A simple search on Google for define crm will display its main definition as customer relationship management. While it sounds interesting, what does it really mean? Well, the expanded definition gives some hints - CRM could be interpreted as a way to manage the relationship you have with your customers (business relationship). While this is a shallow definition of CRM, it points however in the right direction, it's all about the way you do your business so that you gain, keep and maintain a good relation with existing and future customers.
But in the process of getting new customers and maintaining an excellent relationship with the existing ones there are other factors involved. For instance, let's assume you produce airplanes (not in your backyard though), and let's see which factors involve the relationship with your customer:
- Sales and Marketing. To be able to have a relationship with your customer you need first to have a customer. Now that's a pickle. You have to have well trained salesmen and marketing strategies to touch the right niche and grab your customers.
- Suppliers. You got a customer, now you need to start working on his product. To create an airplane you need good materials from your suppliers and delivered in time (if you don't have the materials when you need them, the customer doesn't get the plane in time so the relation is damaged).
- Customer preferences. Now since an airplane involves high costs, you might through in some special customization for your customer. But for that you need to know what the customer preferences are (wouldn't be a good relationship if you would deliver a pink airplane when he wanted a white one).
- Internal processes. You have the parts, you know what the customer wants. Now it's time to produce it using your knowledge, services and people.
- Customer communications. It doesn't take a couple of hours to create the plane, so while the plane is being created you want to be sure that the customer receives the proper information about how the production goes. So you need to communicate with him for a better relationship.
- Delivery. How shiny it looks, now that is ready. However, it's not something you can send via Fedex, so you need to be sure that it's delivered to your customer without any scratches or pee smell on its tires.
- Training. Well it's no use if you give him the plane without an instruction manual. While a manual might work for how to use the radio, to use the plane your customer would need serious training.
- Customer support. Not everything is perfect, and even if it is then your customer still needs some support because he doesn't know why the tiny red button now looks brighter. You want to offer support when he needs it and right to the point.
- Customer followup. Now it's been about 4 months since your customer is been playing around with his new toy. Wouldn't be excellent if you would call or meet him in person to ask if he needs new tires or a new surround system for the passengers?
- Performance management. You're happy and your customer is happy. That's a good relationship. But could you have done something better that would have resulted in a better product or a better service (or even driving costs down a little bit)? It's time for an analysis, so you process all the information gathered and you draw the conclusions. And since this is a process that will be repeating with each new customer, anything you do now to improve it will just improve the relationship with your future customers. But don't forget your people. They did a good job too and they need to be compensated so that they'll do the same good job in the future too.
The above list could go on. As you can see customer relationship management involves a lot of functions and is influenced by a lot of factors. Maybe now we're able to give a better definition for CRM: A business process that has as its main goal your customer satisfaction. Because if your customers are happy, then they'll purchase from you in the future too and also recommend you to others, so your revenue will increase from a healthy customer relationship. Supporting this CRM business strategy is not done with a pen and paper (at least not only with). There are lots of CRM solutions from big names like Oracle, SAP, Salesforce and many others, that include the usage of CRM software. However, to be successful with your CRM strategy, you must align the usage of CRM software with the type of your customers and the particularities of your product.
A little bit more about CRM software and how it helps in the relationship with your customer. A typical CRM program allows you to gather, store and analyze not only the information about your customer, but also the information about the other factors that influence the CRM, such as your partners (suppliers, vendors) and your own people (internal processes). Beside this function, a CRM program also allows you to: plan and execute your sales and marketing strategies, offer customer support and training, manage the performance of your your own processes. Also, there are 2 major types of CRM software: On-demand and On-premise. In a few words, CRM On Demand is the type of CRM program that is accessed as a web service (either provided by a third party for a recurring fee, or installed as a centralized solution in your company), while CRM On Premise is the type of CRM program that is actually installed on your computer and you don't access it as a web service (though communication and data sharing are key elements too and are available in CRM On-Premise too).
So now can you define CRM? defining CRM is not as easy as saying customer relationship management. It's much more than that, because of everything else that influences the business process.