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You have no doubt heard of the term CRM by now, which has become something of a buzzword. However the concept of CRM, its' benefits and the applications that make it a reality have been around for some time. Let's take a look at what it encompasses.

Customers are the lifeblood of any corporation or organisation that wants to stay in business for any period of time. Customer management applications are intended to automate all of the activities that an organisation may have with customers as a way to make the sales force more efficient.

There are five core market segments which are most closely identified with customer management applications:

Sales Force Automation (Technology Enabled Selling)

Applications in the sales force automation (SFA) segment are used to define and maintain standard sales processes (including enterprise contact management systems, marketing encyclopedias, configuration management tools, etc.) and are often designed as workflow applications. 

Sales force automation is the largest segment in this market and applies the principles of customer management to one part of the overall market. Just as many other business processes have been automated with computers over the last decade, sales force automation uses computer technology to improve the ability of sales representatives to find key information on products or services in which their customers are interested; to reduce the errors in configuring a complex order; and to improve account and opportunity management.

By automating these needs, it can reduce the number of activities that fall through the cracks and, with proper reporting, help identify any negative trends before the problems become difficult to resolve.

Customer Support applications are used more in post sales operations to assist customers who need additional assistance; a single customer record can be used across both the SFA and customer support segments. The customer support application segment is often used in supporting technical products; although the kinds of end user applications can be either oriented towards enquiries, complaints, technical problems or customer support operations.

Call Centre applications are used for a variety of customer management activities from lead generation, telesales and account management through to supporting customer inquiries. The call center application segment is often the most recognized and what people generally associate with CRM. Actually this is not the case they are only a part of the solution, and do not give total 360 degree management of the people your organisation deals with. Call centers rely much more on integration with telephony or communications equipment.

Marketing Automation applications are used mostly for customer profiling and marketing campaigns, predominately to assist marketing to launch new initiatives for lead generation and up/cross sell against a predetermined customer profile. These applications allow communication and sharing of critical data between what used to be disparate departments - sales and marketing. This segment is often used in telemarketing, direct mail and web marketing operations and improves results (targeting marketing) and allows instant analysis on marketing initiatives.

eCommerce applications are becoming increasingly part of the CRM philosophy and application area. The reason: in the global economy you must personalise service and build relationships or face losing customers. Sales and other critical information such as customers' likes and preferences, need to be captured in the CRM system to enable front office staff to allocate the appropriate resources, activity, and sales channel to individuals and business alike.

HOW DOES THE INTERNET FIT INTO THIS PICTURE? 

The Internet is a critical element in ALL aspects of customer management. Firstly it opens up your business to all the sales channels available - customers demand choice.

In terms of customer acquisition, it offers a great way for potential customers to get information on the products or services that you're offering. These are hot leads as the customer is responding directly to the products and services that they are immediately interested in learning about. On the web page they can enter contact information, which goes into the CRM database and prompts a telemarketing or local salesperson to give them a call.

Beyond a marketing and sales tool, potential customers can configure a product for themselves, order the product online, and then access technical support for that product as well.

The Internet is also the perfect medium for distributing and sharing information between disparate offices, and with Channel Partners.

We are now seeing a proliferation of products all claming to be web enabled, offering everything from pure order entry tools to more web customer management and product configuration.

WHAT CAUSES ORGANISATIONS TO CONSIDER A CUSTOMER MANAGEMENT APPLICATION? 

There are two primary reasons, grounded in business operations, why customer management applications are being adopted. 

• First it can be very difficult and/or very expensive to locate and close deals with new customers. For example, direct marketing campaigns are often considered successful if they have a response rate of only a few percent. That is, the costs of these campaigns, for the number of actual customers that are generated, is tremendous. If the acquisition cost for these customers can be reduced, then your salesforce can, in turn, be more productive. 
  

• Second, because the cost of customer acquisition is so high, it is extremely important to ensure that your customers have a positive experience in all aspects of the sale. Improving the rate of customer retention helps your sales organisation become more efficient by allowing you to build a satisfied customer base. 
  
  Sales and support organisations should be built around business practices that meet the needs of those customers more effectively. When customers switch to one of your competitors, you've lost the investment that you've made in understanding their business needs and then you have to start all over with the expensive process of acquiring new customers. 

On the front end, customer representatives can work within a single environment because all of the applications that they use form an integrated environment where the data can be easily shared, much of the work related to customer contact can be coordinated from a single application. An important component of Enterprise customer management systems is the ability to communicate between the sales force and the back office systems including remote access capabilities that can be used by remote representatives. 

SOME RESEARCH

AMR Research Inc. predicts that total aggregate revenue of the Customer Relationship Management market is expected to grow from US$1.2 Billion in 1997 to US$11.5 Billion in 2002, sustaining a 58% CAGR over the five years. In addition, according to the firms Customer Relationship Management Software Report, 1997-2002, CRM License revenue will top $7.5 billion by the year 2002, compared to only $762 million in 1997. Source: CRM Software Research Paper 1997 www.amrresearch.com

For more resources on CRM and its related applications check out our resources page.