What is Customer Relationship Management (CRM)?

A study at MIT’s Sloan school of management has found that 80% of the scientific breakthroughs came from the loyal customers rather than the manufacturers.

Studies have proved that a business fails if it doesn’t maintain good relations with their existing customers. An organisation cannot survive in the competitive environment by doing a good job. It has to strive continuously to do an excellent job and provide value to customers better than the competitors. The firm cannot survive by making a sale to a customer. It has to forge a relationship with the customer to ensure that there are repeated sales from him/ her. The long-lasting relationship is beneficial for both the organisation as well as the customer.

Maintaining good relations with the existing customers is important for continued success of a business. One satisfied customer will bring more customers to the business and one unhappy customer will take away many customers along with him.

Customer Relationship Management consists of strategies and plans to manage and maintain satisfactory relations with the lost, existing as well as potential customers by delivering superior customer value and satisfaction. CRM refers to strategies designed to gather, store, and act on the information on customers with the aid of information technology to gain customer satisfaction, loyalty, and business success.

The purpose of CRM is to encourage technology to study its customers and deliver maximum value to them. It focusses on an organised and structured processes in operations, methodologies, and technology to better assess and address the customer’s needs and wants. Studies show that such satisfied customers are ready to pay even more for the services and products from an existing seller. For example, Apple fans wait for the launch of new iPhones. They stand in long queues outside the stores on iPhone launch dates to by the latest model. They can go as far as selling their valuable belongings or taking a loan to buy the latest iPhone.

Most of the organisations are investing in customer relationship management systems to forge a long term relationship with customers. They gather and keep records of customer’s buying history, feedback, complains, etc. to identify their needs and wants, and gain customer loyalty.

An organisation should invest in information systems so that it can store data on the existing customers, lost customers and new customers. Channels of communication should always be kept open with the customers. When the customers are reached or they reach the organisation both the seller as well as the customers are benefited. This helps in identifying the existing customers from the new customer.
The organisation can do simple tasks like asking a customers to fill a form when they visit the store. Once they buy the product, organisation can get forms filled to gather as much information as possible like best mode to reach (email, call, etc.) time to reach over the phone, or a direct mail to confirm the performance of the product. Customers can even be called to ask simple questions depending on the kind of product sold. We will see an example of electronic water purifier –

• How would you rate the product in the range of 1 to 5 (5 being the highest and 1 being the lowest)?
• Did you face any problems in using the product?
• Did the installation happen on time?
• How would you rate the services of the engineer who installed the products?
• What improvements you would like to see in the product?
• Have you contacted any one of our service centres or offices?
• How would you rate your experience talking to the organisations employee?

The inputs received should be stored in the system for easy availability and review of the management to make important and necessary changes as requested by the customers.

The salesmen are also a great source for keeping the track of consumer buying frequency. The call centre representatives, salesmen, front desk, retailers, etc. should be encouraged to collect as much information as possible on its customers.

The effort of an organisation should be to convert prospective customers into partners. Prospective buyers are converted to buyers, buyers to repeat customers. These repeat customers are to be treated specially in order to turn them as members by way of giving them membership programs that offers benefits to customers who join as members. These members are turned into advocates who recommend and advocate the organisations offerings and brand name to others. Organisations should strive to make these advocates as partners.

Most of the innovations that happen in organisations take place because of the inputs from loyal customers and not because of the R&D team. Hence, organisation have started investing in Customer Relationship Management processes.