What is Customer Relationship Management or CRM?

Customer Relationship Management business chart
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CRM is an acronym that stands for Customer Relationship Management. It describes the strategy that a company uses to handle customer interactions. One example of a common CRM strategy is the rewards card program offered by many supermarkets. The store gives its customers a free card that gives them access to special deals and discounts when they swipe the card during checkout. But that card also tracks everything the customer buys and allows the store to create an extremely detailed customer profile based on his or her purchasing habits.

Armed with that information, the store can then offer its customers targeted coupons and other programs that will motivate its customers to buy more products from that store.

Many CRM software and/or service packages exist to help companies manage the customer relationship process. In fact, salespeople tend to think of these computer programs as the be-all and end-all of CRM. But CRM has existed for much longer than the computer – in fact, it has been around in one form or another for as long as people have been buying and selling. Computers have greatly enhanced the customer relationship management process because the key to a good CRM is uncovering and storing information about customers. The more a company knows about its customers, the better it can manage those relationships – as in the above example of supermarket rewards cards.

CRM software can help by storing all this information in an easy-access format.

With a typical CRM program, new leads are entered into the program's database and salespeople add notes throughout the sales cycle. It's then easy for a company to compile reports from this data that help it to design a CRM strategy that's tailored to its customers. The CRM software can also automatically send out emails to individual customers as designated by the salesperson.

For example, a salesperson might program his CRM to send out a thank-you message whenever a customer reaches his or her one-year anniversary of purchase, or to send an e-card on the customer's birthday.

Once a company has collected information about a customer, the next step is training its salespeople and other employees in using that information to keep the customer relationship strong. Because salespeople are often the 'face' of the company, theirs is an important role in any CRM program. Frequently a customer who runs into a technical problem will phone her salesperson instead of calling up the customer service team. She already knows her salesperson and probably has good feelings about him, or she wouldn't have bought the product from him. It's safer and easier to reach out to someone she knows than to try to explain her problems to a stranger. So even after the sale is complete, salespeople often continue to speak with customers on a regular basis.

These customer interactions can be a burden for a salesperson, but they can also bring a blessing in the form of future sales. When a salesperson helps his customer overcome a difficult problem, it's much more likely that she'll get in touch with him for future purchases.

And there's also a good chance that she'll send her friends and family to him as well. And this is exactly what a customer relationship management system is trying to accomplish. It's critical that the sales team understands and implements its company's CRM strategy.

For this reason, the sales manager should make a point of keeping on top of the company's CRM strategy and should pass along any changes to the sales team immediately. She should also counsel her team on how to build and maintain a good customer relationship. Most salespeople are happy to do so once the fruits of this labor start rolling in in the form of additional sales.