collect information and data from customers for the purpose of maintaining customer sales and customer analysis. Customer privacy must always be taken into consideration. When customers do not give their permission to divulge information, data security is required.

This will prevent third parties from obtaining information from the customer relationship management system by illegal actions.

More information

  1. Payne, A., & Frow, P. (2005). A strategic framework for customer relationship management. Journal of marketing, 69(4), 167-176.
  2. Buttle, F. (2004). Customer relationship management (Vol. 13). Routledge.
  3. Verhoef, P. C. (2003). Understanding the effect of customer relationship management efforts on customer retention and customer share development. Journal of marketing, 67(4), 30-45.

How to cite this article:
Van Vliet, V. (2010). Customer Relationship Management (CRM). Retrieved [insert date] from ToolsHero: http://www.toolshero.com/marketing/customer-relationship-management

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