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The Four Phases of CRM
CRM stands for ‘Customer Relationship Management’.
It’s all about getting to know your customers and using this knowledge
to form profitable relationships with them. CRM has been around in
various forms as long as there have been vendors and customers.
Modern CRM originated in large marketing companies from systems that
served two separate areas – sales force automation and call center
management. The sales force needed information about customers so it
could sell the company’s products. Call centers needed information about
customers so they could handle enquiries and resolve problems.
Although usually separate departments with independent functions and
management both areas required access to the same customer information.
The original CRM systems simply captured, stored and allowed them to
access to this information.
These systems were never envisaged as being there to drive the
organization’s relationship with its customers. But CRM evolved and as
it did so it became increasingly focused on this crucial area.
CRM guru Randy Harris says that
CRM has gone through three phases of evolution and is now entering its
fourth phase. The first three were technology, integration and process.
Phase 1: Technology – the automation of what had previously been handled
manually, including the customer database and customer communications.
Phase 2: Integration – organizations start to direct their operations
toward providing customer satisfaction and create links between various
operating sections that share information and facilitate customer
service.
Phase 3: Process – organizations begin to restructure themselves around
their customer relationships, rating their efficiency on the degree of
customer satisfaction created. This is the current phase of CRM.
Now that we’ve reached stage three the CRM systems that are in use are
automated, highly-refined structures. Most of them however are based on
assumptions that are increasingly proving to be doubtful.
For many years it was assumed that past customer behavior could be used
to predict future customer behavior, that traditional value propositions
would remain in place forever, and that just by improving customer
relationships we could ensure customer retention.
But in recent years these assumptions have become victims of the
increasing application and success of better and more effective CRM
systems.
We’ve found that the behavior of customers changes rapidly as markets
create new purchase opportunities and as alternative means of obtaining
satisfaction arise. Value propositions have changed significantly as
competition across all markets has increased, and every customer
relationship is susceptible to better solutions.
Unless we really know our customers - more than just what will influence
them to make a purchase, we risk creating organizations that are
incapable of achieving optimum profitability because they don’t – or
can’t because of their structure – deliver what the customer really
wants.
The fourth phase of CRM that
we’re now entering is called ‘customer-driven CRM’. Customer-driven CRM
systems require a business to first understand its customers, then to
design systems and infrastructure that will provide them with
exceptional and satisfying experiences both during and after purchase.
Customer-driven CRM looks for answers to some very important questions:
• What will our customers buy?
• When will our customers buy?
• What will make our customers buy?
• How much will our customers pay?
• What creates value for them, and if we create value will this bond
them to us?
Once it has the answers to these questions the business actually
re-invents itself to provide everything that will acquire customers and
retain them. If over time the answers to the questions change, the
business will change as well. In effect, the customer determines the
structure and systems of the business.
To enable this to happen CRM software will continue to evolve,
particularly by more integration of a business’ communications channels,
and by strengthening links to all sources of information within the
organization.
There will be a much greater emphasis on long-term partnerships between
CRM developers and their clients. CRM systems will be designed to grow
as the business grows rather than requiring replacement of CRM systems
at regular intervals.
In the longer term it’s likely that a business will restructure itself
around its CRM system as the system evolves, reducing the time needed to
create effective and more profitable responses to the growing amount and
quality of customer information available for analysis.
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