What is customer relationship management?
Definition: Customer relationship management (CRM) is the process of nurturing customer relationships over time to gain a deeper understanding of customer preferences and increase profit.
CRM practices and activities include data, sales, and marketing analysis and management throughout the customer lifecycle.
The goal of CRM is driving sales growth from new opportunities, enhancing the customer experience at different touchpoints, and improving customer retention.
Types of customer relationship management
- Operational CRM — Using technology to streamline customer-facing processes, including sales, customer service, and marketing campaigns. For example, using conversational AI to manage customer service inquiries.
- Analytical CRM — Analyzing customer data to gain knowledge of their needs and preferences to improve customer interactions and find areas of improvement. For example, a company collects customer data to find out which products are the most successful to promote them in their marketing campaigns.
- Collaborative CRM — Managing communication and collaboration of various teams, such as sales and customer service, to ensure a positive customer experience.
- Strategic CRM — Brainstorming and developing long-term strategies for customer marketing, such as loyalty programs, special offers, or rewards to encourage repeat purchases.
- Social CRM — Using social media channels to monitor and interact with customers. For example, using social media data to identify which copy sells the most.
Customer relationship management technology
A CRM tool is a software platform companies use to manage and automate many CRM processes. CRM tools differ in functionality (operational, analytical, collaborative, or all-in-one), installation (on-premise and cloud-based), and purpose (sales, marketing, customer service).
CRM tools include features such as:
- Managing and storing customer information
- Tracking sales and marketing activities
- Analyzing customer preferences and behavior
- Automating customer-facing processes
The main purpose of using a CRM tool is to provide companies with a centralized view of all their customer interactions and information so companies don’t waste a lot of time and resources. A CRM tool automates processes such as generating leads, sales forecasting, customer service requests, and marketing campaigns.
Customer relationship management examples
- Personalized marketing messages
Using customer data to personalize marketing messages is done by collecting data from customer purchase history, website activity, or social media interactions. The goal is to identify preferences, needs, or buying habits and use the data to target the customer with relevant messages.
- Personalized customer support
Using customer data like addressing customers by name, remembering their past purchases, and previous interactions is an excellent example of customer relationship management. The benefit of personalized support through chatbots or customer support agents is that the customer feels valued, and the company gains a deep understanding of what a customer needs.
