Customer Relationship Management ("CRM") is about knowing your customers, and using that information to create greater value for your customers and for your firm.
CRM enables a firm to identify and analyze their business at an individual customer level, rather than at a mass customer level. Breaking your customers into various groups or segments allow firms to identify trends and opportunities with their customers that help drive better business and customer decisions.
CRM can be as simple as creating and managing a customer database with names and contact information for your customers or as complex as building predictive models to determine which customers are most likely going to respond to a marketing promotion campaign.
It has been known for a long time that customers are different. They are different in the way they behave, what they buy, what they want, how much they are willing to pay, and their reasons for buying from your company.
The old age of marketing treated all customers the same with mass marketing and advertising, but only because firms did not have the methods or know how to treat and target their customers differently based on their unique needs.
CRM helps a firm identify the unique wants and needs of their customers and helps a firm determine how they change their offerings to create greater value for each individual customer rather than offering every customer the exact same thing at the exact same time.
In today's digital age, firms are able to capture immense information about their customers and leverage that information to provide more customized service for their customers. Every customer has different needs and wants, and the ability to turn digital information into information that helps you cater to those specific needs for each and everyone of your customers is starting to unfold and will undoubtedly be a huge driving force behind successful business.
Many firms in the past could lose a customer and never even know it. Now with CRM in effect, a firm may be able to run a monthly report on customers who have not purchased in the last 12 months and customize an offer to those customers as way to bring them back to the business. Once a customer is gone, it can be very difficult to bring them back and costs the firm several fold more to acquire a new customer to replace the lost customer.
Because of its importance, CRM is used in all industries and in most businesses. As an entrepreneur and small business, building a solid CRM solution early on will help you drive greater customer satisfaction as you learn more about whom your customers are, what they want, and how you can deliver the greatest value for them. CRM also enables a small business to build closer relationships with their customers.
Marketers know that customers buy based on trust and relationships, not just on price, so rather than try to compete on price, compete by building closer relationships with your customers. One popular example of an effective CRM solution is using birthday promotions. Birthday promotions show the customer that the business cares, knows who the customer is, and usually provides some added benefit to the customer through a discount or other promotional offer.