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What is customer relationship management?

Today's business environment is competitive - that's why it's more critical than ever for you to find new customers and to keep the ones you have. Typically, it's less costly to retain your existing customers than it is to find new ones. As a result, you may want to consider implementing a customer relationship management strategy in order to systematically and efficiently approach satisfying your customers to maintain their business.

What is customer relationship management?

Customer relationship management is a strategy for understanding your customers and their needs in order to optimize your interactions with them. This philosophy leverages technology to create stronger relationships with former, current and prospective customers while maximizing your marketing and customer service capabilities.

CRM will enable you to actively manage your customer relations in an organized and strategic manner. In practice, that means developing your company's methodologies, internal operations, software and Internet capabilities to be able to better address your customers' needs and, as a result, make your relationships with your customers more profitable.

Using a CRM system, you can keep track of key customer information such as contacts, communications, accounts, buying histories and preferences - allowing you to match your customers' needs with your products and services. By analyzing the data, you can:

• Identify your best customers
• Enrich and customize the way you communicate with your customers
• Manage marketing campaigns
• Reduce customer response times
• Serve wider geographical regions

Customer relationship management systems

A wide variety of customer relationship management systems exist, from very simple to complex and range from online solutions to off-the-shelf software to custom-tailored programming. The use of spreadsheets or contact management software to keep track of your interactions with customers would be considered a simple CRM system. To adopt a more effective system, however, you would require a comprehensive, company-wide effort to attract and retain customers through an integration of information, people, policies, processes and technological strategies.

Even if you operate a very small business, you'll discover that CRM technologies have become accessible and cost-effective as technology solutions have increased and prices have dropped. You can now access a wide range of online options - web-based applications that require no software purchase or install; your company simply pays a subscription fee.

Like many small businesses, you may opt to deploy your CRM technologies in steps, perhaps starting with sales force automation or call centre software. As your business grows and you and your employees become more familiar with the software and its capabilities, you will begin to realize how other features can further help your business succeed.

Advanced customer relationship management

As your company grows, it may outgrow a simple contact management system, leading you to consider implementing a full-featured customer relationship management system. An integrated CRM system can provide your business with the following:

• Central Database: All of your employees can access a central database to view and update customer data, ultimately improving customer service, loyalty and retention
• Customer Analysis: Your customers and prospects can be segmented, enabling you to customize marketing or sales campaigns, improve campaign targeting and close ratios
• Customer Service: Provide your customers with the ability to self-order and self-help using password-accessed, web-based system, reducing your order entry costs and customer service costs
• Prospect Tracking: Track your sales leads from start to close while analyzing closing probabilities and ratios; proposals, products and pricing for each of your prospects can be tracked
• Reporting: Forecast your revenues using automated reporting and trend analysis, resulting in better decision making

Planning for customer relationship management deployment

Before selecting a customer relationship management system, you need to understand your customer management methodologies and your customers' preferences and behaviours. In order to be effective, your CRM system needs to ensure that:

• Data is captured accurately
• Data is analyzed properly
• The right people are seeing the results
• The information is used correctly

If your system doesn't achieve all of the above, you risk investing a considerable amount of time and money implementing a strategy of little or no benefit.

At its core, customer relationship management is a business strategy, not a technology. Your best chance for successful deployment of CRM will be achieved if you first develop your strategy and then identify the processes by which your strategy will best function. Finally, you will need to set measurable objectives for your system. Only then should you begin to implement technology, ideally in staggered phases in order to smoothly integrate your business processes.