customer relationship management (CRM)

In recent years there has been increasing emphasis, par-ticularly in online business, on communicating with and “cultivating” customers as well as in systematically using information about transactions and customer behavior (see also e-commerce). Collectively, these activities (and the software used to implement them) are often known as cus-tomer relationship management (CRM).

The basic data stream in CRM is a complete contact history for each customer, including not only purchases, but also product or customer support inquiries. The result-ing database is used to ensure that with each new contact (such as through a call center), the person responding has access to all the information about previous contacts with the customer. Thus, for example, in the course of answering a query or solving a problem, the representative can review a list of which products the customer has purchased and suggest additional products that might help deal with the problem.

Besides dealing with customer-initiated contacts, CRM data can be very useful in designing marketing campaigns, advertising, promotions, and so on (see online adver-tising). The database can be analyzed to determine, for example, the likelihood that a customer who buys a digital camera might also buy a particular printer or memory card (see data mining). Once this is known, a customer who is in the process of buying a camera might be offered a special price on a memory card during checkout. (For an example of extensive integration, mining, and use of CRM data, see amazon.com.) For longer-term planning, “strategic CRM” can help a company decide on what types of products and markets to focus.

In addition to a database with extensive analysis and reporting facilities, a CRM system requires software that sales or support persons can use to access information in real time and update it with the results of the current call. Organizations can buy turnkey products or design their own CRM systems by selecting and integrating software components. However implemented, effective CRM requires that everyone in contact with a customer keep the ongoing cultivation of that relationship in mind, and search for ways to deliver more value than the competition.

Successful CRM also requires a balance between the desire to get as much information as possible and allay-ing customers’ concerns. If the CRM software (or how it is used) slows down the resolution of support calls, ends up generating unwanted solicitations (particularly from third parties), or conveys a sense of disregard for privacy, it could damage customer relations and lead to loss of business and reputation.