Customer Relationship Management (CRM)
CRM is
a business philosophy based on the premise that those organizations
that understand the needs of individual customers are best positioned to
achieve sustainable competitive advantage in the future.
- A customer strategy starts with understanding who the company's customers are and how the company can meet strategic goals.
-
As the business world increasingly shifts from product focus to
customer focus, most organizations recognize the treating existing
customers well is the best source of profitable and sustainable revenue
growth in the age of e-business, however, an organization is challenged
more than ever before to truly satisfy its customers.
Recently, Frequency, and Monetary Value
An
organization can find its most valuable customers by using a formula
that industry insiders call RFM-recency, frequency, and monetary value.
In other words, an organization must track:
- How recently a customer purchased items (recently)
- How frequently a customer purchases an item (frequently
- How much a customer spends on each purchase (monetary value)
The evolution of CRM
Knowing
the customer, especially knowing the profitability of individual
customers, is highly lucrative in the financial service industry.
There are three phases in the evolution of CRM:
1. CRM Reporting technology help organizations identify their customers across other applicants
2. CRM analysis technology helps organizations segment their customers into categories such as best and worst customers.
3. CRM predicts technological help organizations make predictions regarding customer behavior such as which customers are at risk of leaving.
The Ugly Side of CRM: Why CRM Matters More Now than Ever Before
Now
companies have no choice as the power of the customer grows
exponentially as the internet grows. In every case, customers have
become an integral part of the action as a member of the aggregated,
interactive, self-organizing, auto-entertaining audience on businesses.
However, this should no be a surprise, since it was the customers crazy
passion and hobbies and obsessions-that build up the web in the first
place.
Customer Relationship Management's Explosive Growth
When customers buy on Internet, they see, and they steer, entire value chains.
-
Customer web interaction become conversations, interactive dialogs with
shared knowledge, not just business transaction. Web- based customer
care can actually become the focal point of customer relationship
management and provide breakthrough benefits for both the enterprise and
its customers, substantially reducing costs while improving service.
- Current users allow allocating 20 percent of their IT budget to CRM solutions.
Using Analytical CRM to Enhance Decisions
The two components of a CRM strategy are:
- Operational CRM supports
traditional transactional processing for day-to-day front-office
operations or systems that deal directly with the customers.
- Analytical CRM supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers.
The
primary difference between operational CRM and analytical CRM in the
direct interaction between the organization and its customers.
-Personalization occurs
when a website can know enough about a person's likes and dislikes that
it can fashion offers that are more likely to appeal to that person.
Many organizations are now utilizing CRM to create customer rules and
templates that marketers can use to personalize customer messages.
Customer Relationship Management Success Factor
CRM
solutions make organizational business processes more intelligent. This
is achieved by understanding customer behavior and preferences, then
realigning product and service offering and related communications to
make sure they are synchronized with customer needs and preferences. If
an organization is implementing a CRM system, it should study the
industry best practices to help ensure a successful implementation.
Using
he analytical capabilities of CRM can help a company Anticipate
customer need and proactively serve customers in way that build
relationship, create loyalty, and enhance bottom lines.
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