How Does CRM Build Relationships?

Gwynne Young
Managing Editor, CustomerThink
Member

Posted 09-Aug-2004 09:19 AM
[Posted for Shenervi Zoe]

CRM focuses on building long-term and sustainable customer relationships, but how did CRM achieve this?

What are the advantages and disadvantages of CRM?

What role does the e-commerce web site play in CRM?

Scott Wildemuth
Member

Posted 13-Aug-2004 08:32 AM
CRM, ideally, is an enabling tool so that everyone in the organization can have a single view of the customer, prior interactions and purchase histories. The vision of CRM is to enable customer service reps, for example, to glance at a customer record and see that this customer has placed 10 orders in the last 3 months, but has called support several times recently because the last item purchased isn't working properly. Knowing this information should impact how he/she handles the customer's call.

That's the ideal, but companies too often assume that CRM will cause organizational change.

Building and sustaining long-term customer relationships is an attitude and a corporate culture. Organizations must create and sustain this culture and back it up with performance measures. If an organization does this, then CRM can be a powerful tool...it's hard to execute a relationship-focused culture if you have customer data spread across four independent systems.

If an organization retains an exclusive focus on short-term sales volumes, and doesn't reward relationship building, a CRM system can't change that culture. It just becomes a glorified contact management system or sales pipeline predictor.

The Internet is simply another sales channel, so companies need to make sure that Web transactions and activities are somehow reflected in a customer's CRM data.

These are simple answers to a complex question, but I think they captures the essence of what you need to know.

Scott Wildemuth
Hitachi Consulting
214-615-5723

Thanh
Member

Posted 15-Sep-2004 09:11 AM
CRM is a process (as most people in this forum agree) to help companies to understand their customers better and create a better experience for their customers regardless of the channels—store fronts, onlines, or others.

My good experience with CRM is with dental offices. Most dental offices that I have visited know who I am by the time I show up. Not just knowing my name but they ask about my family, my kids and their b-days, "did I enjoy such and such?" (based from the last visit 6 months ago). They make me feel like a part of the family. I am sure they don't have a sophisticate CRM system back there but they do have a process. Whatever that process may be, it works!

CRM process and tools can create that experience thus building long-lasting relationships with customers by enabling every organizations (not just customer-facing organizations) to know their customers better. Often than not, I see that attitude "knowing and dealing with customers are for the people at the front". Customers should be the focus of the entire company.

The same principal—building better experience—should apply to websites (e-commerce or not). I still can't believe how many flash-based websites out there. Did anyone keep track of how many times people click "Skip Intro" button? Simple, get-to-the-point, making visitors feel less intimidated create the first strong impressions. Also when I come back to thhe site, it should be cater to me and my likings based on the data from my last visit. NetFlix does a great job at it. There is no excuse that a website can't collect the data.

CRM is a relatively new term but it's an age old process. Now it has software to go with it...

Thanh Nguyen
thanh@ventureallies.com
thanh_nguyen_co@yaoo.com
Principal
Venture Allies

Simone Oltolina
Member
Picture of Simone Oltolina

Posted 09-Nov-2004 05:45 AM
eh eh, yours is a though question to answer. CRM means so many different things to different people that the term is almost devoid of meaning, a mere buzzword. There are many schematizations of what CRM is but I tend to depict it as an information-intensive process that gathers data about the customer (whenever he comes in touch with the company, AND via external sources) and customizes the firm's actions accordingly. It's a loop that most academics call "learning relationship".

This means that my customer service reps know who you are when you call them and use this info to provide a better service (more recently companies are starting to employ the call center as a locus for the cross-selling initiatives).

It also means that when you visit my website the front page will be customized to better fit your tastes. Also, we can use knowledge about other customers, analyze it through data mining tools and make specif product rec. That's what Amazon.com does (did you ever receive an email starting with "as a customer who bought this item we also think you're gonna like this one"?)

Another important area is Sales Force automation. It makes the field sales force more efficient because it supplies the sales reps with up-to-date info about the customer, prior to their visit.

Product customization is science-fiction in most industries but I think we'll see more of this in the future. All we have for now is collaborative-CRM à la Dell (the user configures its brand new PC online)

Loyalty programs are another important area of CRM. They increase loyalty AND they let the firm learn more about the customer (most loyalty programs use loyalty cards that keep track of what and when the owner buys).

Also: the customization shouldn't be based solely on the customer's tastes and prefernces but also on it's value FOR the firm. Customer Value (or Customer Equity) can be calculated in many ways (Life-time value is a good proxy but it's terribly difficult to calculate). This is another important area of CRM (although it's a field in its infancy. Right at the moment I think CE should be placed on top of "peak of inflated expectations" in the Gartner Hype Curve).

Not a very comprehensive definition, I know. Bu then, it's very hard to say where CRM begins and where it ends.