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CRM Definition –
Customer Relationship Management

CRM definition: Customer Relationship Management integrates all business processes, communication channels and business areas that have direct contact with the customer. These include, above all, the marketing, sales and service departments. Customer contact has the highest priority for the entire duration of the cooperation with him.

However, the CRM definitions of individual companies always differ slightly from each other, depending on the respective business concept: Because CRM is not an isolated instrument and must be incorporated into the processes as part of the company’s philosophy, the respective structure of the company also determines its own CRM definition.

In times before digitization, the focus was on a company’s products and services, and buyers were searched for and found through advertising.

That has changed. Today, companies focus on their customers and their product wishes,deliver a corresponding offer including good advice and ensure that customers can trust their company in order to bind them to themselves in the long term.

CRM definition - customer relationship management 1
CRM definition – customer relationship management 4

Part of the CRM definition: Goals of the CRM

The following 7 goals are the most important:

  1. Lasting customer relationships:
    The goal of a customer relationship is a long-term commitment of the customer to the company. This primarily serves to increase profits, secure market shares and thus the growth of the company, e.B. by customers recommending the company to colleagues, friends and acquaintances through their satisfaction and they make repeat or follow-up purchases.
  2. Individual customer relationship:
    A differentiation of customer relationships with regard to products or services, which are recommended in individual advice, promotes the loyalty of customers to the company.
  3. Customer orientation:
    A targeted alignment of all corporate activities to the needs and wishes of potential and existing customers in the sense of comprehensive processing is fundamental.
  4. Orientation towards cost-effectiveness:
    The focus should always be on those customers who are particularly profitable for the company. However, this does not mean that less profitable customers should be treated worse.
  5. Systematization:
    Of great importance is a systematic customer processing, which is geared to the needs of the customers and which extends over the customer relationship cycle.
  6. Increase in efficiency:
    By simplifying administrative work by optimizing processes, integrating and analyzing data, a company can increase its efficiency according to the CRM definition.
  7. Optimal processes through CRM software:
    The more customers a company has, the harder it becomes to know the individual needs of each customer. This also makes it more difficult to make them individual offers and to support them according to their needs. The purchase of CRM software helps to optimize the customer relationship according to the CRM definition. Customer data can be called up in the software at any time via integrated databases. This allows machining processes or customer discussions to be individually designed. In addition, resources are used more efficiently and scattering losses are avoided.

The following CRM videos show you how these processes can look in a CRM software.

CRM Definition: the four forms of CRM

Within the CRM definition, four forms of CRM can be distinguished:

  • Analytical CRM:
    evaluates the data from the operating business. This evaluation takes place on the basis of KPIs (Key Performance Indicators) in order to analyze and interpret the requirements placed on the products. The analytical CRM also includes the components collection, system integration as well as data warehouse and evaluation routines such as data mining or OLAP.
  • Operational CRM:
    in this case, the supporting function of the customer relationship management system is used for the departments to initiate contacts and maintain the customer relationship. At the same time, after the CRM definition, customer-relevant data is continuously collected and collected in operative CRM so that it can be processed in analytical CRM.
  • Collaborative CRM:
    this form of customer relationship management deals with cooperation, as the name suggests. This is done on the one hand within the company, but on the other hand also with external partners. This makes collaborative CRM used throughout the CRM process.
  • Communicative CRM:
    controls all communication channels. Focusing on the customer is a top priority. The communicative CRM is often seen in the CRM definition as part of the operational orientation, as the contact initiation is also used there.

Strategies – also part of the CRM definition

With the CRM strategy, the management and the internal CRM team develop the targets and objectives based on customer and market requirements.

Strategies - also part of the CRM definition

Examples of possible strategies are:

  • Uncovering & benefiting from market potentials (turnover/costs)
  • Early identification of customer needs
  • Increasing service quality
  • Key Account Introduction
  • Increase customer satisfaction
  • Improve processes in the company
  • Increase in sales
  • Increase employee satisfaction

Subsequently, the strategic objectives must be translated into concrete, operational measures and CRM processes, e.B.:

  • Facilitate access to customer information and make data more quickly accessible
  • Departments such as service and sales should be able to share information with each other
  • Enable control of interactions between customers and employees
  • Faster responses to customer inquiries
  • Improve master data quality
  • Simplify and improve self-organization
  • Optimize sales planning and management
  • Faster visit preparation and effective visit planning
  • Set up complete, clear reporting

New CRM Definition: Empathetic CRM

In addition to the four well-known forms of CRM, a new form of CRM definition has emerged in the last two years: the Empathic CRM. As a person-centered approach to unrestricted customer management, it plays an increasingly important role. Individual decision-making and action motives are the basis for the development of new or existing customers. The aim of the Empathic CRM is to take into account as far as possible all touchpoints between company and customer (Customer Journey) as well as all relevant information about the customers and to make them usable for the development of a sustainable customer relationship.

Additions to CRM definition

Retention Marketing

Retention marketing is a strategic marketing approach with the aim of increasing customer loyalty. For this purpose, important customer groups are segmented in the company in order to bind them to the company in the long term with targeted measures (example: payback cards).

For this purpose, data from crm software and systematically created market research are brought together and evaluated as the basis of database marketing. Subsequent activities are intended to increase customer value, extend the customer life cycle and thus increase sales per customer for the company.

Social CRM

As a relatively new trend, Social CRM is expanding operational CRM. The main focus is on potential and existing customers who are more strategically integrated into a collaborative dialogue via the Internet and social media platforms (such as Facebook, WhatsApp, Twitter or Instagram). The aim is to find out about customer wishes, but also to spread quick answers and reactions to customer satisfaction.

Mobile CRM

Mobile CRM enables the field service to access customer data from anywhere. For this purpose, modern technologies are used, which allow working via the browser (CRM in the cloud) or in a native CRM app. Since the availability of mobile data cannot yet be guaranteed nationwide, mobile CRM is viewed critically in some companies. But there are already CRM apps that are offline-capable.

Elementary for CRM

The right system, CRM analysis and the use of the insights gained

CRM systems are tools for optimizing customer relationship management. You improve this according to one of the CRM definitions mentioned above by collecting customer data and processes that are relevant to the company’s success.

The CRM software supports all areas of the company that are connected to customers. CRM is used particularly frequently in sales, but also in marketing or for service & IT. To decide which program best suits your company, get a CRM software function overview in advance.

With the introduction of a CRM system, great potential for intensifying existing or emerging business relationships arises. However, the prerequisite for this is on the one hand the analysis of purchase and decision-making motives and on the other hand the use of these findings in customer care and acquisition for individual communication through adapted strategies, processes and technical solutions on the part of the company.

Data collection and analysis is carried out on an ongoing basis and produces data for the evaluation and consideration of future developments. This data and associated decisions in turn form the basis for further analyses and new decisions.

CRM analysis covers the following areas:

  • Customer segmentation (for example, the subdivision of customers according to purchase probability)
  • Profitability analysis (Which customers have the greatest potential?)
  • Personalization (targeted approach to customers based on existing data)
  • Purchase probability (analysis to place targeted offers based on purchases made (cross- and upselling))
  • Models for predictions (analysis of customer questions and complaints, to record the products that promise success)
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