What Is Customer Relationship Management (CRM)?
Definition & Examples of Customer Relationship Management
Customer relationship management is the strategy a company uses to handle customer interactions. The goal of customer relationship management is to increase sales by improving customer loyalty and satisfaction.
Learn more about the benefits to both customers and businesses of creating a customer relationship management strategy.
What Is Customer Relationship Management (CRM)?
Customer relationship management (CRM) helps a company stay connected with its customers, promoting a positive relationship with them which in turn increases sales, revenue, and profitability.
A focus on customer relationship management can improve lead conversion, customer retention, and customer satisfaction, among other metrics, while decreasing customer attrition and the time required to implement new strategies. Positive customer experiences can even justify price increases in the mind of the consumer.
- Alternate definition: CRM is also sometimes used to refer to customer relationship management software, which streamlines and automates the process of managing relationships with customers or clients.
How Does Customer Relationship Management Work?
When a company has an effective customer relationship management strategy, it focuses on building trust and positive experiences with its customers.
When a salesperson helps a customer solve a difficult problem, it's much more likely that the customer will continue to make purchases from that salesperson because a bond has been created. There's also a very good chance that the customer will send friends and family members to that salesperson as well. Although customer interactions can be time-consuming for a salesperson, they can also hold the key to future sales.
This bonding experience and good word of mouth are exactly what a customer relationship management system is trying to accomplish. It's critical that every member of a company's sales team understands and implements its company's CRM strategy. It is one of the key ways a salesperson can be successful, and in turn, make the company successful.
Customer relationship management can include a number of strategies and tools, including special software. CRM software stores customer 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. After that, it's easy for a company to compile reports from this data that help it design a CRM strategy custom-tailored to the profile of each customer.
It's important to train salespeople and other employees how to use the profiled information to keep the customer relationship strong.
One example of a common CRM strategy is the rewards card program that many supermarkets offer. The store gives its customers a free rewards card that grants them access to special deals and discounts when they swipe it during checkout. However, that card also registers and tracks everything the customer buys. This allows the store to create an extremely detailed customer profile based on the purchasing habits of the customer.
Armed with that information, the store can then offer its customers targeted coupons and other programs that can motivate them to buy more products from that particular store.
Benefits of Customer Relationship Management
There are many benefits to customer relationship management for a business.
CRM systems can show how well each sales team is doing and track the performance of the products they sell and the campaigns they implement. Also, each sales manager has access to information about whether their teams are achieving their sales goals or not.
The ability to map out an entire customer journey—from the first contact to the point of sale—is another huge benefit to a business because it allows for accurate forecasting when it comes to determining customer need. Also, given today's abundance of social media, being able to view a customer's social media activity (including their likes and dislikes) can help businesses gauge customer sentiment about different brands.
Another benefit is that the CRM software can automatically send out emails to individual customers, as designated by the salesperson. For example, a salesperson might program their CRM software to send out a thank-you message whenever a customer reaches a one-year anniversary of purchase. The salesperson can also further personalize the relationship by sending an e-card on the customer's birthday, for example.
Of course, it's not just the salesperson and the company that benefits from CRM systems. Customers are better served, too. Highly targeted customer profiles help ensure customer satisfaction, while CRM data can improve pricing to better meet customer budgets.
Customized products and service offerings make purchasing more efficient, and individualized marketing messages can help customers actually find what they are looking for.
- Customer relationship management (CRM) is the sum of the technology and techniques a company uses to nurture its relationships with its customers.
- The goal of customer relationship management is to increase sales, and therefore revenue and profits.
- Customer relationship management often involves the use of CRM software, which tracks customer data and generates reports used by salespeople and key stakeholders.
PWC. "Experience Is Everything: Here's How To Get It Right," Page 3. Accessed Sept. 22, 2020.