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Marianne CRM Explained: A Life Cycle Review of CRM Success Factors

 By Marianne Cotter

A Customer Relationship Management Special Report

Table of Contents

  1. CRM Definition & Overview
    The Customer Centric Enterprise
    The Value of the Customer Relationship
  2. How CRM Fits into the Enterprise Software Picture
  3. Operational versus Analytical CRM
  4. CRM Software Components
  5. CRM Software Delivery Methods
  6. The Right Way to Initiate Your CRM Project
  7. Success Factors in Selecting the Best CRM System
  8. Successfully Implementing Your CRM Solution
    CRM Implementation Best Practices
    CRM Deployment Mistakes
  9. The Post Implementation Plan
  10. New Development in CRM

CRM Explained, A Definition and Overview

The Customer Centric Enterprise

A customer who orders a pair of shoes online, returns them for a smaller size and then orders a second pair of shoes from the same website is more than a customer.

If the first shoes are high heels, the customer is most likely a woman who may want a purse in a similar style. If the second pair is children's sneakers, she may be a mother who will be in need children's shoes for years to come. This "customer" is actually a business asset whose buying patterns can be observed, customized and optimized over time, delivering lifetime value to the company. When business processes are reoriented in a customer-centric manner, the data that can be extracted based on customer activity provides the company with a means of increasing its profits over time.

Customer Relationship Management software is the technology that enables the management of that asset across all customer touchpoints and all customer-facing departments from marketing to sales to service, creating a unified customer profile that is accessible across the enterprise. CRM software then uses analytical tools to correlate and synthesize customer data to drive product development, improve marketing campaigns and increase sales efforts. The success of CRM requires that all customer touchpoints (call center, email, website self-service, chat/IM and even social media) be integrated into a single profile of the customer. The elimination of information silos within a company is paramount to achieving ROI on a CRM investment.

It is the focus on the customer that distinguishes Customer Relationship Management applications from all other enterprise software. But the key to CRM is not technology. Technology alone will not transform an enterprise. CRM is a comprehensive, customer-centric approach to dealing with a company's customers, an approach that must be sponsored by the executive team and embraced throughout the organization.

The Value of the Customer Relationship

Understanding the value of each customer to the company is the basis for the shift in business priorities that gave rise to CRM. For many years business operated on the assumption that companies could control customer desires by pushing products on them with aggressive marketing campaigns. It is now generally accepted that customers drive the relationship, not the company.

This evolved from several principles. Beginning with a variant of Pareto's Principle of unequal distribution, somewhere around 20 percent of a company's customers often generate 80 percent of its profits. Therefore, all customers are not the same and do not have the same value to the company. From here it is a matter of identifying high-value customers, grouping them according to value and customizing products, services and marketing efforts to their specific needs. Retaining and optimizing those most valuable customers is much more cost effective than recruiting new customers. As new customers are acquired and tracked, they are similarly customized.

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Beginning with a variant of Pareto's Principle of unequal distribution, somewhere around 20 percent of a company's customers often generate 80 percent of its profits. Therefore, all customers are not equal and do not offer the same value to the company.


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