CRM – the reality
In recent years, businesses have concentrated on saving money and, therefore,
increasing profits by redefining internal processes and procedures. Companies in the twenty-first century are, therefore, lean and mean. Analysts and pundits alike are focusing on ‘up-selling’, ‘cross-selling’ and ‘organic growth’. The fact of the matter is that it costs a company dramatically less to retain and grow an existing client, than it does to court new ones. As with any other business decision, there are many aspects to be taken into consideration to make your solution a profitable one. A badly implemented solution might as well not be implemented at all. The time taken to establish the exact parameters of your project is time well spent and saves a worthy principle from becoming a worthless investment.
Over the last eighteen months, the concept of customer relationship management (CRM) has taken centre stage in the business world. Where as customer service was once low-ranking incorporate priorities, organisations are now being harried to place their clients at the heart of all of their activities and to rethink their entire sales and marketing strategies. Organisations which are looking to improve their customer-focused activities face a difficult task. There is widespread confusion about the terminology employed by both management consultants and IT suppliers. There is disagreement about the approaches which organisations should take to build a CRM strategy. There is a lack of consensus about what CRM really means and a growing uncertainty about how e-business fits into the customer management vision.
In the late 1960s, in his seminal article on marketing, management guru Ted Levitt suggested that the purpose of a business was to „create and keep a customer“. He advocated that the modern firm should view “the entire business process as consisting of a tightly integrated effort to discover, create, arouse, and satisfy customer needs”. Over two generations later, businesses are beginning to wake up to this reality.
Customer relationship management (CRM) is now being actively considered by organisations across the globe, parading itself in the open market disguised as new technology and software applications. Recent market analyses suggest that the CRM software market is set to grow by 700% over the next three years and estimated to generate total revenues of approximately $3 billion by 2004. However behind this camouflage of expensive technology and fancy software packages sits the deeply embedded business concept that suggests that knowing, understanding and serving the customer should be at the core of what organisations do best. Building sustainable and successful relationships with a large customer base is not the easiest thing to do and will have a direct impact on many core operational processes from product development to debt recovery.
Over the past twelve months there have been multiple definitions of CRM including suggestions that it is a sales strategy, a software product and even a new method of data collection. Customer Relationship Management is the establishment, development, maintenance and optimisation of long term mutually valuable relationships between consumers and organisations. Successful CRM focuses on understanding the needs and desires of the consumer and is achieved by placing these needs at the heart of the business by integrating them with the organisation’s strategy, people, technology and business processes. At its most basic CRM involves customers, organisations and relationships, and the combination creates the need for management. It is not simply a buzzword, a new software package or a breakthrough in sociological research methodologies. It is the renaissance of a belief that at the heart of all transactions is the creation of mutual value for all parties.
CRM is about creating a competitive advantage by being the best at understanding, communicating, delivering and developing existing customer relationships in addition to creating and keeping new customers. The concept of product life cycle is giving way to the customer life cycle, focussing on developing products that anticipate the future needs of existing customers and creating services that extend existing customer relationships beyond the merely transactional. The customer life cycle will focus on lengthening the life span of the customer with the organisation rather than the endurance of a particular product. Customers have changing needs as their lifestyles alter – the development and provision of products or services that continuously seek to satisfy those needs is good CRM. Mission statements will focus greater attention on how to deliver customer satisfaction and organisations will begin to structure themselves around customer segments and not product lines. A good CRM strategy will take the business vision and apply it to the customer base by asking the questions: