A functioning Customer Relationship Management (CRM) is essential for the efficient acquisition and retention of customers. This not only increases the sales potential, but also optimizes marketing and sales activities. In this article we explain what CRM is and how you can use it profitably.
Definition
Customer Relationship Management (CRM) is the strategy that you follow with your company to manage all relationships and interactions with existing customers and potential customers. The term also refers to the systems and processes that are used for this purpose.
A well-set up CRM can directly improve your profitability and increase sales. An efficient CRM will help you to keep an eye on the needs of your customers and to ensure that all the necessary information is always available. This allows you to use your resources more efficiently and turn every customer contact into an opportunity to strengthen the relationship. Last but not least, it is about a customer experience that can lead to sales increases and nothing strengthens a company's image as much as a good experience and returning customers. The information gained from a well-set up CRM helps sales and customer care to quickly find the right solution for a customer's inquiry. This saves you resources and time.
History of Customer Relationship Management
The management guru Peter Drucker said in 1954: "The point of a company is to win and keep customers". This motto remains unchanged to this day, even though the business world has changed a lot. Acquiring customers has since become more complex and demanding. While the expansion of the customer base in the 1950s was usually dependent on advertising, pure reach and recommendation, modern technology dictates a different approach today. A modern CRM tool gives you the opportunity to collect and manage the many points of contact that you have with your customers so that you can always communicate effectively. But let's start at the very beginning.
The basics of CRM
At its core, this is about contact management and building relationships. By focusing on the right people and relationships, you can help your customers but also optimize your own sales pipeline. From the first contact with a potential customer, you can track and evaluate the various stages of interactions with them. Understanding your relationship with your customers is an ongoing process. It's not just about gaining new leads and converting them into customers, but also about retaining and developing customers over the long term.
We would like to symbolize this with an example: Each of us has certainly already been in the situation in which we have complained about something and given up after several waiting loops and redirects. That leaves a bad impression and, if we have a choice, we will avoid this company going forward. The opposite is the case: You give your name as a customer, the service team knows you, understands the problem and takes care of it. Your request will be dealt with immediately. You will most certainly pass this positive experience on when you get the chance and make a recommendation. So CRM isn't all about sales.
However, this only works if you have an effective customer relationship management system that helps you understand what data you have available and how you can access the right information when you need it. You can choose from a variety of CRM tools. Good software provides all the information from different departments in the company. This enables all employees involved to have a holistic view of the customer. Departments such as sales, marketing and customer service work together to make well-founded decisions.
Goals and processes of a good CRM
As a company, you know that every customer and their needs are different. Some require intensive support from your service department, but only spend little money. Others, who may also be opinion leaders in your market, buy repeatedly and also new products and a third customer group needs a long lead time, but can then be expanded continuously. A versatile CRM tool is required so that you can adequately support each customer.
With it you can:
Win new customers
Expand existing customer relationships
Increase customer satisfaction
Address customers individually
Actively address customers instead of just reacting
Carry out personalized marketing measures
Subsequent goals of customer service can be, for example:
Optimization of the product portfolio
Improvement of the company image
Uncover up- and cross-selling potential
Optimization of the sales funnel
Under the bonnet: CRM processes
As we have already established, all relevant departments in a company should work together for successful customer relationship management. This mainly affects sales, marketing, customer service and the complaints department.
The processes can be divided into business-oriented and customer-oriented processes.
Business-oriented processes: Processes that make a company more efficient, such as sales planning, strategy or budget planning.
Customer-oriented processes: processes from sales, marketing and customer service.
A strategic CRM focuses primarily on customer-oriented processes. The internal processes should be continuously improved with regard to the fulfillment of the customer's needs.
The table shows an example of which individual processes are included.
A strategic CRM focuses primarily on customer-oriented processes. The internal processes should be continuously improved with regard to the fulfillment of the customer's needs. The following table shows an example of which individual processes are included.
Components of the CRM systems
As we know, CRM systems combine individual solutions from different departments in one tool and collect the data. The mapping of the above-mentioned individual processes is implemented using certain components. The advantage of the standardized solution is cross-departmental optimization based on a single database. Depending on requirements or focus, only a certain selection of components can be used. Not every company needs the entire range of functions for its business.
The components of a CRM tool are:
Analytical component: The quick and intuitive execution of evaluations is an essential function of CRM tools. For example, for the segmentation of customers, specific target groups are narrowed down and identified, in which the CRM tool recognizes and displays commonalities of previous customers. It thus supports the alignment of its own products. The technical basis is often data warehousing, which combines functions from business intelligence with the knowledge functions of data mining.
Operational component: In departments in which there is direct customer contact, this is used to automate processes, campaigns and customer activities. This is usually done using tools such as call center solutions or Salesforce automation applications.
Communicative component: The provision of all communication channels, including: multi-channel management, with which the customer can be contacted. This includes telephony and e-mailing, but also correspondence and social media are integrated here.
Collaborative component: For the optimization of the entire value creation process of your company, the collaborative element is implemented, which provides for cooperation with both internal and external partners.
Overall, the collaborative component starts with internal and external communication, while the analytical and operational components are more aimed at improving information management.
Today, some additional components have emerged that take into account the changed communication habits of customers:
Social component: Social CRM takes into account the use of social media with their own channels and rules, including with regard to the service level of customer care. Social media also play an important role in campaign management. Conversely, modern CRM tools can also analyze content from social media and generate additional information from it.
Mobile CRM: The increasing use of mobile devices, also in customer appointments, makes this connection necessary. All operational, communicative and analytical components must be adapted or expanded for mobile use. Access to all data must also be ensured in mobile use, be it on site at an appointment or at events and trade fairs.
CRM vs. e-CRM
In contrast to classic customer relationship management, a kind of digital CRM, electronic CRM (e-CRM), has developed in recent years. In today's digital world, customer loyalty and contact are increasingly taking place in different ways than before. Classic direct mail is obsolete and customers and decision-makers get information from the Internet before they get in touch with you as a company. The speed of communication has increased and queries are expected to be answered within a very short time.
A fully automated e-CRM plays a particularly important role in e-commerce, as transactions on the Internet take place at any time of the day, and thus outside of your business hours. The tools for marketing, sales and customer service are often linked directly to the shop system.
In the clouds: CRM in the cloud
The first web-based CRM platform was published by the provider Salesforce around 20 years ago. What was still a novelty at the time has long since become part of everyday life: decentralized work in the cloud. Cloud-based CRM solutions are cheaper, especially for smaller companies, as there is no need to set up a separate server. Cloud solutions allow you a deep insight into customer interactions and that in real time. All components and processes can be mapped in the cloud with modern CRM tools. Nowadays, all major CRM software solutions are also available as a cloud model.
Providers of modern CRM tools
Over the decades, some larger specialists have developed who offer powerful CRM software. As communication channels and customer behavior change faster and faster, these tools evolve very quickly. In addition to the top dogs, there are a number of smaller tools that you should check for yourself on a case-by-case basis. We list the most famous providers here.
1. Salesforce
A pioneer from the very beginning, offering a comprehensive range of solutions for contact management, sales, marketing and employee tracking. The cloud-based tool has a user-friendly interface and is the most widely used CRM tool.
Another, but more expensive solution, especially for smaller companies, is SAP C / 4Hana. The most important functions include lead, contact and opportunity management as well as collaboration functions. The possibility of ERP integration is a clear strength.
3. Oracle
Oracle Cloud CRM includes the standard CRM functions such as digital tracking, lead scoring, nurturing campaigns and the distribution of leads ready to buy. It also offers a strong business intelligence solution with custom reports, data warehousing and OLAP (Online Analytical Processing).
A variety of functions such as social insights, business intelligence and campaign management in one flexible tool that can be operated both locally and in the Cloud. The tool can be integrated into MS Office 365.
The diverse CRM tool has a wide range of functions, especially for marketing. In addition to data management and campaign functions, it also offers the integration of marketing options via social channels, TV platforms as well as targeting and A / B test functions.
6. Hubspot
HubSpot is a software platform for inbound marketing, sales and service. It provides a comprehensive set of tools for successful marketing campaigns, with different tools supporting each stage of the buyer’s journey. It is the least expensive from the above and it is good solution for SMBs.
Conclusion
A modern customer relationship management tool is essential for efficient customer acquisition and retention. The data-driven personalization gives a multitude of possibilities to find new customers and to get in contact with them. The channels used to connect with customers are complex and evolving at a rapid pace.
As soon as you go beyond these basics of CRM, you will find that it can help your internal processes in other ways as well: from optimizing your marketing activities to the business insights that you can only get through a working CRM. As your business grows, it can be an effective tool in ensuring that everyone in your organization is working toward the same goals.