Once upon a time, there was an employee in Sales who knew everything about her customers: birthdays, hobbies, holiday destinations. She had even made note of their wedding anniversaries, the names of their children and their favourite meals. Her notebook was the most important tool for good customer relationships.
That was the case in the past. But, in principle, it is still the case today: the more we know about our customers, the better we can shape customer relationships.
Some things are different today, however: customers generally have contact with companies via many different channels: in person, on the telephone, in an online shop, via email, on Facebook, etc. Knowledge of these customer relationships is no longer exclusive to one person’s notebook, but rather shared by all those who have direct or indirect customer contact. That means not only in Sales and Retail, but also in Accounting, the Complaints department, Customer Service and Marketing.
Software for customer care is available in order to collect all this knowledge in one place and make it usable by all. This is generally referred to as customer relationship management, or CRM for short.
What is CRM?
Customer relationship management (CRM), is defined as a system in which all the facts about a customer and their relationships with a company are collated in a structured way in one place: for example, their purchase history, enquiries, sales turnover, wish list for the online shop, contact data and emails.
With this information collected by the CRM software the company looks to acquire new customers in an efficient, structured and active manner, retain existing customers or win back customers they had lost. In this way, the use of a CRM solution promotes company growth.
What can CRM systems do?
Most CRM systems offer the following functions as standard:
- Administration of customer data (names, addresses, contact data, consent to advertising)
- Storage of contact history (emails, phone memos, visits, contact partners on the customer side and in the company)
- Customer selection (filtering by own criteria such as turnover, region, branch)
- Document management (data import function, e.g. of contract data, fast data recording)
- Task administration (follow-up) and project management (with editing and comment function)
- Calendar and appointment management
- Offer and sales planning
- Interfaces to other possible platforms (newsletter, accounting)
Depending on the size of the company, the number of customers and the variety of customer contacts, additional functions can be activated.
Good CRM software is scalable and grows with the company. That means that over time it can process more customers, more campaigns, more data and more analyses and integrate additional functions. Above all, it allows more employees in the office or on the go to access and work with the data.
What tasks do CRM systems support?
Aside from the individual functions, CRM systems differ in terms of their requirements and areas of activity. The following components are typically included in CRM:
- Communicative CRM: all customer contact points are integrated
- Operational CRM: marketing and sales processes made digital
- Analytical CRM: turning data into information
- Collaborative CRM: networking internal and external partners
Communicative CRM perfectly coordinates all methods of customer contact, because customers should receive the same quality of service in communication everywhere – in the real world and the digital one. This includes the integration of a wide variety of contact channels into CRM: telephone calls, emails, the online shop, post and personal contact.
Operational CRM includes functions that support marketing and sales processes. An example is the management of mailing campaigns and promotions: who receives which offer? Sales can use this to generate leads and better understand which phase of the sales process the customer is currently in. It is therefore important that all customer data and all customer contact is documented and viewable in the contact history.
Analytical CRM is becoming increasingly important. The abundance of data generated through interactions with customers is a valuable source for further development of products, services and offers. Business analytics turns data into analyses for customer reports. Data and text mining allow patterns to be recognised, connections to be understood and new ideas for selective customer communication to be found.
A fourth component has now been added to the initial three: collaborative CRM. This connects all parties who work together to serve the customer. That not only means internal employees, but could also be suppliers and other partners, who, for example, a mechanic might involve in a discussion with the customer via a live-video call in order to find a solution together quickly.
For which companies is CRM worthwhile?
The answer to this is very clear: for everyone. Even a start-up with three employees and seven customers can make use of the advantages of CRM. Of course, that also applies to joiners, bakers, dentists and flower shops, as well as small plumbing businesses, car mechanics and industrial production operations. The more a company grows, the more the CRM will do.
It is important from the word go. And if you establish it early on, you won’t get bogged down with lists and customer data in different systems – because you will often lack the time to tidy up the data chaos when you most need it: when there is a lot to do because the company is growing. At that point, too, customers want first-class service – which is more achievable with CRM already established.
What are the benefits of CRM?
If you are familiar with customer care using Excel spreadsheets, you will particularly appreciate the centralised data management in CRM. There is no more redundant data, and the full history of all customers is available to everyone. The quality of data is also higher, because the data from all employees with customer contact can be updated and maintained.
Sales campaigns can be viewed transparently in CRM, making it possible to evaluate and plan them. What did my last promotion do? Marketing and sales can now precisely calculate and evaluate promotions, rather than relying on instinct as before.
The information collected on each customer can, for example, be used to identify potential for reselling, cross-selling and upselling and to develop suitable promotions. Taking care of existing customers (retention marketing) can also be viewed from a new angle with analytics and integrated into work methods.
CRM increases both the quantity and quality of customer relationships – highly efficiently in both cases.
How does CRM take care of customer relationships?
The more we know about the paths and needs of potential customers, the more touchpoints we have in sales and marketing to actively shape customer relationships. The path from an interested non-customer to becoming a regular customer is referred to as the buyer’s journey or customer journey.
This journey describes the steps a customer takes from discovery and investigation of an offer, via the purchase decision, to excitement about the purchase of a product or service. A differentiation is made between five phases:
Awareness: The offer is perceived.
Consideration: The potential customer considers that the product could be useful.
Conversion: The product is purchased and used.
Retention: Satisfied customers will buy the product again or try other products from the same company.
Advocacy: If they are impressed by their experience, they will talk about it and be happy to recommend the product or company.
Customer relationship management accompanies and simplifies this buyer’s journey process. Potential customers are registered and identified more quickly. Communication with content and offers is targeted and customised – depending on the phase of the customer relationship.
The CRM system evaluates the results after each marketing promotion and sales campaign. Instinct is still important, but with CRM a sound analysis and evaluation that you can rely on, and build on, is now provided.
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How do I find the right CRM system for my company?
As with all software products, the CRM market also offers various packages aimed at different company sizes and complexities of use cases. Fundamentally, the products differ in terms of where the customer data is secured:
- Desktop (local installation at a workspace)
- Enterprise (client server/on-premises on own server)
- Cloud (SaaS – in the cloud of an external partner)
The cloud offers many advantages, but also has one decisive disadvantage: the data is stored on an external server outside the company. Some businesspeople still struggle with the idea of having customer data hosted by an external partner.
In order to find the right CRM system, a detailed inventory of the requirements the system should fulfil is required. To this end, you can answer a number of questions with your team:
- How does Sales work currently?
- How many employees will use the CRM tool?
- Do you require local support and service?
- What are the data protection requirements for the system?
- How user-friendly is the CRM system?
- Can we test the tool?
Does CRM grow in line with its tasks?
Yes, it can and should. There are many arguments in favour of a cloud-based CRM solution. It is simple and economical to implement. It has excellent scalability – not only in terms of the quantity of data, but also the functions. That means you can start with a simple version and add more features over time.
The user-friendliness of the software is the most important criterion for acceptance by the employees who are supposed to use the CRM system. You should not lose sight of that among all the other requirements: how easy and intuitive is it to work with? With this in mind, as many employees as possible should test and be in favour of the CRM software before you choose it.
Who takes on the task of introducing CRM?
Anyone who wants to introduce CRM into a company focuses on customers and their relationships with the company. Technology and automation help with lead generation, follow-up and targeting of new customers.
It is important that all departments and employees who are in contact with customers are on board in the preparation of the CRM project. This is not an IT project, but rather a change management project, because it will change the way many employees in various departments will work.
Everyone should be aware of what targets they can achieve with the system, how it changes the way they work – and how it improves work in the process. It is not about collecting data in a frenzy, but rather looking after and taking care of each and every customer in the best way possible and encouraging them to purchase again.