Components of CRM

CRM requires that a company develop a customer-centric business model (CCM). This means that virtually every action within the model supports the strategic agenda of profit­ably acquiring, satisfying and retaining target customers. Whether enterprise-wide or within a subsidiary serving a particular market, a CCM should address six elements:

  • Building and leveraging a sufficiently robust customer or prospect database.
  • Identifying target customers or segments.
  • Defining and delivering against the prescribed customer experience.
  • Defining and measuring desirable business outcomes.
  • Aligning the organization to deliver against customer experience requirements and desir­able business outcomes.
  • Creating a culture of measurement, experimentation, learning and adaptability.

Types of CRM

Four broad classifications are possible when it comes to the application of CRM. They are:

Strategic CRM: It is focused upon the development of a customer-centric business culture. This culture is dedicated to winning and keeping customers by creating and delivering value better than competitors.

In a customer-centric culture, you would expect resources to be allocated where they would best enhance customer value, reward systems to promote employee behaviour that enhance customer satisfaction and retention and customer information to be collected, shared and applied across the business.

Operational CRM: It is a process by which companies maximize the process of gathering and understanding customer information from all touch points, i.e. point of sale, call cen­tres, web, etc. in an effort to increase customer loyalty and to retain them over their lifetime. It enables and streamlines communication to and from the customer.

Today, the consumer approaches the business in far too many ways than in the past. Also known as front office CRM, it involves the areas where direct customer contact occurs. These interactions are referred to as customer touchpoints.

The customer touchpoints are classified into:

  • Face-to-face touchpoints: Sales/service/channel/events/stores/promotions
  • Database-driven touchpoints: Telephones/e-mail/mail/SMS/fax/loyalty cards/ATMs
  • Mass media: Advertising/PR/Web sites

Analytical CRM: It is also known as back-office or strategic CRM and involves under­standing the customer activities that occur in the front office. It involves analysing large amounts of cross-functional data using data mining and other methods and feeding the result back to operational CRM. It also studies consumer behaviour patterns that help to know what products to position for cross-selling/up selling and the level and kind of ser­vice to deliver to meet customer demand. Analytical CRM requires technology and new business processes.

Collaborative CRM: The primary goal of organizations is to build a long-term and “profit­able relationship” with the “chosen” customers. It is necessary that all concerned parts of the organization work in collaboration with aligned purpose, objective and strategy to achieve this outcome. A “lifetime” value extraction is possible only through close collaboration of internal stakeholders and customers.

Collaborative CRM is a specific functionality that enables a two-way dialogue between a company and its customers through a variety of channels to facilitate and improve the quality of customer interactions. The mandate of collaborative CRM is to manage various partners of the company be it business partners, agents, brokers, OEMs, intermediaries like distributors, dealers, resellers and retailers. By managing all these partners, it tries to facili­tate the integration of various activities such as marketing, sales, service/support and quality.

Source: Poornima M. Charantimath (2017), Total Quality Management, Pearson; 3rd edition.

One thought on “Components of CRM

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