What Customer Relationship Management ?

Q: Customer Relationship Management.

A:
Peter Drucker said, “The purpose of a business is to create customers.” Implied in his words and his work is the importance of keeping those same customers and of growing the depth of their relationship with you. Most customers are only profitable in the second year that they do business with you. That’s right. Initially, new customers cost you money—money spent on advertising and marketing and money spent learning what they want and teaching them how best to do business with you.

Customer relationship management (CRM) can be the single strongest weapon you have as a manager to ensure that customers become and remain loyal. That’s right! CRM is the single strongest weapon you have, even before your people.

Soundlike heresy?

Let us explain what we mean.

Great employees are, and always will be, the backbone of any business. But employee performance can be enhanced orhampered by the strategy you set and by the tools that you give employees to get the job done. Done right, CRM is both a strategy and a tool, a weapon, if you will. In your hands, and in the hands of your employees, CRM comes to life, keeping you and your team on course and able to anticipate the changing landscape of the marketplace. With CRM, loyal customers aren’t ahappy accident created when an exceptional customer service representative, salesperson or product developer intuits andresponds to a customer need. Instead, you have at your fingertips the ultimate advantage—customer intelligence: data turnedinto information and information turned into acustomer-satisfying action.

Implementing CRM is a nonnegotiable in today’s business environment. Whether your customers are internal or external, consumers or businesses, whether they connect with you electronically or face to face, from across the globe or across town, CRM is your ticket to success.
Customer Relationship Management DefinedCustomer Relationship Management is a comprehensive approach for creating, maintaining and expanding customer relationships.

Let’s take a closer look at what this definition implies.

First, consider the word “comprehensive.” CRM does not belong just to sales and marketing. It is not the sole responsibility of the customer service group. Nor is it the brainchild of the information technology team. While any one of these areas may be the internal champion for CRM in your organization, in point of fact, CRM must be a way of doing business that touches all areas. When CRM is delegated to one area of an organization, such as IT, customer relationships will suffer. Likewise, when an area is left out of CRM planning, the organization puts at risk the very customer relationships it seeks to maintain.

The second key word in our definition is “approach.” An approach, according to Webster, is “a way of treating or dealing with something.” CRM is a way of thinking about and dealing with customer relationships. We might also use the word strategyhere because, done well, CRM involves a clear plan. In fact, we believe that your CRM strategy can actually serve as a benchmark for every other strategy in your organization. Any organizational strategy that doesn’t serve to create, maintain, or expand relationships with your target customers doesn’t serve the organization. Strategy sets the direction for your organization. And any strategy that gets in the way of customer relationships is going to send the organization in a wrong direction. You can also consider this from a department or area level. Just as the larger organization has strategies—plans—for shareholder management, logistics, marketing, and the like, your department or area has its own set of strategies for employee retention, productivity, scheduling, and the like. Each of these strategies must support managing customer relationships. Sounds too logical to need to be mentioned. Yet it is all too easy to forget. For example, in times of extremely low unemployment, how tempting is it to keep a less than ideal employee just to have a more comfortable headcount? Or, consider the situation all too familiar to call center environments, where pressure to keep calls short goes head to head with taking the time necessary to create a positive customer experience. Now, let’s look at the words, “creating, maintaining and expanding.”

CRM is about the entire customer cycle. This is what we’ll discuss in Chapter 2 as the Customer Service/ Sales Profile. When you implement your CRM strategy, you will capture and analyze data about your targeted customers and their targeted buying habits. From this wealth of information, you can understand and predict customer behavior. Marketing efforts, armed with this customer intelligence, are more successful at both finding brand new customers and cultivating a deeper share of wallet from current customers. Customer contacts, informed by detailed information about customer preferences, are more satisfying.
Are you a manager whose area doesn’t deal with external customers? This part of the definition still applies. First, you andyour team support and add value to the individuals in your organization who do come into direct contact with customers. Againand again, the research has proven that external customer satisfaction is directly proportional to employee satisfaction.That means that the quality of support given to internal customers predicts the quality of support that is given to external customers.

Second, consider your internal customers as advocates for your department or area. For you and your team, CRM is about growing advocates and finding new ways to add value.

Finally, what do we mean by “customer relationships” in today’s economy, where we do business with individuals and organizations whom we may never meet, may never want to meet, much less know in a person-to-person sense? CRM is about creating the feel of high touch in a high tech environment. Consider the success of Amazon.com. Both of us are frequent customers and neither of us has ever spoken to a human being during one of our service interactions. Yet, we each have a sense of relationship with Amazon. Why? Because the CRM tools that support Amazon’s customer relationship strategy allow Amazon to:

• Add value to customer transactions by identifying relateditems with their “customers who bought this bookalso bought” feature, in much the same way that a retailclerk might suggest related items to complete a sale.

• Reinforce a sense of relationship by recognizing repeat shoppers and targeting them with thank you’s rangingfrom thermal coffee cups to one-cent stamps to ease thetransition to new postal rates.

In short, customers want to do business with organizations that understand what they want and need. Wherever you are inyour organization, CRM is about managing relationships more effectively so you can drive down costs while at the same time increasing the viability of your product and service offerings.