CRM definition – customer relationship management
CRM definition: Customer Relationship Management (to german: Customer Relationship Management) integrates all business processes, communication channels and business areas that have direct contact with the customer, such as marketing, sales or service. Contacting the customer is the highest priority throughout the entire cooperation.
However, the CRM definition of each company always differs a little depending on the company’s philosophy: Because CRM is not an isolated instrument and must be incorporated into the processes as part of the company’s philosophy, the structure of the company,own CRM definition.
Despite the distinctions in practice, however, a general CRM definition applies, in which the customer is the focus (Customer Centricity). The goal is to have as many customers as possible and to sell as many products as possible to certain customers, by making them feel well looked after and advised by the company.
Part of the CRM definition: Goals of the CRM
The CRM definition includes various objectives of the CRM. The following are the most important:
- Lasting customer relationships: The goal of a customer relationship is a long-term relationship between the customer and the company. This serves primarily to increase profit, market share and company growth by, for example, reducing the price sensitivity of loyal customers who recommend the company to colleagues, friends and acquaintances through their satisfaction and make repeat or follow-up purchases.
- Individual customer relationship: A differentiation of customer relationships with regard to products or services, which are recommended in individual consulting, promotes customer loyalty to the company.
- Customer orientation: A targeted orientation of all corporate activities towards the needs and wishes of potential and existing customers in terms of comprehensive customer processing is elementary.
- Orientation towards economic efficiency: 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 badly.
- Systematization: Of great importance is systematic customer processing, which is geared to the needs of the customer and extends beyond the customer relationship cycle.
- Increase efficiency: By simplifying administrative work by optimizing processes, integrating and analyzing data, a company can increase efficiency according to the CRM definition.
- Optimal processes through CRM software: As soon as a company has several customers, it is difficult to always know the needs and individual information of the customers in order to make them individual offers and to support them according to their needs. By purchasing CRM software, the customer relationship is optimized according to the CRM definition, because customer data in the software can always be called up in the integrated databases and customer processing processes and customer meetings can therefore run individually. In addition, resources are used more efficiently and, for example, wastage is avoided.
The following CRM videos will show you what these processes can look like in 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 operative 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: This uses the supporting function of the Customer Relationship Management system for the departments to initiate contacts and maintain customer relationships. 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: as the name suggests, this form of customer relationship management deals with collaboration. This happens 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.
Examples of possible strategies are:
- Uncovering and exploiting market potential (turnover/costs)
- Increase in sales
- Increasing service quality
- Increasing customer satisfaction
- Increase employee satisfaction
- Early identification of customer needs
- Key Account Introduction
- Process improvement in the company
These strategic objectives must now be translated into concrete, operational measures and CRM processes, e.B:
- Make customer information easily and quickly accessible
- Simplified and improved self-organization
- Control all interactions between customers and employees
- Improving master data quality
- Quick visit preparation
- What does the “Left Hand” and the “Right Hand” do with customers and prospective customers
- Service and sales share your information
- Quick response to customer requests
- Complete, clear reporting
- Effective visit planning
- Sales planning and control
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 the person-centered approach of unrestricted customer management, in which the individual decision-making and action motives are the basis for the development of new or existing customers, it plays an increasingly important role. 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 is a strategic marketing approach with the aim of increasing customer loyalty. For this purpose, important customer groups are segmented within the company in order to bind them to the company in the long term with targeted measures (e.g. 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. The activities subsequently initiated are intended to increase customer value, extend the customer life cycle and thus increase revenue per customer for the company.
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 (Facebook, WhatsApp, Twitter, Instagram, etc.). The goal is to find out customer requests, but also to disseminate quick answers and reactions to customer satisfaction.
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 it is not yet possible to guarantee the availability of mobile data across the board, Mobile CRM is viewed critically in some companies. But there are already CRM apps that are already offline-enabled.
CRM analysis and implementation of the findings on motives for purchase and decision
With the introduction of a CRM system, great potential for intensifying existing or emerging business relationships arises. However, this requires, on the one hand, the analysis of purchasing and decision motives and, on the other hand, the use of these insights in customer care and acquisition for individual communication through adapted strategies, processes and technical solutions on the part of of the company.
CRM analysis covers the following areas:
- Customer segmentation: for example, the subdivision of customers by probability of purchase
- Profitability analysis: Which customers have the greatest potential
- Personalization: Targeted targeting of customers based on existing data
- Probability of purchase: Analysis to place targeted offers based on purchases (up- and cross-selling)
- Prediction models: Analysis of customer questions and complaints. (Which products will be successful in the future.)
Data collection and analysis is ongoing and thus again produces data that should be included in future considerations or analyses. These, as well as the resulting decisions, form the basis of new decisions.
Elemental for CRM: the right CRM system
CRM systems are tools for optimizing customer relationship management. According to the CRM definition, you improve this by collecting customer data and processes that are relevant to the company’s success.
CRM software for all areas of the company
The CRM program supports all areas that are related to the customer. CRM is particularly often used in sales,marketing, and service & IT. Get an overview of the CRM software function overviewin advance.