Is A Method Of Interaction With A Customer, Such As Telephone Or Customer Service Desk.

Customer Relationship Management Systems

Customer relationship management is both a business and technology discipline for managing customer relationships to optimize revenue, profitability, customer satisfaction, and customer retention. It uses information technology to track all of the ways in which a company interacts with its customers and to analyze these interactions to maximize the lifetime value of customers for the company while simultaneously maximizing satisfaction for the customers. Customer relationship management helps organizations identify customers who cost little to attract and to keep and who provide the greatest revenues for every marketing or customer service dollar spent.

Partner relationship management (PRM) uses many of the same data, tools, and systems as customer relationship management to enhance collaboration between a company and its selling partners. It provides a company and its selling partners with the ability to trade information and distribute leads and data about customers, integrating lead generation, pricing, promotions, order configurations, and availability.

CRM systems capture and integrate customer data from all over the organization, consolidating the data, analyzing the data, and then distributing the results to various systems and customer touch points across the enterprise. A touch point (also known as a contact point) is a method of interaction with the customer, such as telephone, e-mail, customer service desk, conventional mail, Web site, or retail store

Commercial customer relationship management (CRM) software packages range from niche tools that perform limited functions, such as personalizing Web sites for specific customers, to large-scale enterprise applications. The more comprehensive CRM packages contain modules for partner relationship management (PRM) and employee relationship management (ERM) . Employee relationship management software deals with employee issues that are closely related to CRM, such as setting objectives, employee performance management, performance-based compensation, and employee training.

CRM sales force automation modules help sales staff increase their productivity by focusing sales efforts on the most profitable customers. They provide sales prospect and contact information, product information, product configuration capabilities, and sales quote generation capabilities.

CRM customer service modules provide information and tools to make call centers, help desks, and customer support staff more efficient. They have capabilities for assigning and managing customer service requests.

CRM marketing modules include tools for analyzing marketing and customer data—identifying profitable and unprofitable customers, designing products and services to satisfy specific customer needs and interests, and identifying opportunities for cross-selling, up-selling, and bundling. Cross-selling is the marketing of complementary products to customers. Up-selling is the marketing of higher-value products or services to new or existing customers. Bundling is cross-selling in which a combination of products is sold as a bundle at a price lower than the total cost of the individual products. [Figure 11-9, Figure 11-10]

FIGURE 11-9 CRM software capabilities
The major CRM software products support business processes in sales, service, and marketing, integrating customer information from many different sources. Included are support for both the operational and analytic aspects of CRM.

FIGURE 11-10 Customer loyalty management process map
This process map shows how a best practice for promoting customer loyalty through customer service would be modeled by customer relationship management software. The CRM software helps firms identify high-value customers for preferential treatment.

Operational CRM includes customer facing applications such as tools for sales force automation, call center and customer service support, and marketing automation. Analytical CRM includes applications that analyze customer data generated by operational CRM applications to provide information for improving business performance management. Analytical CRM applications are based on data warehouses that consolidate the data from operational CRM systems and customer touch points for use with online analytical processing (OLAP), data mining, and other data analysis techniques. [Figure 11-11]

FIGURE 11-11 Analytical CRM data warehouse
Analytical CRM uses a customer data warehouse and tools to analyze customer data collected from the firm�s customer touch points and from other sources.

Customer churn is reduced as sales, service, and marketing better respond to customer needs. The churn rate measures the number of customers who stop using or purchasing products or services from a company. It is an important indicator of the growth or decline of a firm's customer base.

Successful CRM implementations require that financial and operational goals and the metrics to evaluate them be clearly defined at the beginning of the project. Metrics for customer relationship management might include the cost per lead, cost per sale, number of repeat customers, reduction of churn, or sales closing rate. Another important metric is the customer lifetime value (CLTV) . CLTV represents the difference in monetary value between revenues and expenses minus the cost of promotional marketing used to retain an account or client.