Monday, January 12, 2009

What is CRM?

Googling CRM will give you lots of opinions and thoughts on what is CRM. Some talk about the philosophy of CRM and customer-centricity, others talk about the technologies. This blog is all you need to read on what CRM is.

Most of us buy groceries. Many of us go regularly and buy similar stuff each time. Imagine if you went to the supermarket and on arrival you were greeted and told "Welcome back Mr. Smith. Because you shop with us regularly and buy similar things each time, we know what you need and already have your shopping ready for you. Let us know where your car is and you can be on your way". Would you go to another grocery store again?

That is the philosophy of CRM. A supplier anticipating the needs of a customer and fulfilling their requirement before the customer has even asked. In return the customer perceives such a loss of service in going somewhere else, it is simply not an option. For anyone selling a product, they could call the customer when an upgrade is available that will save the customer money or it could be calling the customer just prior to the life expectancy of the product is up to save productivity loss due to outage. 

As many consultants know, their job is to up-sell services, even when the customer may not realise they need them. If the 'value add' truly provides more benefit than it costs, this is also a form of CRM.

So what stops grocery stores getting your box of shopping ready just in time for your arrival? Or someone that sells air conditioners calling their customers and telling them that it is time for their unit to be serviced to stop it running inefficiently and wasting the customer's money? The answer is the systems in place. In the case of the grocery store they would need a system that stores each customer, when they have come into the shop and what they bought. 

Computers are excellent at storing large amounts of information and allowing it to be queried in a variety of ways quickly. This is the technology of CRM. A database with customer information. This information might be what you have done before a sale is made or it could be the information of the sales themselves. It could be the post-sale support information or it could be the marketing campaigns you've run to generate new customers. Any information relating to your business and the external parties that you deal with is fair game.

That is it. CRM in a nutshell. The philosophy of CRM and what it aims to achieve and the technology needed to support it.

As an interesting aside, I've implemented a lot of CRM systems and, for the most part, they are not there to meet a CRM philosophy. Often CRM systems are used to monitor staff, improve internal work processes or simply to help management better manage their reporting. There is nothing wrong with this and most were perfectly successful in achieving their aims. As long as the organisation is behind the system, gives it the resources it needs and they have their eyes open to what it will and will not do for them, usually everything is fine.

One other thing to note. An essential requirement for a CRM system meeting a CRM philosophy is the ability to extract the information you need to understand your customers. Therefore it is essential you understand what information you want about your customers before the first DVD hits the tray and make sure your CRM system will be able to give you this information. Moreover, for complex requirements, a business intelligence system (BI) should be seriously considered.


TravelingNinja said...

This is just what I needed to find. Most webcasts and articles like those on Microsoft Momentum already assume you know what CRM is.

Anonymous said...

Thanks Leon! Would you be interested in being quoted? with proper reference of course!


Unknown said...

Hey Leon, is there any way to contact you in order to find out more information about CRM question I have? I've been scouring the internet for forums to find people to help. It's always helpful to have a person to talk to directly.


Leon Tribe said...

I've adjusted my profile blurb to include my email.