Customer Relationship Management (CRM)

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Customer Relationship Management (CRM) is the combination of practices, strategies, and technologies businesses use to manage interactions and analyze customer data over time.

It involves analyzing data about customer interactions gathered through various channels, such as websites, phone calls, emails, live chats, marketing materials, and social media.

This information helps businesses understand their customers better, tailor their offerings to meet customer needs, and improve customer retention and sales growth.1

Visual Representation

Customer Relationship Management CRM Visual Representation

Purpose

The primary purpose of CRM (Customer Relationship Management) is to improve a business’s relationships with its customers.

It helps to improve business relationships with customers, assist in customer retention, and drive sales growth.

The ultimate goal is to make customers more loyal by providing personalized experiences and improving the quality of customer service.2

How CRM Works

A CRM system acts as a digital assistant for managing your company’s relationships and interactions with customers and potential customers.

It serves as a central database that stores all customer data, including contact information, purchase history, preferences, and past interactions, in one place.

The system tracks every interaction, including phone calls, emails, meetings, and presentations, allowing you to remember each customer’s needs and follow up effectively.

A CRM system provides a comprehensive view of customers, helping you offer personalized and efficient service.

It tracks every detail and opportunity to make your customers happy and your business successful.3

Usage

CRM (Customer Relationship Management) systems are used across various industries and departments to manage and improve interactions with customers and prospects.

Here are some key areas where CRM is commonly used:

  • Sales: To manage leads, track sales pipelines, and analyze sales data to forecast trends and focus efforts on the most promising opportunities.
  • Marketing: For segmenting customers, personalizing marketing campaigns, tracking customer responses, and managing email marketing efforts.
  • Customer Service: To provide support teams with complete customer histories, manage support tickets, track customer issues and resolutions, and improve service quality.
  • E-commerce: To enhance online shopping experiences by personalizing offers, managing customer interactions, and analyzing purchasing behavior.
  • Business Development: For identifying and nurturing potential business opportunities, managing partnerships, and tracking competitor activities.
  • Retail: To offer personalized shopping experiences, manage loyalty programs, and analyze customer purchase patterns.
  • Banking and Finance: For managing customer accounts, personalizing financial advice, and ensuring compliance with regulations through detailed customer records.
  • Healthcare: To manage patient information, improve patient care through personalized communication, and streamline appointment scheduling.
  • Real Estate: For managing client information, tracking property listings and client preferences, and automating communication for viewings and follow-ups.
  • Manufacturing: To manage orders, track customer interactions, and forecast demand to adjust production planning.4

Example

Imagine an online store that sells fitness gear.

They use a CRM system to keep track of their customers. Here’s how it works:

  1. A visitor signs up for the newsletter on the website, and their info goes into the CRM.
  2. The CRM monitors what they do on the site: what pages they check out, what products they’re interested in, and what they buy.
  3. Based on this activity, the system sends them custom emails with recommendations or deals on things they looked at but didn’t buy.
  4. If this customer needs help or has questions, the customer service team can see everything they’ve done or bought before. This makes it easier to help them quickly and effectively.

Thanks to the CRM, customers have a personal shopping experience. They’re more likely to buy more and be happy with their purchases.

Related Terms

References

1. Wikimedia Foundation. (2023b, December 14). Customer relationship management. Wikipedia. https://en.wikipedia.org/wiki/Customer_relationship_management

2. Rababah, K., Mohd, H., & Ibrahim, H. (2011). Customer relationship management (CRM) processes from theory to practice: The pre-implementation plan of CRM system. International Journal of e-Education, e-Business, e-Management and e-Learning, 1(1), 22-27. https://d1wqtxts1xzle7.cloudfront.net/31400708/process-libre.pdf?1392351499

3. A beginner’s Guide to CRM Systems. Salesforce. (n.d.). https://www.salesforce.com/eu/learning-centre/crm/crm-systems/

4. Buttle, F. (2009). Customer Relationship Management: Concepts and Technologies. Netherlands: Butterworth-Heinemann. https://www.amazon.com/Customer-Relationship-Management-Second-Francis/dp/1856175227/

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