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Customer Relationship Management (CRM)

CRM: Short Summary


Customer relationship management, or CRM for short, is a business strategy, which is centred around the ideas of nurturing customer relationships, managing customer interactions and learning about customers’ behaviours, feelings and needs. The main objectives behind the vast majority of customer relationship strategies are to enhance customer satisfaction levels and increase customer retention rates. As a result, financial results may also be improved.

The approach itself is data-driven, with information about customers coming from a range of different channels, including telephone conversations, emails, letters, online chat logs and social networking sites. Using CRM software solutions, this data can then be collected, accessed at will, and used to inform business decisions. Generally speaking, multiple departments within a business will take collective responsibility for customer relationship management.

CRM: Detailed Summary


Modern businesses communicate with their customers through a number of channels, including in-person, over the telephone and via the internet. The rise of social media and the emergence of new communication technology, like chatbots and videotelephony, has only added new channels. Crucially, this provides businesses with a wide range of ways to obtain valuable information about individual customers, and the customer base as a whole.

The strategy of customer relationship management is intended to help companies to improve relations with customers, in order to retain more of them. While the origins of customer relationship management can be traced back to the 1980s and the rise of database marketing, CRM itself became a prominent business strategy in the late 1990s and continued to grow in the early 2000s, with companies like IBM and offering their own CRM solutions.

Compiling data from these various sources makes it easier to actually understand customers, respond to their needs, and provide a superior, more tailored customer experience. The hope for businesses is that using CRM to make improvements in these areas will help to generate a greater degree of customer loyalty and reduce complaints, with customers recognising the quality of the service and the effort that the business has put in.

Although a successful customer relationship management strategy will likely result in improvements to financial results, it is important to understand that CRM is not primarily focused on this. Instead, success is primarily measured through customer satisfaction levels. Nevertheless, the assumption is that satisfied customers will be more enthusiastic about products or services, as well as the business as a whole, which can influence their future purchasing behaviour.

Once a business has gathered and analysed customer data, the business also becomes more informed about what those customers need and what they want to see. This can then result in heightened efforts to appeal to them, whether it is through more personal and relevant marketing messages, or new products and/or services.

In most cases, CRM is cross-departmental, and various parts of an organisation will contribute to the wider CRM strategy. For example, customer service, sales and marketing departments will all gather valuable data and feed it into CRM software. Those departments then use the collated information to inform their own individual strategies, which can help to create a much more coherent, company-wide approach to managing customer relationships.

The term ‘customer relationship management’ may imply that the concept is more applicable to business-to-customer (B2C) businesses than business-to-business (B2B) environments. Yet, in reality CRM has become a vitally important approach in B2B settings too. This is because B2B companies tend to have a much smaller base of clients or customers, and they tend to find it harder to attract new ones, making long-term customer loyalty essential for success.

The Benefits of CRM Software Solutions


Customer relationship management strategies are enormously reliant on software, to such an extent that the term CRM is sometimes viewed as being synonymous with CRM software packages. Such software is intended to allow businesses and their individual departments to compile customer data in a single place and make it accessible across the whole business. Data can then be continually updated by staff members across the business and even autonomously.

Some of the customer information that may be input and retrieved through the use of CRM software includes previous interactions with customer service agents, purchase history, contact information and details about specific customer preferences. This information may be taken from any of the aforementioned channels.

By accessing this data, departments can provide a greater level of customer service, tailor marketing and sales efforts, and anticipate or forecast future demand for products or services more accurately. Using the software, technical support teams can also avoid situations where customers need to explain problems multiple times. This is especially important with modern businesses, as customers often raise an issue on one platform and follow up on another.

CRM software solutions can greatly improve the quality and efficiency of customer communications, meaning problems can be resolved easier and more quickly, resulting in higher overall customer satisfaction. Software applications can also help businesses to form a much more comprehensive picture of what their customers are like.

Key Areas of Customer Relationship Management


Customer relationship management includes a number of different components or key areas, with the main ones being:

  • Operational CRM – Assists marketing, sales and service functions within organisations, primarily by improving customer-related business processes. This is typically achieved by collecting data about customers and then using it to allow for marketing, sales and service automation and/or the streamlining of key tasks.
  • Analytical CRM – Involves the collection and analysis of customer data, using techniques such as data mining, machine learning and pattern recognition, in order to identify key trends. The conclusions that are drawn from analytical CRM systems can then be used to make more informed, evidence-based business decisions.
  • Collaborative CRM – Focuses on the sharing of information about customers between the different departments in a business, as well as with relevant external stakeholders, such as suppliers. This data is usually generated from interactions with customers and the sharing between departments allows for a more coherent approach.

Typically, all three of these key areas of customer relationship management will be used in combination. In all cases, the end goal is still to better understand customers and improve the relationship a business has with them.



The concept of customer relationship management is still relatively new, at least in the grand scheme of business practices, but it has become extremely important within both B2C and B2B environments. By collecting, analysing and otherwise utilising data about customers, the interactions a business has with them can be improved, leading to increased satisfaction. The hope is that this then also results in lasting loyalty and reduced customer attrition.

Software applications are central to CRM strategies, allowing customer data to be easily collected, compiled and shared between the different departments. Additionally, this data can be analysed to identify significant trends, while some of the information gathered can help to inform the processes and strategies of individual departments too. Ultimately, customer satisfaction is the key aim, but a successful CRM strategy is also likely to improve financial results.

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