What Exactly is Customer Relationship Management?

The defintion of Customer Relationship Management (CRM) that I favor is "CRM is the business strategy that aims to understand, anticipate, manage and personalize the needs of an organization's current and potential customers"

From this we can learn that CRM is more than just a piece of software; CRM is a business strategy, one that puts the customer at the heart of the business.

"That's nothing new" I hear you say, and you would be right. Good business people have always understood the relationship between happy customers that come back again and again and creating long term, sustainable profitability.

You just have to think of the local shop owner who knew everyone of his customer's names, birthdays and particular ailments to prove that point. What is new is that there now exists the technology to enable this customer-centricity on a much larger scale.

It is said that a successful CRM implementation will allow your Customer Service, Sales and Marketing people (and anyone else in your organization) to have a holistic view of each and everyone of your customers. In theory this will enable them to make quick, informed decisions, create cross selling and up selling opportunities, measure marketing effectiveness and deliver personalized Customer Care.

Sound's great doesn't it!

The History of CRM

Following on from Enterprise Resource Planning or ERP (the business strategy that promised to automate the "back-office"), the term CRM was first coined in the mid-1990s. CRM in those days referred to the software used to help businesses manage their customer relationships. From sales force automation software (SFA) that focused on customer contact management to integrated knowledge management solutions, these were the early foundations of CRM.

The last couple of years have seen the term broaden to encompass a more strategic approach and the investment of billions of dollars worldwide into CRM solutions and services has followed.

First Things First

Successful CRM always starts with a business strategy, which drives change in the organization and work processes, enabled by technology. The reverse rarely works.

The key here is to create a truly Customer-Centric philosophy that touches every point and more importantly every person in the company. From CSR to CEO everyone must live and breathe customer focus for all of this to work.

At the same time you should look at your which processes could be re-engineered to make them more effective for your customers. Until you have done this, put away your chequebook!

The Right Technology

It is estimated that the global market for CRM services and solutions is currently worth $148 billion. That means a lot of choice when selecting your technology - from web-based solutions aimed at small businesses with less than 10 employees to solutions suitable for multi-national enterprises with millions of customers.

The Future

CRM has already made a big impact in the world of Customer Service and will continue to do so. As more and more companies become customer-centric those that fail to do so will lose competitive advantage. As technology increases to develop at a startling rate the key emphasis will be how we can fully utilise it within our business.

However let's not lose sight of the fact that Customer Relationship Management is about people first and and technology second. That's where the real value of CRM lies, harnessing the potential of people to create a greater customer experience, using the technology of CRM as the enabler.

CRM may or may not prove to be the answer to providing excellent customer care, but the philosophy of putting customers at the heart of our business is definitely a step in the right direction.

Ian Miller is Editor of The Customer Service Manager - An online resource for Customer Service Managers and professionals. On the CSM website you can read about the latest customer service trends, make use of useful management tools and sign up for a free customer service newsletter. Visit http://www.customerservicemanager.com for more details.