Customer Relationship Management (CRM)

Woman Tea Computer Customer Relationship Management (CRM)

Customer Relationship Management (CRM) is the processes of improving the long-term Business-to-Consumer (B2C) relationship by using information gathered about customers in order to enhance overall customer service, thereby encouraging sales. Most companies also apply CRM to business partners (B2B) and other supply chain members in order to improve business efficiency.

Why CRM Matters

Customers are the life of a business. Without customers, businesses do not survive.

Customer Relationship Management (CRM) has developed from the recognition that not only are customers essential to business, but repeat customers are essential. Obtaining and keeping customers is a primary goal for many businesses in this increasingly competitive world.

The banking and personal computer industries are excellent examples of attempts at maintaining customer relationships. Each customer is required to open a personal account (think Apple, Google, and Microsoft, as well as Credit Cards), in which a plethora of information can be learned about individual customers based on factors like purchase history. This information can be used for highly targeted promotions and allow companies to better fulfill their customer's needs and wants, encouraging sales and a positive experience.

By creating a positive experience for customers, businesses employing CRM also benefit in many other ways. A positive experience produces positive brand awareness, and encourages word-of-mouth advertising.

The Role of Technology in CRM

Technology has played a huge role in advancing Customer Relationship Management (CRM) by organizing massive amounts of data and providing platforms for managing consumer relationships. Social media (Facebook, Twitter) is an excellent example of connecting with customers in order to maintain a positive relationship for long-term business.

Technology allows for a greater personalized experience, which typically leads to a positive experience because consumers generally respond well to personalization. Personalizing the experience communicates a "You are individually important" message.

Consumers want their individual needs and wants fulfilled, and they want to be treated like they are individually important. Technology furthers this processes by bringing CRM directly to their personal computers, tablets, and phones.

CRM Improves Consumer Response to Advertising

How consumers respond to advertising heavily depends on whether a consumer was expecting the advertisement and whether the advertisement is something they are interested in. If the advertisement is viewed as an interruption, then perception is highly negative. Unscheduled cold calls, door-to-door selling, and pop-up internet advertisements are all examples of negatively perceived interruptions (hence, the very low success rate). However, even if the advertisement is unexpected, if it is something currently needed or wanted at the time of delivery, then the change in perception is extreme.

Customer Relationship Management (CRM) improves consumer response to advertisements by allowing companies to highly target promotions to individuals, thereby increasing sales while simultaneously reducing the negative experience associated with unexpected advertisements.

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