my crm resources - What is CRM? | Customer Relationship Management

What is CRM? Well, CRM is short for Customer Relationship Management. The concept is nothing new because it has been around since the day people traded with each other.

In the old days, because of physical closeness, people normally buy from suppliers which they had previous dealings with. The suppliers concerns, on the other hand, know their customers well - their likes and dislikes. As a result they often could add sweeteners to ensure customer loyalty. That's customer relationship mangement in action, although it was not known as such then.

But the business environment began to change as countries developed and urbanisation cropped up. Globalisation also meant trading internationally - meaning the distance between customer and supplier widens immensely. Suppliers could no longer deal with their customers like before, and the downside is that they don't know their needs, wants, preferences and buying habits. Businesses who do not have such information or data about their customers lose the competitive edge, especially when the competition is fierce. When there is fierce competition, customers tend to go for those who could offer the best deals or solutions to their needs.

So, how does one ensure that customers remain with a business over the long haul, and are not easily swayed by the competition? The strategy is to use customer realationship management, because business concerns must interact with their customers or risk losing their loyalty. It has been proven over and over again that keeping a customer is much cheaper than gaining a new one. Put in another way, selling to an existing customer is way cheaper than selling or acquiring a new customer.

But the key problem is that gathering all the desired information about present and potential customers or clients, analysing them, and interpreting the results can be a very daunting and expensive task when done manually.

But when computerisation and the internet were born, things because so much easier. These digital tools enabled companies to nurture relationships with customers like those seen in the good old days. The terms customer relationship management (CRM) was thus coined. CRM software, web based CRM, online CRM and a myriad of CRM solutions started cropping up and it took sales, service and technology to a higher level.

The aims of CRM for its user is to deliver value at a profit, and deliver it so well that customer loyalty is assured. This enhanced the firm's brand and reputation because they have become the firm of choice for their clients. For the customer or client, the value of customer relationship management is to have a supplier who understands their needs and wants so well that value is delivered at virtually every interaction.

You may be wondering, if CRM tools are so great, why is it that it failed to work for some? Well, studies have found that the fault is almost always not due to the CRM systems per se. The fault likes with poor implementation and application of it. In in most basic form, customer relationship management is just a tool. If a company does not know what to do with it, or use it ineffectively, then it will not work.

Don't ask What is CRM? Just embrace its power. It is not a fad. It is a principle of interacting with customers, and all firms should practise it as part of their corporate strategy.