CRM Definition (Customer Relationship Management)

Is yours doing what it needs to do?

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Customer Relationship Management (CRM) refers to the methodologies and tools that aim to encompass all of a business's interactions with current, past and future customers with the goal of "improving" customers' relationships with that business. In other words, the goal of CRM is to gather enough information about a customer and use it well enough to increase that customer's positive interactions with the company, thereby increasing that company's sales.

CRM systems are collaborative; the gathering of data through all phases of the customer relationship (marketing, sales, and service) provides a complete picture, allowing business owners/managers to make informed decisions.

For small businesses, customer relationship management includes:

  • Processes that help identify and target their best customers, generate quality sales leads and plan and implement marketing campaigns with clear goals and objectives
  • Processes that help form individualized relationships with customers (to improve customer satisfaction) and provide the highest level of customer service to the most profitable customers
  • Processes that provide employees with the information they need to know their customers' wants and needs and build relationships between the company and its customers

The Benefits of CRM

Customer relationship management gathers comprehensive data about customers, their needs and preferences, which can then be used to:

  • Improve customer service and the customer's buying journey
  • Drive product development
  • Personalize advertising
  • Find new customers
  • Increase sales

What Kinds of Data Are Recorded by a CRM System?

The key to an effective CRM system is comprehensive data collection about your customers. For example, sales groups cannot properly respond to the customers wants/needs without customer data from service groups, and vice-versa. CRM data includes the following:

Contact Details

  • Customer name
  • Customer contact information – email, physical address, phone/mobile, website address, social media contact information such as Facebook page, LinkedIn profile, etc. Includes preferred method of contact.
  • How the customer became aware of your company (web search, social media, newspaper ads, word of mouth, etc.)

Customer Personal Profile

  • Family information - can be used to send birthday/anniversary/Christmas wishes, etc.
  • Hobbies - useful for rewarding your best customers with (for example) a golf or ski pass or Christmas gift
  • Group memberships, associations - can be useful for generating sales leads with associates of the customer

This type of CRM information is normally obtained over time as you grow relationships with customers.

Sales History

  • Products/services purchased, including date/time and transaction amounts
  • Method of payment (Paypal, cash, check, debit or credit card)
  • If purchases are made on credit, details of credit terms and history of credit payments
  • Response to ad campaigns, promotions, etc.

This CRM information is very useful for analytical purposes. For example, salespeople can examine the frequency of purchases by a customer and send out reminders. Purchase behavior can also be used to tailor product offerings to suit customer preferences. Customer responses to ad campaigns and promotions can be used to fine tune your marketing strategy. Credit payment history can be useful when issues of late payment arise.

Customer Communication

  • How does the customer normally get in touch? Do they prefer email, text, or phone communication? Do they promptly return phone calls, text messages, or emails?
  • All communications with the customer should be noted - digital contact (texts or email) should be filed, and a record should be kept of phone calls to sales, service or customer support.

Linking your email with the CRM system is a must. Most CRM systems have built-in or third-party add-on capability to integrate with popular email clients such as Microsoft Outlook.

Customer Feedback

  • Customer complaints, product returns, and details of calls for support should be recorded, as well as follow-up information (was the issue resolved to the customer's satisfaction, or was there a refund, etc.)
  • Response to customer surveys.
  • Has the customer rated your products or services in an online rating site or social media?
  • Has the customer taken his business elsewhere and if so, which competitor and why? (price, service, etc.) This can be taken from information received from the customer directly or anecdotally.

CRM customer satisfaction metrics can point out a variety of issues that must be addressed:

  • Repeated returns or complaints can point out particular products that are defective or unreliable
  • Product/service pricing that is not competitive
  • Poor customer service - not responsive to phone or email requests, products/services not delivered as promised, customer complaints not properly dealt with, poorly trained staff, and not "going the extra mile"

CRM Tools

Customer relationship management tools include desktop and browser-based software and cloud applications that collect and organize information about customers.

Note that many top accounting software packages either have available CRM modules or integrate with third-party CRM add-ons.