General CRM Explanations – brainX Handbuch

1. What Does "CRM" Mean?

Customer Relationship Management, abbreviated CRM, refers to the consistent alignment of a company towards its customers and the systematic design of customer relationship processes. The associated documentation and management of customer relationships is an important building block and enables in-depth relationship marketing.

In many industries (e.g. telecommunications, mail order, service companies), relationships between companies and customers are long-term in nature. CRM is used to manage these customer relationships, which is intended to have a significant impact on business success.

2. Background

Customer engagement and retention are becoming increasingly important, as acquiring new customers can cost up to five times more than retaining existing ones. For this reason, many companies store all customer data and all transactions conducted with them in databases. This data can be integrated and processed to be available throughout the company in the appropriate form wherever needed. Data and transactions are always viewed in the context of a company's processes.

CRM supports communication in the customer process with reliable figures, data and facts, in order to focus attention on relationships with high customer value and to identify weaknesses in dialogue with the customer. CRM software, for example, provides a structure to ensure a standardised workflow. Nevertheless, the process does not align itself to the software – rather, the software should align itself to the processes.

CRM is a holistic approach to business management. It integrates and optimises all customer-related processes across departments in marketing, sales, customer service, and research and development. This is done on the basis of a database with corresponding software for market development and on the basis of a previously defined sales process. The objective of CRM is to create added value for both customers and suppliers within the framework of business relationships.

3. Objectives

Since CRM operates in close interaction with marketing, its concrete objectives should be derived from the marketing objectives. In general, the aim is to increase customer satisfaction and purchase frequency through up-selling and cross-selling by analysing purchasing behaviour and deploying the appropriate marketing mix instruments, to retain existing customers with tailored campaigns, and to convert prospects into customers – the so-called conversion.

The goal of a customer relationship management system is to visually represent documented information that can be clearly attributed to a customer, through consolidation, generalisation, combination and abstraction, in order to provide meaningful answers to the maximum possible number of potential marketing questions. At the same time, central data capture reduces costs, increases response and delivery speeds, and improves customer orientation by enabling customers to be offered individualised services tailored to their needs. The ease with which databases within CRM can be analysed means that, for example, a change in customer behaviour on a large scale can indicate changed needs or new competitors.

4. Processes

Starting from the premise that CRM is a means of communication in the customer process, five areas can be highlighted for which CRM is particularly relevant: Sales, Marketing, Billing (Faktura), Support and Projects. These five business processes also define the internal and external organisational units (e.g. employees, customers, business partners, business units) that are affected by CRM. The subdivision also serves to structure functional questions, for example when determining which functions should be available in particular in operational and analytical CRM.

Examples: The marketing department selects customer data for targeted customer outreach as part of campaigns. Sales and service use a central database both for new customer acquisition and for existing customer management, to give all parties in the company a uniform view of the customer and their history.

5. CRM Systems

Software specifically designed for customer relationship management is called a CRM system. This is a database application that enables structured and, where applicable, automated recording of all customer contacts and data. This data supports the work of sales staff in many ways through its permanent and comprehensive availability.

CRM systems are predominantly based on standard software products. Such programmes are available on the market in great variety and across all price ranges for typical requirements. CRM solutions for special requirements, on the other hand, are usually created as individual solutions.

In most cases, proprietary software solutions are the primary option for customer management. However, software-on-demand, SaaS and open-source solutions also exist. On-demand solutions are immediately available. Users in most cases only pay for usage and save themselves the sometimes costly technical infrastructure. Open-source solutions are largely freely available and therefore inexpensive to procure.

When making a selection, the most important factors are the software's ability to be customised to the specific task at hand within the company, and the available interfaces to the existing software landscape. The main part of the costs of customer relationship management arises not in the procurement of the software, but as personnel costs in the planning and execution of campaigns and in the maintenance of data.

5.1. Stored Data

Which data is stored depends, among other things, on the specific objectives of the CRM and the industry of the company. The range extends from simple contact data, through account data, to sometimes very personal data such as credit information, personal information, criminal records and debt collection. Data protection must therefore be strictly observed when storing and processing data and when granting access rights.

This applies without restriction even when data collected within the scope of a data protection law is processed outside the scope of that law. If performance and behaviour monitoring of employees is possible in the relationship between customers and employees, employment law provisions must also be taken into account.

In view of the legal situation, refraining from storing and processing sensitive data (e.g. personal data) is often the most practical way to respect the rights of the individuals to whom this data relates.

5.2. Benefits

A CRM system makes a decisive contribution to business success, as it allows you to track the complete history of interactions with customers. If you want to be successful, you need a complete overview: from calls made and meetings held to the next steps required to close a deal or expand the customer relationship.

In a CRM system, you can store all customers, prospects ("leads") and service requests together with all contact information in a central customer database. This information is available to you at any time on both mobile devices and desktop computers in the form of meaningful dashboards and reports.

Marketing professionals use CRM systems to identify potential revenue opportunities for lead generation. Forecasts of expected results can be created more easily and accurately. With a CRM system, marketing professionals have full transparency and can always access information when they need it.

Modern CRM systems also support employees in day-to-day customer dialogue. For incoming calls (CTI – computer telephony integration) or emails, etc., the appropriate customer data can be displayed directly based on the sender ID. A clear contact history shows all interaction points with the customer including notes. Emails and other files are directly linked. Through an integrated workflow engine with ticketing system, direct access to sales opportunities or service tickets is provided.