Customer Relationship Management (CRM)

Customer relationship management (CRM) has existed since people first started selling things. The first shopkeeper who stopped to chat with his customers, who remembered their names, and perhaps gave them a small freebie for continually using his services was practicing a form of customer relationship management by making customers feel special. He was also probably seeing the favorable effect on his bottom line.

Today, with business interactions becoming digital and more remote, and person-to-person contact becoming scarcer, CRM is more important than ever. Businesses need to build and maintain relationships with their customers. A faceless company is not personable or engaging, and it has to work harder to fill the gap between attracting and retaining customers (and their good will). The relationship a customer builds with a company is often the reason they return, but building it today is more difficult than ever, in a society where data is protected, customers are smart in their exercise of their right to choose, and a competitor can be just a click away.

CRM is a customer-focused approach to business based on fostering long-term, meaningful relationships. CRM is not about immediate profit. It's about the lifetime value of a customer, the purchases they will make in future, the positive word of mouth they will generate, and the loyalty they will show a brand. Effective CRM enables businesses to collaborate with customers to inform overall business strategies, drive business processes, support brand development, and maximize return on investment.

There is a truism that a happy customer tells one person, but an unhappy customer tells ten. With your customers' voices are being heard on blogs, forums, review sites, and social media, they can talk very loudly and impact your business much more easily.

Key CRM Terms

Customer
A person who buys or uses goods or services, with whom a company should develop a relationship.
Customer-centric
Placing the customer at the center of an organization’s business planning and execution.
Customer-driven
Allowing and encouraging customers to drive the direction of a business.
Customer lifetime value (CLV)
The profitability of a customer over their entire relationship with the business.
Customer relationship management (CRM)
A strategy for managing a company’s relationships with clients and potential clients. It often makes use of technology to automate the sales, marketing, customer service, and technical processes of an organization.
Data
Statistics and facts collected for analysis.
Data mining
The process of analyzing data to discover unknown patterns or connections.
Key performance indicator (KPI)
A metric that shows whether an objective is being achieved.
Metric
A defined unit of measurement.
Model
A strategic visual representation of a process to which a company adheres.
Prospect
A potential customer.
Stakeholder
A person or organization with an interest in how a resource is managed.

Licenses and Attributions

Chapter 8: Customer Relationship Management (CRM) from eMarketing: The Essential Guide to Marketing in a Digital World, 5th Edition by Rob Stokes and the Minds of Quirk is available under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported license. © 2008, 2009, 2010, 2011, 2013 Quirk Education Pty (Ltd). UMGC has modified this work and it is available under the original license.