What is CRM?

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If you were to ask 10 corporate leaders what CRM (Customer Relationship Management) is, you would likely get 10 different definitions.  Some would say CRM is “improving customer contact”, others would say “understanding customer needs”.  Where as these may be some of the desired results, they fail to encompass the true definition.

In the broadest sense, CRM is a business philosophy that places customer needs as the most important focal point for a business organization.  In the post WWII era, companies flourished because they made something of value – anything.  Production capacity was most important.  During the technology revolution of the 70’s and into the 90’s, product innovation became the most important drivers.  More advanced products, whether perceived or real, drove sales. 

But the market has changed.  Copycats can produce near equivalent products in record-breaking time.  And, in a global market, products can be subcontracted to satisfy any demand.  Now, customers have more product choices than ever.  It is no wonder that customer loyalty is declining.  For these reasons many corporation now consider CRM their primary focus – a focus that at its core attempts to maximize every sales opportunity and optimize every customer’s purchase and ownership experience.

Consider these facts:

• It cost 10 times as much to bring in a new customer than it is to retain one. Industry analysts estimate
• The choices to the customers today are so much so that one needs to make the most of every chance that he gets when he comes in contact with a customer. - (general understanding)
• 71% of repeat purchases are made out of indifference not out of loyalty – Industry analysts estimate
• “some companies can boost profits by almost 100% by retaining 5% more of their customers” – Harvard Business Review
• “…. dissatisfied customers would tell between 7-10 people while a satisfied customer would recommend a company to 3-4 of their friends". – PIMS
• “…. estimating all customer service problems would double profit growth over a five-year period” – Ventura
• 80% of tradeshow leads are never followed up. – Center for Exhibition Industry Research (CEIR)
• Average time a sales representative spends on sales: 47%; on administrative tasks; 39% - “Firstwave Delivers Real CRM Benefits, Fast” in Selling Power Magazine, Jan/Feb 2002, p. 90.
• Percent of qualified telemarketing leads that have only marginal follow-up: 40%; that are never called 50% - LeadMaster

Ultimate customer satisfaction seems like a very lofty goal.  As with all esoteric concepts, putting CRM theory into practice is the hard part.  Applying CRM involves three primary ingredients.

The first 2 ingredients (Professional people and well-designed processes) are not new.  Long before CRM became popular, good business practices included these principals.  What has change is Functional technology.