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CRM definition –
Customer Relationship Management

CRM definition: Customer Relationship Management integrates all business processes, communication channels and company divisions that have direct contact with the customer. This primarily includes the marketing, sales and service departments. The 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 one another, depending on the respective corporate 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 helps determine its own CRM definition.

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

That has changed. Today, companies focus on their customers and their product wishes, deliver an appropriate offer including good advice and ensure that customers can trust their company in order to retain them 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 aim of a customer relationship is to establish a long-term bond between the customer and the company. This primarily serves to increase profits, secure market share and thus grow the company, e.g. by customers recommending the company to colleagues, friends and acquaintances through their satisfaction and by them making repeat or follow-up purchases.
  2. Individual customer relationship:
    Differentiation of customer relationships with regard to products or services recommended in individual consulting promotes customer loyalty to the company.
  3. Customer focus:
    A targeted orientation of all corporate activities to the needs and wishes of potential and existing customers in the sense of comprehensive processing is elementary.
  4. Orientation to 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 less favorably.
  5. Systematization:
    Systematic customer processing, which is geared to the needs of the customer and extends throughout the customer relationship cycle, is of great importance.
  6. Increasing 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 offer them individualized services and provide them with the care they need. The acquisition of CRM software helps to optimize the customer relationship according to the CRM definition. Customer data can be accessed in the software at any time via integrated databases. This allows machining processes or customer meetings to be individually designed. Moreover, resources are used more efficiently and wastage is avoided.

How these processes can look like in a CRM software is shown in the following CRM videos.

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, the supporting function of the customer relationship management system is used for the specialist departments to initiate contact and to 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 collaboration, as the name suggests. This is done on the one hand within the company, but 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

The company management and the internal CRM team use the CRM strategy to develop the specifications and objectives based on customer and market requirements.

Strategies - also part of the CRM definition

Examples of possible strategies are:

  • Uncovering & exploiting market potential (sales/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.g.:

  • Facilitate access to customer information and make data accessible more quickly
  • 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 control
  • Faster visit preparation and effective visit planning
  • Set up complete, clear reporting system

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 people-centric 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 in the area of CRM definition

Retention Marketing

Retention marketing is a strategic marketing approach aimed at increasing customer loyalty. To this end, 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 the CRM software and systematically designed market research are combined and evaluated as the basis of database marketing. Subsequent activities are designed to increase customer value, extend the customer life cycle, and thus increase revenue per customer for the company.

Social CRM

A relatively new trend, social CRM extends operational CRM. The main focus is on potential and existing customers, who are more strategically engaged in a collaborative dialog via the Internet and social media platforms (such as Facebook, WhatsApp, Twitter or Instagram). The goal is to find out what customers want, but also to disseminate quick responses and reactions for customer satisfaction.

Mobile CRM

Mobile CRM enables the field sales force to access customer data from anywhere. For this purpose, modern technologies are used that 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 across the board, mobile CRM is viewed critically in some companies. But there are already CRM appsthat are offline-capable.

Elementary for CRM

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

CRM systems are tools for optimizing customer relationship management. You improve this according to one of the above CRM definitions by capturing customer data and transactions that are relevant to the success of the business.

The CRM software supports all areas of the company that are connected with customers. Particularly frequently CRM in salesbut also used in marketing or for service & IT. To decide which program is the best fit for your business, get an up-front CRM Software Feature Overview.

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 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 ongoing and produces data for evaluation and consideration of future developments. This data, along with related decisions, in turn forms the basis for further analysis and new decisions.

CRM analysis includes the following areas:

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