CRM Definition

Customer Relationship Management (CRM) is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized and efficient manner. In many cases, an enterprise builds a database about its customers. This database describes relationships in sufficient detail so that management, salespeople, and customer service reps can access information; match customer needs with product plans and offerings; remind customers of service requirements; know what other products a customer had purchased; etc.

There are three parts of application architecture of CRM.

1. Operational CRM

Operational CRM means supporting the so-called “front office” business processes, which include customer contact (sales, marketing and service). Tasks resulting from these processes are forwarded to employees responsible for them, as well as the information necessary for carrying out the tasks and interfaces to back-end applications are being provided and activities with customers are being documented for further reference.

2. Analytical CRM

In analytical CRM, data gathered within operational CRM are analyzed to segment customers or to identify cross- and up-selling potential. Data collection and analysis is viewed as a continuing and iterative process. Ideally, business decisions are refined over time, based on feedback from earlier analysis and decisions. Business Intelligence offers some more functionality as separate application software.

3. Collaborative CRM

Collaborative CRM facilitates interactions with customers through all channels (personal, letter, fax, phone, web, e-mail) and supports co-ordination of employee teams and channels. It is a solution that brings people, processes and data together so companies can better serve and retain their customers. The data/activities can be structured, unstructured, conversational, and/or transactional in nature.

Collaborative CRM provides the following benefits:

  • Enables efficient productive customer interactions across all communications channels.
  • Enables web collaboration to reduce customer service costs.
  • Integrates call centers enabling multi-channel personal customer interaction.
  • Integrates view of the customer while interaction at the transaction level.

CRM has to two typical implementation methods: on-premise and on-demand/hosted. Each method has
its advantages and disadvantages as described below.

On-premise CRM is appropriate for:

  • Companies seeking to implement highly customized customer-management practices
  • Companies that need specialized data structures
  • Companies with complex or real-time integration requirements
  • Companies with available in-house IT resources and support systems
  • Companies who can afford the up-front capital investment and fixed costs
  • Companies who deal with sensitive data that don't want other parties to see

On-demand/hosted CRM is appropriate for:

  • Customers seeking to implement standard processes from a variety of industries and companies
  • Companies that are able to use standard data structures
  • Companies with more basic integration requirements
  • Companies with limited technical resources and support personnel
  • Companies seeking variable pricing and lower up-front costs
  • Companies dealing with non-proprietary data

Related Terms

  • Enterprise Relationship Management

Other Definitions

CIO Magazine, January 15, 2006
Wikipedia, The Free Encyclopedia

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