CRM: Beyond the buzzwords

Customer relationship management (CRM) has been an IT industry buzzword for years - but like most buzzwords, it's used so loosely and in so many different ways that it can be difficult to work out what it actually means. So, for all those who thought they were the only ones feeling the confusion, here is a CRM primer - without the buzzwords.

To start with the most common misconception, CRM is not just a souped-up contacts list. In fact, CRM is not even software: it's the business process by which you manage your relationships with clients and customers, including finding them, keeping them and growing their value to your business. Software is very often a key part of that process, but it's not what you start with.

The ideal starting point, rather, is the recognition that customer relationships are a source of competitive advantage which needs to be carefully nurtured. Those who can build long-lasting learning relationships with their customers hone their innovative edge and can market more effectively.

If CRM is really all about the strategy, why do people focus so much on the software? Because software and other systems are what enable the strategy to be implemented. Good CRM software can help companies find leads, mature those leads into customers, serve the customers well and find out what's working and what isn't.

In the first stage of finding customers, CRM software enables marketing automation. Lists of leads and prospects can be managed and segmented, email and SMS campaigns can be planned, implemented and tracked, and return on investment can be measured with some precision.

In the second stage, sales force automation helps with lead management, opportunity tracking and the creation of a consistent, successful sales process that can be replicated. In most sales organisations the 80:20 rule applies: around 80% of the sales are made by 20% of the people. Good software helps make it easier to identify what that 20% is doing right, and then replicate it.

CRM software really comes into its own at the customer service stage. Simply having a centralised database of customer information can make a huge difference: traditionally this information is on widely scattered spreadsheets, from the sales team's personal contacts to the MD's Christmas card list. Putting it all in one place can eliminate hours, days and even weeks of wasted or misdirected effort, and stop valuable customer data from leaving when a sales team member does.

Using this central database a good CRM system can record all meetings, calls and email contacts with customers, track queries, issues and complaints and trigger calls when contracts are up for renewal or services are due. The system can also provide the information needed to manage service level agreements and customer satisfaction targets.

Finally, CRM software can help businesses analyse and make sense of all their customer information. Which customers are most profitable and which are most troublesome? How long is our sales cycle really, where do after-sales problems happen most frequently and how are we doing on our SLAs? CRM should put answers to these questions at a CEO's fingertips.

If CRM has had a chequered history, it's because vendors have focussed all attention on the software. But, as we should all know by now, there's no organisational challenge that can be easily solved by plugging in some software; good implementations are led by the needs of the business, not the capacities and constraints of the software tools.

Executives who want successful CRM in its broadest sense should start by assessing their most pressing customer-related business need, then meeting that need first. Tackling CRM in easily digested chunks will deliver quick benefits without the stress and confusion of sweeping changes implemented simultaneously across the entire organisation.

Newer CRM software is not just the preserve of those with deep pockets. Traditional implementations can be complex and costly, involving not just licence and installation costs but also training and new hardware. The latest software is so easy to use there's very reduced training required, and using the software as a hosted service can deliver all the benefits on a pay-as-you-use basis, with no need for large upfront investments or ongoing infrastructure management costs. All this can ensure that you're up and running in weeks rather than months.

Finally, there's no reason to limit CRM software to customers. Think of it as XRM, where X stands for anybody you have a relationship with: suppliers, franchisees, partners, unions and any other stakeholders can be added and managed just as easily.

Relationships are the bedrock of most business transactions; it makes sense to tend them with vigilance and the best tools you can find.