Why CRM?

It`s being called many things, customer relationship management, customer value management, synchronous customer management and the latest from Forrester, e-relationship management.

Any organisation that doesn`t think customers are important should try doing without them for a week!

Whatever the title, the big question on the minds of those tasked with ensuring business continuity and success in the new digital economy is why customer relationship management (CRM)?

Is this yet another organisational transformation from the management consultants aimed at ensuring the Big Five meet their targets? Is it a clever repackaging of an old management approach?

The essence of CRM is not a new concept. The simple fact is it`s about the effective management of your customers.

Any organisation that doesn`t think customers are important should try doing without them for a week!

So why the renewed focus on managing customers? Well, the rules have changed.

Today`s customers are empowered to decide what they will buy, from whom, when and through which channel. They have infinitely more choice in products, services and interaction channels and they are thriving on it. Fortunately, technology has given us the ability to satisfy this new breed of customer.

CRM is about finding, winning, retaining and growing customers to increase the value of your customer base. It`s about gathering information on your customers, identifying those groups that are attractive to your organisation, and then treating your customers differently according to their potential lifetime value to your organisation. It`s about gathering customer information, turning it into knowledge and applying it intelligently to your business and communications strategies.

Few organisations can claim not to need improvement in their approach to, and interaction with, their customers. Individual organisations need to define what CRM means for them, assessing their own requirements for a customer management programme, and defining the benefits they want to achieve from a CRM initiative.

Organisations at the high-volume, low-value end of the market, selling brand products to a retail target audience, are probably better off spending their marketing budget on branding and advertising, than trying to build a comprehensive database of their end-users. The average value per customer doesn`t warrant it.

But big retail brands have different levels of "customers" and some of these groups are undoubtedly targets for customer management type initiatives.

Take Wall`s Ice-Cream (part of Unilever and locally marketed as Ola). It can`t possibly attempt to use customer management principles on its millions of ice-cream eaters worldwide, but it can certainly influence the buying of its products by retailers. Through Wall`s Direct, the manufacturer is able to contact its 60 000 retailers telephonically to promote its ice-cream products, offering next day delivery. Cleverly, the company bases its campaigns on three-day weather reports, making proactive calls to those regions that are due for some hot sunny weather.

CRM is about managing customers to optimise their lifetime value to your organisation. It`s also about building relationships and building knowledge. It`s about segmenting your customer groups to interact with them via the most cost-effective channel relative to their value to the organisation.

The first step is to determine why you need to embark on a CRM programme and how you intend to measure the benefits. Ask your customers. Ask your staff.

Look at your data. Look around you and see what other organisations are doing. Benchmark. Listen. Then decide what customer management means for your organisation.