What is CRM?
Know Your Customers and Treat Them Uniquely
Customer Relationship Management (CRM) is a broad term that covers concepts used by companies to manage their relationships with customers, including the capture, storage and analysis of customer, vendor, partner, and internal process information.
CRM is not just a technology, but rather a comprehensive approach to an organization's philosophy in dealing with its customers.
Customer Relationship Management (CRM) is a business philosophy involving identifying, understanding and better providing for your customers while building a relationship with each customer to improve customer satisfaction and maximise profits. It's about understanding, anticipating and responding to customers' needs.
To manage the relationship with the customer a business needs to collect the right information about its customers and organise that information for proper analysis and action. It needs to keep that information up-to-date, make it accessible to employees, and provide the know how for employees to convert that data into products better matched to customers' needs.
The secret to an effective CRM package is not just in what data is collected but in the organising and interpretation of that data.
CRM Challenges
- Most companies do not have the information about customers to establish close relationships.
- CRM requires companies to use the "customer" as the lens to understand and define the marketplace (this is difficult since most companies are oriented towards products or finances or markets)
- CRM Systems can be a struggle to get up and running (people make comments like "I don't have time to enter the information")
- I don't know who my customers are
- We don't have contact with customers because we sell via channels
- Our internal systems don't provide a single unified view of our customers
- I don't know which customers are most valuable and deserve special attention
- I don't know why my customers defect
Why CRM?
- Customers: Always been the Focus of Business
There is only one valid definition of a business purpose: to create a satisfied customer. - Relationship: The New Focus
A customer becomes more profitable with time because:- High Acquisition cost exceeds gross margin initially
- Retention cost much lower
- Greater share of customer wallet boots profits
- Management: Focus on Maximizing Life-Time Value (LTV) of CustomerRelationships
- A big challenge to shift corporate thinking from delivering a product to serving a customer
- Measure and manage customer profitability
- Become Customer-Centric
CRM Aspects
There are three aspects of CRM which can each be implemented in isolation from each other:- Operational - automation or support of customer processes that include a company's sales or service representative
- Collaborative - direct communication with customers that does not include a company's sales or service representative (self service)
- Analytical - analysis of customer data for a broad range of purposes
Operational
Operational CRM provides support to "front office" business processes, including sales, marketing and service. Each interaction with a customer is generally added to a customer's contact history, and staff can retrieve information on customers from the database when necessary.
One of the main benefits of this contact history is that customers can interact with different people or different contact channels in a company over time without having to describe the history of their interaction each time.
CollaborativeCollaborative CRM covers the direct interaction with customers, for a variety of different purposes, including feedback and issue-reporting. Interaction can be through a variety of channels, such as web pages, email, automated phone (Automated Voice Response AVR) or SMS.
The objectives of collaborative CRM can be broad, including cost reduction and service improvements.
AnalyticalAnalytical CRM analyzes customer data for a variety of purposes:
- Design and execution of targeted marketing campaigns to optimise marketing effectiveness
- Design and execution of specific customer campaigns, including customer acquisition, cross-selling, up-selling, retention
- Analysis of customer behavior to aid product and service decision making (e.g. pricing, new product development etc.)
- Management decisions, e.g. financial forecasting and customer profitability analysis
- Prediction of the probability of customer defection (churn).
Business Value of Customer Analytics - Think about all the money you're saving not going after customers that the model says will have a very low response rate. The marketing campaign based on a predictive model of propensity to purchase is much different from how you ran it in the past when campaigns were based on selecting media for the targeted audience.
Car Manufacturing Business CRM - Example
If they maintained a database of which customers buy what type of product, and when, how often they make that purchase, what type of options they choose with their typical purchase, their colour preferences, whether the purchase needed financing etc., the manufacturer knows what marketing material to send out, what new products to promote to each customer, what preferences/options may swing the sale, whether a finance package should be included in the marketing material and when would be a good time to target each customer.
They could use the information to build a relationship with the customer by reminding customers of service dates, product recalls, and maybe even to send the customer a birthday card.
Car Manufacturing Business - Throught Analytics:- Build profiles of our car owners
- Segment by Value Tiers
- Build Life-Time Value Indices and Loyalty Indices
- Develop Measures of Retention Risks
System can identify a loyal car owner (because she had purchased multiple cars from the same vendor) but is having service warranty problems. We can identify her as a retention risk and take proactive action right away to keep her as a loyal customer rather than let her fall off the radar screen. - Help the call center representatives to get a complete view of each caller's history with the company - computer screen will show what vehicle the customer currently owns, vechicles owned before, theri service histort, their previous contacts with the company and whether there is a current promotional offer that they are eligible for and that we can offer while they are on the phone.
CRM Software Systems
Selecting a CRM (Customer Relationship Management) software solution is a significant undertaking that requires careful planning and managed execution.
The real question at this early point is "what do you need" to accomplish your customer relationship management objectives?
Top 5 On-Premise CRM Software Systems
On-premise software refers to the use of an executable computer program (software) installed on the premises (in the building) of the person or organization using such software.
| Siebel | Microsoft CRM | Onyx | Pivotal | SAP |
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Top 5 On-Demand CRM Software Systems
On-Demand refers to a service or feature which addresses the user's need for instant gratification and immediacy of use.
| Salesforce.com | Aplicor | Entellium | Microsoft CRM | RightNow |
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Top 5 Open Source CRM Software Systems
Open source is a set of principles and practices that promote access to the design and production of goods and knowledge. The term is most commonly applied to the source code of software that is available to the general public with relaxed or non-existent intellectual property restrictions. This allows users to create software content through incremental individual effort or through collaboration.
| SugarCRM | Vtiger | Daffodil | Anteil | Compiere |
CRM Generations Comparison
| # | 1st Generation CRM | 2st Generation CRM | 3st Generation CRM | 4st Generation CRM |
|---|---|---|---|---|
| Business Model | Commerce | Commerce / E-Commerce | Commerce / E-Commerce | S-Commerce |
| Representative Vendor | Siebel Systems | Salesforce.com | SugarCRM | Consumer Generated CRM |
| Primary Architecture | Client / Server with mobile extensions | Hosted, but with no access to source code | Commercial Open Source | Company Hosted - Consumer Controlled |
| Ownership Costs | Expensive licensing, support, integration and customization | Lower licensing costs, limited customization & expensive integration | Low cost leader in licenses, customization and integration | Extensively lower |
| User Adoption Rate | Poor. System geared primarily towards management needs | Fair. Interface became complex sales and management | Best. Open source makes userfriendly features easier to implement | Superior. Conversation based thus intrinsically global |
| Support for Globalization | Limited. In general, language support is hard-wired | Limited. Same problem as first generation CRM | Extensive. Templates provide users with 20+ selectable languages | Community based thus intrinsically global |
| Core Functionality | Good. Maturity of software resulted in extended features | Limited. Feature creep that is isolated from other applications | Excellent. Benefits from a large community of developers. | Simple and based on community effort |
| Customization Capability | Poor. Customization generally requires a programming staff | Fair. Supports the changing of fields and screens | Best. Allows for easy implementation of new features | Extreme every customer decides how to participate |
| Integration Capability | Good. Server portion of implementation has database | Poor. Backend integration very difficult | Allows maximum integration | Based on open platform |
| Customer Support | Good. Client/Server CRM vendors provide adequate support | Good. Hosted CRM vendors provide adequate support | Good. SugarCRM provides full support of core product set | Primary focus |
| Integration with Legacy Systems | N/A. These are legacy systems | Difficult. Hosted model precludes deep connectivity | Easy. Open source is adaptable to legacy systems | Open and shareable thus fully integrated |
| IT Personnel Costs | High. Experts in Client/Server difficult to locate | Costs hidden until environments become more complex | Low. Implementation in LAMP is familiar to most programmers | Simple Ajax integration |
Open Source Suggestion - Sugar CRM
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SugarCRM is the world's leading provider of commercial open source customer relationship management (CRM) software for companies of all sizes. Sugar easily adapts to any business environment by offering a more flexible, cost-effective alternative than proprietary applications. SugarCRM's open source architecture allows companies to more easily customize and integrate customer-facing business processes in order to build and maintain more profitable relationships. SugarCRM offers several deployment options, including on-demand, on-premise and appliance-based solutions to suit customers' security, integration and configuration needs. |
| Current Version - 4.5 | |
| Category - On-Premise Mid Market CRM Solution / SaaS Mid Market CRM Solution | |
| Client Platform - Web Browser | |
| Server Platform - Microsoft IIS. Apache | |
| Database Platform - Microsoft SQL Server, MySQL | |
About the Product -
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Sugar 4.5 Platform Content -
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| Launch Site | |
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| Demo - Sugar Enterprise Edition | |
| Demo - Sugar Professional Edition | |
| Demo - Sugar Open Source Edition | |
| Download |
Alternative Open Source Suggestion - vTiger CRM
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vTiger has the mission to bring affordable, enterprise IT solutions in CRM, Groupware and other areas. vTiger has been established with a vision to offer best-of-breed open source solutions that are integrated, validated, and certified with additional functional features augmented by our own contributions. We certify the distribution, and provide world-class support. vTiger products may be downloaded and used free of charge, with support and subscription services providing our revenue. |
| Current Version - 5.0.3 | |
| Category - On-Premise Mid Market CRM Solution | |
| Server Platform - Microsoft IIS. Apache | |
| Database Platform - MySQL | |
About the Product -
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Customer Results using CRM
- Doubled profits in two years. (Source: BT)
- Grew sales more than 300 percent. (Source: ViewSonic)
- Saved 17 million per month in billing costs. (Source: Verizon Wireless)
- Reduced call handling times by 25 percent. (Source: US Department of Homeland Security)
- Achieved a 32 percent increase in retail checking customers. (Source: PNC Bank)
Bibliography
- evalica©2007