Customer Relationship Management (CRM): Definition, Purpose, Functions and Benefits for the Company
June 23, 2023
One of the main goals in business is to create good relationships with customers. Customer relationship management (CRM) is something that can be done to ensure that condition.
This customer relationship management refers to a series of important processes to increase competitive advantage, gain long-term benefits, and build strong brand awareness.
Then, what exactly is meant by CRM? Is it important to apply in all types of business? For more details, let's see a full discussion of what CRM is, its goals, benefits, stages, and examples of its implementation in the following article!
Definition of Customer Relationship Management (CRM)
Customer relationship management (CRM) is a strategy, activities and technology used by companies to help build good relationships with customers or potential customers.
By establishing good and strong relationships with customers, the higher the profit in sales.
CRM aims to improve service quality, customer satisfaction, and strengthen customer loyalty and retention.
To run it in a company, you need a system. This system is an application that is used to plan, schedule, and control or control the pre-sales and post-sales activities that occur within the company.
generally often used in the context of CRM technology or software.
CRM software itself is used to store customer data in one place so that it is easily accessible to all stakeholders within the company. This data is data between customers and companies from various channels, for example company websites, social media, telephone, live chat, direct e-mail, and others.
With the help of data collected in the CRM database, businesses can track what consumers really need.
CRM also makes work in various departments more efficient, including sales, marketing, customer service, accounting, and management.
Main Components And Measures Of CRM
CRM has 3 main components, namely management, relationships and customers. These three departments can be numbered with the aim of making improvements to get the desired results.
The first component is management. In this case, the parties involved in interaction with customers, such as call center agents, sales teams, marketing teams and so on.
And also about how their strategy is to carry out good and appropriate customer relationship management.
- number of campaigns created
- the number of responses from campaigns that have been run
- the number of buyers from the campaign results
- revenue generated from the campaign
- the number of new customers resulting from the campaign
- number of referred customers
- number of web page views
- time per website visit
- customer lifetime value
- cross-sell ratio
- up-sell ratio
- email increment ratio
The next component is relationships. That is about how to build positive customer relationships by always providing the best service to create good relationships with customers and how to provide the best solutions for every problem and customer need.
- number of cases at hand
- the number of cases handled in a day
- average handling time
- number of services that can be provided per day
- Complaint service time calculation until the settlement stage
- the number of customers who call back
- average service price
- missed calls
- average time in solving telephone problems
The last component is the reason why CRM exists and is needed by companies, namely customers. Customers include potential customers as well as existing customers. In addition, the company must also determine a strategy on how to get new customers and retain existing customers.
- number of prospects
- the number of customers retained
- close rate (deal rate in sales)
- update rate
- number of new customers.
- numbers from sales through calls
- number of sales opportunities
- new amount of income.
- number of open opportunities
- sales duration
- sales cycle duration
- number of proposals given
CRM Functions and Duties
In general, the main purpose of CRM is to assist companies in improving the relationship between customers and companies. To do this, companies need to obtain comprehensive information about customer behavior.
Some of the functions and tasks of CRM include:
Storing and Managing Customer Data
CRM functions to store all information about customers, such as names, addresses, telephone numbers and shopping history.
Manage Customer Communications
CRM assists companies in managing and managing communications with customers through various channels, such as email, telephone and social media.
Analyzing Customer Data
CRM helps companies analyze customer data to find out more about customer needs and preferences.
Manage the Loyalty Program
CRM can be used to manage customer loyalty programs, such as giving gifts or discounts to loyal customers.
Provision of Better Customer Service
CRM also assists companies in providing better customer service by providing access to the information needed by customer service staff, to deal with various problems or questions from them.
Benefits of CRM for Companies
If a business company uses CRM, the following benefits can be obtained:
Increasing Customer Satisfaction
CRM helps companies improve customer satisfaction by providing better customer service and creating better relationships with them.
Increase Customer Loyalty
CRM is used to assist companies in increasing customer loyalty to the company by maintaining their satisfaction and communication.
Increase Company Revenue
CRM also helps companies increase revenue by increasing the number of purchases made by customers, increasing the price of products or services sold, and increasing the number of customers who buy their products or services.
Reducing Lost Customers
CRM is useful for helping companies reduce the number of customers leaving the company by identifying and dealing with problems that might cause customers to feel dissatisfied.
Increase Business Efficiency
In creating campaigns, the marketing team spends a lot of time analyzing data, testing strategies, and looking for campaigns that suit their audience. While the customer service team works to answer questions, complaints, problems, and other things that are needed by customers.
Both of these teams need efficiency in order to serve customers better together.
CRM platforms offer companies automation systems. The existence of automation brings several benefits, both for the marketing team and customer service, including:
- Automatically answer simple customer questions, such as checking order status, chatbots, and more.
- The time it takes to send an e-mail becomes shorter.
- Can score leads using pre-set customer parameters or using the built-in AI (Artificial Intelligence), so the team can prioritize leads that meet marketing requirements.
Increase Understanding of Customers
CRM is also used to increase understanding of customers and their preferences by gathering and analyzing information about customers and their interactions with the company.
Make Sales Easy
Finally, assisting companies in facilitating the sales process by automating and monitoring the entire sales process, from lead generation to closing. By speeding up the sales process and optimizing sales opportunities, companies can increase revenue and business efficiency.