In this blog, I will be covering one of my favorite topics and most relevant tools to be successful in the real world of business: Customer Relationship Management. Although this tool takes many forms, many view it as a simple program, system, or way of recording preferences. In reality, it is more like a comprehensive business strategy if it is implemented correctly and can have immeasurable benefits. CRM has many purposes and methods to reach its goals and helps considerably in building, maintaining, and improving any business. In today’s business world, relationships can be the greatest asset for an organization, although at times they can become a major liability. This makes the importance and real-life application of CRM even more important and can mean the difference between record profits or losses and success or failure.
As cited in our text, Business 2.0 calls relationship capital the most important asset a firm can have (“Relationships Rule,” 2000). In the business environment of today, I could not agree more with this statement more. In this world, the customer is in charge of the market and is now empowered to buy or not to buy, as well as communicate negatively or positively more than ever before. With the importance of feedback so much higher in today’s digital age, all organizations must provide for their customers like never before: it is now love them or lose them, along with the thousands they tell. It is overwhelming how much of a difference customer satisfaction can have for an organization which has made building and harvesting these relationships the single most important part of facilitating and ensuring future business success.
While suppliers used to simply throw out a marketing effort or good and see if some consumers would take the bait, successful marketers and businesses of today must make very calculated attempts at their targeted customer base and focus more than ever on satisfying their needs to the fullest. In the past, CRM used to mean a chalkboard of regular customers and perhaps some index cards with some information jotted down on them. However, technology has made it possible for CRM and data management systems to take a whole new form. There are now advanced software packages available that have transformed the way organizations focus on and capitalize on their greatest asset: their valued and loyal customers. One of the greatest challenges organizations of today face is the ever- changing market, which has required them to focus on what serves the customers of today and the future best, not what served them best in the past. However, as the market does change, it has been crucial to stay focused on their target market, as they are the ones with greatest buying power and brand loyalty.
Successful organizations have also realized that it is more important than ever to maintain and build upon their existing customer base and have finally recognized the value of a lifetime customer. For nearly any company, the majority of their profits come from repeat customers who are loyal to the brand. Although this is a good attribute, it also means the consumer will come to expect more and very consistent experiences each and every time. In order for these moments of success in service to occur, it is crucial to focus on their goal of meeting and exceeding their every expectation in order for them to keep coming back for more. To fulfill this perceived value, this is where the effective CRM strategies come into play.
CRM has been noted to take three primary approaches, each engineered to meet a different goal. These include sales force automation (utilized primarily in B2B efforts), marketing automation, and customer service. One organization that has implemented a truly state of the art customer service oriented CRM database is the Ritz-Carlton hotel company, which they refer to as "Mystique." I was introduced to this system in reading “The New Gold Standard,” written by Dr. Joseph A. Michelli. He introduces the reader to the many processes of CRM that this successful hotel has utilized in their resorts, which includes a variety of individualized personal attributes for the hotel staff to be informed of. By using this system, the company has found that the lifetime value of their customer has increased to over 1 million dollars (Michelli 117). It was very interesting to see the real-life application of this kind of technology, as well as the drastic benefits they have seen.
CRM has many different and lasting benefits but primarily include profitability, revenue, retention, growth, loyalty, goodwill, targeting, and most importantly, wallet share. The most important aspect of CRM is to focus on the customer base you have to get the most sales out of each customer. In this situation, the organization, their marketing efforts, and every employee down the line targets the customer on an individualized, long-term basis. By doing so, the value of that customer is stretched to the fullest and results in a greater level of profitability for the firm. On this same aspect, the customer also gains because they have all of their needs met to the fullest, including their unrequested ones if the CRM is truly working.
Although I have introduced some of the endless benefits of CRM and the ways it exists in today’s business world, the most fundamental and crucial aspect is the relationship. This is the single part of doing business that can determine if that customer base can be tuned into a lifetime customer by refining the opportunities that exist on an individual level. However, the most important and frequently overlooked aspect of CRM is the fact that all alone, the data is only a bunch of information that will not be generated into any value to the company. And if it is used, this resource should be used to allow the organization to leverage their knowledge in turning actual profits from their understanding of the relationship, the individual, and the ways to improve it.
Michelli, J., (2008). The New Gold Standard. New York: McGraw-Hill.
“Relationships Rule” (2000). Business 2.0 (May), pp. 303-319.
Strauss, Judy and Raymond Frost. E-Marketing. Englewood Cliffs: Prentice Hall, 2008.