Use of Customer Relationship Management

Jodie Humphries

As every good business manager knows, Customer Relationship Management (CRM) is an information industry term for methodologies, software, and usually internet capabilities that help an enterprise manage customer relationships in an organised way.

Knowing, understanding and predicting what your customers want - and will want in the future - is vital to the success of any enterprise, therefore IT systems that specifically address the problems of dealing with customers on a day-to-day basis are growing in popularity.

CRM is not just the application of technology, but is a strategy to learn more about customers' needs and behaviours in order to develop stronger relationships with them.

In the commercial world, the importance of retaining existing customers and expanding business is paramount. The costs associated with finding new customers means that every single existing customer could be important.

The more opportunities that a customer has to conduct business with your company the better, and one way of achieving this is by opening up channels such as direct sales, online sales, franchises, use of agents, etc.

Customer relationship management (CRM) helps businesses to gain an insight into the behaviour of their customers and modify their business operations to ensure that customers are served in the best possible way. In essence, CRM helps a business to recognise the value of its customers and to capitalise on improved customer relations. The better you understand your customers, the more responsive you can be to their needs.

Customer Relationship Management requires a focus and commitment by business in order to become a value centre. CRM can not be seen as a mere technology investment which is purchased, deployed and then delivers value in itself. Instead, CRM is a concept that must be realised within the organisation and with the support of its staff. For full effectiveness, CRM must be seen as an ongoing goal in order to stay in line with business objectives and be able to change with the enterprise.

Breaking CRM down

Customer Relationship Management can be broken down into three sections, mariosalexandrou.com lists them as:

1. Operational CRM

Operational CRM means supporting the so-called "front office" business processes, which include customer contact (sales, marketing and service). Tasks resulting from these processes are forwarded to employees responsible for them, as well as the information necessary for carrying out the tasks and interfaces to back-end applications are being provided and activities with customers are being documented for further reference.

2. Analytical CRM

In analytical CRM, data gathered within operational CRM are analyzed to segment customers or to identify cross- and up-selling potential. Data collection and analysis is viewed as a continuing and iterative process. Ideally, business decisions are refined over time, based on feedback from earlier analysis and decisions.

3. Collaborative CRM

Collaborative CRM facilitates interactions with customers through all channels (personal, letter, fax, phone, web, e-mail) and supports co-ordination of employee teams and channels. It is a solution that brings people, processes and data together so companies can better serve and retain their customers. The data/activities can be structured, unstructured, conversational, and/or transactional in nature.

Is the CRM market growing?

A Frost & Sullivan report sponsored by IBM Corp. indicates that CRM is poised to grow from US$399.8 million in 2009 to US$673.6 million in 2013. CRM is considered a good indicator of the adoption of mobile devices by business.

Baring this in mind, last month, Microsoft has outlined its plans to boost its presence in the field of dynamic customer relationship management software.

With growing numbers of businesses, both large and small, opting to make use of CRM hosting solutions, the US software giant has announced that it is to step up its presence in the sector.

Specifically, Microsoft is set to ensure that its CRM software is available to users in 41 languages, with the systems also to be made available as cloud-based solutions, as well as on-premise solutions.

This will bring the total number of markets in which the company offers CRM solutions to 32, with Spanish, Portuguese and French-speaking nations in particular to be targeted by this latest push, the company announced at its Dynamics Conference in Atlanta, Georgia, Outsourcery states.

News of the planned CRM solutions development comes soon after Microsoft reported that demand for software as a service (SaaS) among small and medium-sized businesses is continuing to rise.

According to the firm, by the end of the year, around one in five smaller enterprises will have invested in such a software solution, with many having opted for Microsoft SharePoint.

Despite more companies getting involved in the CRM market, Vivek Ranadivé, Tibco's chairman and chief executive, believes that CRM functions will be eclipsed by event management within 10 years as his vision of the Enterprise 3.0 becomes reality.

He said that customers now expect problems to be anticipated and eliminated before they are badly affected. He does not believe that CRM can ever act fast enough to keep the new generation happy and that it will largely be replaced by event management within the next 10 years. "It's the end of an era for CRM," he said to ITPro.

Implementing CRM

Previously speaking to CXO, Jack Noonan, President and CEO of SPSS, a leading provider of predictive analytics software and solutions, said "Our customers are typically large organisations with large customer bases that either have, or want to have, a direct relationship with their customers. That's why industries such as financial services, telecommunications, travel and leisure, consumer products and insurance providers are readily adopting predictive analytics to provide better customer relationship management and strengthen customer loyalty. In today's world of multiple avenues to reach and understand customers, predictive analytics clearly provides a core competitive advantage for every industry worldwide."

Further talking about the point with CXO, Noonan gave examples of SPSS customers that have successfully integrated predictive analytics with traditional business intelligence. He said, "Take the example of Volkswagen AG's market research group. Predictive analytic technologies from SPSS are helping VW integrate all of its survey research data with its CRM data to predict which car designs and features are most desirable to specific markets or customer groups."

Another example he said, was "Center Parcs, a leisure services company in the Netherlands. The most important challenge for Center Parcs is to achieve maximum occupancy for the vacation parks. Using SPSS, Center Parcs now accurately predicts individual customer needs, contacting only those customers that are likely to respond to a campaign. As a result, it has reduced the costs associated with direct marketing campaigns by 46 percent in the course of a single year, the equivalent of approximately US$1.5 million in savings. These campaigns are now followed by several small, but highly targeted campaigns that are used to sell remaining accommodation or to cross-sell additional facilities."

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