CRM is the abbreviation of “Customer Relationship Management”. By just looking at the title, it seems that this is a concept about how to deal with customers in various manners. People commonly know CRM as customer relationship management software.
The term customer relationship management or CRM has entered the field of management and marketing since the early nineties. At the time, a man named Thomas Sibel owned a company called Siebel Systems, where he designed and marketed software for sales automation (contacting customers, tracking orders, registering contracts, etc.). Siebel explained that the software is responsible for customer relationship management (Customer Relationship Management). Since then, the term customer relationship management or CRM has gradually become popular and even found its way into management and marketing books. You may want to know that Siebel was bought by Oracle in 2006 while his company had nearly 4,000 customers. Oracle still sells its CRM software as Oracle Siebel.
CRM system of CRM software
There is still no consensus on the definition of CRM and it is not possible to provide a definitive definition for CRM. Even the task of CRM is not so clear that when we talk about CRM, we are referring to software or a system. When we talk about systems, we mean a broad set of activities, processes, and infrastructure that must deploy in an organization. But when we talk about software, our mind goes to one or more programs that must be installed on several computers in an organization. Interestingly, there are both views on CRM among CRM providers and customers.
The group that focuses more on IT and programming and software solutions see CRM, as a set of software that helps automate marketing, sales, and related services. If you tell this group that you want to set up a customer relationship management system in your company, they will understand this phrase: “You are going to buy one piece of software or some software and install it.” But there is another group that considers the establishment of a customer relationship management system beyond the purchase of customer relationship management software. These people emphasize that CRM is an attitude. An attitude that seeks to create, maintain and develop and deepen relationships with customers. The use of new technology software and tools in the CRM deployment is a minor issue.
With that in mind, when Peter Drucker said, “The goal of any business is to build and retain customers,” he was talking about CRM. Even though many CRM software companies did not exist at the time.
CRM Books
The same disagreement in the definition of CRM can be seen in customer relationship management books. Some books are written as if they want to teach their readers how to work with software. Some other books are far removed from technology and focus more on the fundamental of CRM. There is a third category of books that have tried to take the middle way, and they mention this in their titles. For example, they write “CRM – A Balanced Approach“. With this explanation, the third category books emphasize both the systemic, strategic, and infrastructural aspects of customer relationship management, as well as software tricks and technological aspects.
Definition of CRM
Here are some common definitions of customer relationship management. You do not need to memorize these definitions at all or bother to understand the details. Our goal is simply to show the diversity of perspectives on the definition of CRM. Once you have seen the definitions, we present another classification that will be more important to us:
CRM from Oracle’s perspective
This is how Oracle (the current owner of the Sibel system) defines customer relationship management:
“Customer relationship management is the use of tools, technology, and processes to collect and analyze customer data and use this information to improve the customer experience.”
Microsoft Perspective of CRM
Microsoft recognizes CRM more as CRM software and in its definition of CRM, it says so. “Customer relationship management, or CRM, is software that companies use to automate sales and marketing, as well as to manage sales and service-related activities within an organization.”
Defining CRM from Gartner’s view
Gartner, one of the IT research giants, defines CRM as completely independent of the platform as follows:
CRM or customer relationship management is a macro strategy for the whole business that is used to optimize profits and revenue and customer satisfaction. To achieve this goal, CRM organizes all business activities around different groups of customers and tries to create and develop behaviors in the business that ultimately lead to greater customer satisfaction.
CRM from the perspective of the CIO site
The CIO site, whose content and articles are well-known in the field of technology and CRM, defines CRM as follows:
CRM is a strategy to better understand the needs and behavior of customers to develop and strengthen relationships with them.
Salesforce’s definition of CRM
Salesforce offers a similar definition. CRM is a strategy for managing all of a company’s relationships and interactions with potential and current customers and helping to increase the profitability of the business.
Types of CRM
Given the variety of definitions provided by CRM, it is important to be able to categorize these different perspectives appropriately.
Francis Butel, a well-known CRM expert, has a simple and informative classification of customer relationship management models in his book Customer Relationship Management instead of discussing the definitions of CRM, which we review here:
CRM does not have a specific definition; Everyone has defined it in some way. There is no complete certainty as to what CRM stands for, and some refer to it as Customer Relationship Marketing. But what is more important is that customer relationship management has been considered with three completely different approaches: collaborative, operational, and analytical.
Strategic CRM (Strategic Look at CRM)
Some people who talk about CRM and customer relations have a strategic view of this area. This means that they don’t have any limitation to simple tasks such as buying CRM software or setting up a store sales software. Rather, they seek to organize the whole business around the customer axis. If in this way, for example, a CRM unit form or some people work as customer relationship experts, these are considered sub-issues. The main thing is to pay attention to the concept of CRM, which is what everyone in the definition of CRM has focused on: focusing efforts on customer acquisition as well as customer retention by increasing customer satisfaction and using a variety of tools to increase customer loyalty.
Operational CRM
From an operational point of view, customer relationship management, any process that is somehow related to the customer is equipped with automated tools using software systems. Marketing, sales, and customer service are among these processes.
Suppose someone gives you the following suggestions in a CRM consulting session:
- You need to modernize your support services and consider a special software for it.
- An automated telephone answering system can help meet some of the customer’s needs outside of office hours.
- With the use of sales support software, anyone who contacts your sales expert can instantly see his or her previous purchase records and have a more effective conversation.
This view of CRM is not wrong, but we can say it be “very limited” if not accompanied by a strategic view.
However, most automation and software equipment can simplify customer work and increase customer satisfaction. But the peak of the effectiveness of these activities is when the business first moves to the customer-centric and accepts that it wants to move from the product-oriented to the customer-centric.
Analytical CRM
Analytically, customer relationship management (CRM) is a tool for intelligently analyzing customer data and information for strategic or operational purposes. Therefore, if customer information collects, or if processes perform automatically and software, the goal is to gather more customer information and help them make better decisions by analyzing them.
If we want to use a more precise term, we must say that CRM in this case is a decision support system. For example, if managers decide to change the price of a product or run a customer segmentation project, they can refer to data collected from customers and, using common methods in data science, obtain valuable outputs and make better decisions.
CRM is different from creating a database for marketing
In some companies, when it comes to deploying a CRM system or customer relationship management, they mean registering, maintaining, and developing a collection of customer information so that they can send them promotional messages at specific times. In fact, they consider CRM to be a backbone for SMS marketing or email marketing. However, such systems are, at best, database marketing or database marketing.
In CRM, our main priority is to establish satisfaction and loyalty and strengthen the relationship; While in database marketing, the main goal is to achieve maximum sales (albeit in the short term).
Customer Relationship Management is not just a subset of marketing unit activities
Sometimes, customer relationship management or CRM consider merely a subset of the marketing unit: just like all other departments and subdivisions.
Customer relationship management, on the other hand, is successful when customer orientation becomes a key factor of the organization and the customer relationship unit can interact with other units comprehensively and effectively. For this reason, we have repeatedly emphasized that customer relationship management is not a system or software; Rather, it is a new definition of the mission of the organization with a focus on the customer.
In the beautiful words of Wei Kumar in the book Customer Relationship Management:
When we can say that in an organization, the mission of customer relationship establishes as the axis of operation and organizational lifestyle that:
- The production unit can improve its products by guiding the customer relationship management system.
- Human resource management, the criteria for attracting, evaluating, retaining, and firing employees, their relationship with customers.
- The R&D unit should consider the interests and preferences of customers as one of the factors used in making decisions and evaluating its new designs.
- And the different units of the organization, all to gain more knowledge of customers.
Customer Relationship Management is not a service of the IT unit
The IT unit can serve CRM, But it cannot be in charge of it. Some managers think that CRM is a new tool for the organization’s IT unit. To the extent that they even leave the management of CRM systems and decisions about the capabilities of CRM software to their IT specialists.