Customer relationship management or CRM

The term customer relationship management or CRM has entered the field of management and marketing since the early nineties.

At that time, a person named Thomas Siebel had a company called Siebel Systems, and in the form of that company, he designed and offered software for sales automation (contacting customers, tracking orders, registering contracts, etc.).

In explaining its software, Siebel said that this software is in charge of customer relationship management.

Since then, gradually, the term customer relationship management or CRM has become popular and has even found its way into management and marketing books (source).

It might be interesting for you to know that Siebel was later bought by Oracle in 2006, when it had about 4,000 customers, at a price of nearly 6 billion dollars. Oracle still markets and sells its CRM software under the name Oracle Siebel.

CRM software or CRM system?

There is still no consensus on the definition of customer relationship management and it is not possible to provide a definite and final definition and explanation for CRM.

Even the task of CRM is not clear that when we talk about CRM, we are referring to a software or a system.

When we talk about a system, we mean a broad set of activities, processes, and infrastructure that must be in place in an organization (such as an ISO quality management system).

But when we talk about a software, our mind goes to one or more programs that must be installed on a number of computers in an organization.

Interestingly, there are both views of CRM among CRM suppliers and customers.

If you tell this group that you want to implement a customer relationship management system in your company, they will understand this as: “You are going to buy a software or a number of software and install and run them.”

But there are other groups who consider the deployment of a customer relationship management system beyond the purchase of customer relationship management software. These people emphasize that CRM is an attitude. An attitude that seeks to create, maintain and develop and deepen the relationship with customers. The fact that new technology software and tools are used in the establishment of CRM is a secondary issue.

With this attitude, when Peter Drucker said “the goal of every business is to create and keep customers”, he was talking about CRM. Even though many companies selling CRM software did not exist at that time.

Customer relationship management books

The same disagreement in the definition of CRM can be seen in customer relationship management books.

Some books are written as if they want to teach their audience how to work with a software.

Some books are far away from technology and focus more on the intellectual and systemic foundations of CRM.

There is also a third group of books that have tried to take the middle way and mention this point in their title. For example, they write: CRM – A Balanced Approach.

With this explanation, the books of the third category emphasize that they pay attention to both the systemic, strategic and infrastructure aspects of customer relationship management, as well as software techniques and technological aspects.

Here are some of the most common definitions of customer relationship management.

You don’t have to memorize these definitions or bother yourself to understand their details. Our aim is simply to show the diversity of views in the definition of CRM. After you have seen the definitions, we present another classification that will be more important to us:

Defining customer relationship management from Oracle’s point of view

Oracle company (the current owner of the Siebel system) defines customer relationship management as follows:

“Customer relationship management is the use of tools, technology and processes to collect and analyze customer data and use this information to improve the customer experience.”

Defining customer relationship management from Microsoft’s point of view

“Customer relationship management or CRM is a software that is used for the purpose of sales and marketing automation as well as the management of sales and service-related activities within an organization.”

Definition of customer relationship management from the point of view of Gartner

The Gartner company, which is one of the research giants in the field of information technology, defines CRM as completely independent of the software platform as follows:

CRM or customer relationship management is a macro strategy for all business, which aims to optimize profit and revenue and customer satisfaction. To achieve this goal, CRM organizes all business activities around different customer groups and tries to create and develop business behaviors that ultimately lead to greater customer satisfaction.

Defining customer relationship management from the point of view of the CIO site

The CIO site, whose content and articles are known in the field of technology and customer relationship management, defines customer relationship management or CRM as follows:

Customer relationship management or CRM is a strategy to better understand the needs and behavior of customers with the aim of developing and strengthening relationships with them.

What is Salesforce’s definition of CRM?

Salesforce also offers a similar definition:

Customer Relationship Management (CRM) is a strategy for managing all of a company’s relationships and interactions with its potential and current customers, helping to increase business profitability.

Types of CRM Classification of customer relationship management systems

Considering the variety of definitions provided of CRM, it is important to be able to classify these different views in an appropriate way.

Francis Battle, who is a well-known person in the field of CRM, in his book Customer Relationship Management, instead of discussing CRM definitions, has a simple and informative classification of customer relationship management models, which we will review here:

CRM does not have a specific definition; Everyone has defined it in a different way.

There is no certainty even about what CRM stands for, and some consider it to be an abbreviation of Customer Relationship Marketing.

But what’s more important is that customer relationship management is approached from three completely different approaches: strategic, operational, and analytical.

Strategic CRM (a strategic view of CRM)

Some of those who talk about CRM and communication with customers have a strategic view of this area. This means that their view is not limited to simple tasks such as buying CRM software or, for example, installing a store sales software. Rather, they are looking for the whole business to be organized around the customer.

If in this direction, for example, a CRM unit is formed or some people work as customer relations experts, these are considered minor issues. The essence of the story is to pay attention to the concept of CRM, that is, what everyone has paid attention to in the definition of CRM: focusing efforts on customer acquisition and customer retention by increasing his satisfaction and using various tools available to increase customer loyalty.

History of marketing and customer relationship management

Definition of customer orientation

Relationship marketing

Operational CRM (operational view of CRM)

In the operational view of customer relationship management, every process that is related to the customer in some way is equipped with automatic tools using software systems. Marketing, sales and customer service are among these processes.

Suppose you are given the following suggestions in a CRM consulting session:

• You should modernize your support services and consider a special software for it.
• An automated telephone answering system for customers can help solve some of the customer’s needs outside of office hours.
• With the help of a sales support software, whoever contacts your sales expert can instantly see their previous purchase history and have a more effective conversation.
• One of the principles of CRM is that you have a customer club software and the special customer section encourages everyone to become a member of that club.

This type of view of CRM is not wrong, but if it is not accompanied by a strategic view, it can be said to be “very limited”.

However, most automation methods and software equipment can simplify the work of customers and increase customer satisfaction. But the peak of the effectiveness of these activities is when the business is first driven to be customer-oriented and accepts that it wants to move from a product-oriented perspective to a customer-oriented one.

Analytical CRM (an analytical look at CRM)

In the analytical view of customer relationship management, CRM is a tool for intelligent analysis of customer data and information with strategic or operational goals. Therefore, if customer information is collected, or if processes are implemented automatically and software, the goal is to collect more information from customers and analyze them to help make better decisions.

What are the things that are confused with CRM?

One of the common ways to better understand the definition of a concept is to see what is outside of that concept’s circle. Many scientists and writers have used this method.

For example, when Michael Porter wrote about strategy, he used the title What strategy is not in one of his articles and tried to introduce things that are not strategy but are confused with strategy.

In other words, to introduce any land, it is appropriate to know its neighbors first so that the borders are better defined and the possibility of misunderstanding is reduced.

This list is adapted from the book Customer Relationship Management by Francis Battle.

CRM is different from building a database for marketing

In some companies, when they talk about establishing a CRM system or customer relationship management, they mean recording and maintaining and developing a set of customer information so that they can send their advertising messages to them at certain times. In fact, they consider CRM as a support for SMS marketing or email marketing.

While such systems are, at best, database marketing or database marketing.

Many of the companies that email us and you today or send promotional messages on our mobiles have collected a list of our numbers in some way – ethically or unethically.

These collections sometimes think they have a powerful customer relationship management system.

Some of these groups – who think they know this type of marketing in a more scientific way – also define indicators to evaluate the quality of customers. For example, they regularly pay attention to which customers have a higher response rate.

By using such tools, they try to maintain the quality of their database and refine its information.

In CRM, our main priority is to create satisfaction and loyalty and strengthen the relationship; Whereas in database marketing, the main goal is to achieve maximum sales (albeit in the short term).

CRM is not just a subset of marketing unit activities

Sometimes, customer relationship management or CRM is thought of as just a subset of the marketing unit: just like all the other departments and subsets.

Meanwhile, customer relationship management is successful when customer-oriented becomes the key philosophy of the organization and the customer relationship unit can interact with other units in a wide and effective way.

For this reason, we have emphasized many times in the supplement that customer relationship management is not a system or a software; Rather, it is a new definition of the organization’s mission with a customer focus.

You probably know many organizations that have extensive systems called customer relationship management; A four-digit phone number is also provided for customer communication; They have prepared and deployed numerous and expensive software to communicate with customers; The customer relationship management unit is also considered in their organizational chart; But customer-centricity as the ruling mental model and organizational philosophy has not been formed in them.

In the beautiful words of V. Kumar in the book Customer Relationship Management (+):

When we can say that in an organization, the customer relationship philosophy has been established as the operational axis and organizational lifestyle when:

• The production unit can improve its products by guiding the customer relationship management system.
• Human resources management should make the criteria of recruitment and evaluation, retention and dismissal of employees, their relationship with customers.
• The research and development unit should consider the interests and preferences of customers as one of the factors used in making decisions and evaluating new designs.
• And the different units of the organization, all of them get to know more about the customers.

CRM is not a subset or service of the IT unit

The IT unit can serve to manage customer relations; But he cannot be the trustee and responsible for it.

Some managers think that customer relationship management is a new tool for the organization’s IT department. To the extent that they even leave the management of customer relationship management systems and decision making about the capabilities and capabilities of CRM software to their IT specialists.

We must remember that:

Customer relationship management is a part of the organization’s strategic processes and should be considered in the management layers.

Of course, it is obvious that IT and information technology, just as it serves other activities of the organization (such as marketing and advertising and human resource management), should also be used as a tool to implement this system.

Customer relationship management is different from customer club

programs such as Miles & More, which assign points and ratings to passengers for every mile they fly; Or programs that give you points as buyers from online sales sites to use these points as discounts in the future.

One of the developed and efficient types of customer loyalty programs is the Customer Club, which is widely popular today.

There is definitely a connection between customer club and customer relationship management. For example, a company that has powerful CRM systems can design and implement customer club programs more efficiently.

For some loyalty programs, specific forms must be completed. For others, it is necessary for the customer to pay a fee to be accepted as a member of the customer club.

But in customer relationship management, everyone who has had a relationship with the organization, regardless of whether his relationship has led to a purchase or not, and whether he has registered to enter the customer club and loyalty programs, lottery and similar programs or not. , is considered a valuable audience and should be taken care of