CRM: Meaning & Definition

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The meaning of CRM: Simply explained, definition included! Read now.

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Everything important at a glance

  • Customer Relationship Management (CRM) describes the strategy of a company to optimally build up the relationship with its customers and to maintain it in the long term. 

  • Regardless of the strategy chosen, CRM always puts customers at the center. 

  • In order to determine the right CRM strategy, you should not only have the best possible knowledge of your company's individual requirements, but also of your target group. 

  • By consciously shaping your customer relationships from the very first contact, you not only create a clear strategy for your employees, but also lay the foundation for a high level of customer retention, satisfaction and loyalty. 

  • CRM enables efficient cooperation between all customer-oriented departments such as marketing, sales and service. Successful communication and cooperation are essential for this. 

  • Specialized CRM software supports you in the concrete execution of your strategy. Here, all data and processes are bundled, structured and managed in order to optimize the measures and especially the interactions with customers.

What does CRM mean?

Ongoing globalization and digitization have increased competitive pressure in many markets. Customers are becoming increasingly demanding, expect state-of-the-art products and services, and want personalized service. Only those who really know their needs can also hold their own in the market - making them one of your company's most valuable assets. Accordingly, it is important to manage customer relationships efficiently, from the first contact to sustained support. A powerful CRM system offers you a wide range of solutions for this. But CRM is much more than just software: it is a comprehensive and long-term strategy and should be understood as a building block of your corporate philosophy. With the right strategy, you can initiate a structural change in your customer management that will be decisive for your future success. 

What is CRM (Customer Relationship Management)?

In the corporate world, the focus on building and maintaining customer relationships is described by the term Customer Relationship Management (CRM for short). Alternatively, the term customer management is often used without a clear distinction from CRM. What the various definitions have in common is that the focus is always on the customer.  

"CRM describes the totality of all measures used to shape the relationships and interactions of companies and existing & potential customer:s." - Salesfive 

These measures can therefore serve both to acquire new customers and to maintain existing customer relationships. An analysis of the collected data in turn makes it possible to incorporate the knowledge gained into future interaction with customers. Even if CRM can be oriented differently depending on the company, the basic goals are always the same: to sustainably build up, manage and strengthen all customer relationships in all areas (marketing, sales, service, etc.) in order to increase success and sales in the long term. 

Importance of CRM for companies

The term CRM is often associated with a specific system or software. However, customer relationship management is much more. It should be understood as a long-term strategy to optimize customer work within the relevant departments and at the same time bring it into focus throughout the entire company. Since customer relationship management is applied on several levels, it is important to adapt the strategy to the requirements of your company and to make it as efficient as possible. 

 

Depending on the tasks and functions, a distinction is made primarily between operational and analytical customer relationship management: 

 

  • The operational CRM primarily has an administrative benefit, reduces the workload through automation, provides support for concrete measures and supplies useful information for day-to-day business. 

  • The Analytical CRM on the other hand, focuses on extracting crucial data from your existing customer contacts. This involves not only the mere contacts, but above all their characteristics and behavior on different channels, which often allow useful conclusions to be drawn about your target group. The data is systematically evaluated in order to subsequently implement valuable findings within operational CRM in turn into new measures. Thus, analytical CRM often has a more long-term effect, which can also hold previously undiscovered opportunities. 

  • The communicative CRM deals with the various communication channels in direct customer contact and provides concrete solutions for interaction such as in the form of chatbots or call centers. 

  • The use of optimized customer orientation along the entire value chain, i.e. beyond the boundaries of departments or even the entire company, is referred to as the collaborative CRM designated. 

CRM Strategy

The right CRM strategy gives companies enormous market advantages. Many companies have long since recognized that it is cheaper to maintain existing customer contacts well than to constantly acquire new ones. A CRM strategy primarily describes the targeted use of self-chosen measures to collect and manage customer data. It therefore specifies where the data is to be collected and when it is to be used again.Accordingly, your CRM strategy should answer all the W-questions surrounding customer data. When do you collect/use data? Where? Why? What comes afterwards? How do you want to benefit from it? 

We explain how you can arrive at the right CRM strategy in three steps in this guidebook chapter.

What does CRM bring to the individual departments? 

Customer Relationship Management serves as a holistic approach and encompasses several departments such as Sales, Marketing and Service. Within each department, it brings its own advantages and improvements from which your employees can benefit. The goal always remains to be able to focus more strongly on customers and thus offer them, for example, better offers and outstanding service. 

Distribution

Above all, CRM brings administrative relief to your sales team. Calls can be followed up, interactions monitored, progress tracked, and e-mails automated. This allows employees to address customers much more individually and create personalized offers. 

Marketing

In the marketing area, employees benefit particularly from analyses of user behavior and a better understanding of your target group through CRM. The insights gained can be used for further measures and processes. However, day-to-day operations are also facilitated by a wide range of automations. 

Service

Thanks to the cross-departmental orientation of CRM, the service department, including field service, always has an overview of all data and processes and can thus respond individually to inquiries or problems, even across channels. Excellent service is an important aspect of the customer journey and is often rewarded with loyalty and recommendations.

CRM Advantages 

If you want to survive in the market and meet the constantly growing needs of your customers, strategic customer relationship management is indispensable. Benefit from the comprehensive advantages, both within the company and on the customer side: 

 

  • Smart, long-term customer relationship management will help you establish optimal customer focus across departments and foster internal departmental collaboration. 

  • Pool the resources of your teams so they can focus on your customers. At the same time, you get to know your target group better and make more accurate forecasts. 

  • With an optimal linking of processes in marketing, sales and service as well as personalized interaction, you strengthen customer relationships, promote customer loyalty and increase satisfaction. 

  • They invest equally in potential new customers and in the long-term maintenance of existing customer contacts. 

  • The strategic orientation from the very beginning enables better planning. In addition, you can adapt your CRM system to future developments in your company without much effort. 

  • The success of your measures becomes measurable and, with the help of intelligent analyses, can be incorporated into further customer work in order to continuously improve it. 

  • CRM enables you to interact successfully not only with customers, but also with colleagues, suppliers, stakeholders and partners. 

  • With the help of optimized customer management, you can not only increase your sales in the long term, but also continuously improve your products or services. 

Common challenges during implementation

Customer relationship management is often equated with a specific CRM system. However, the implemented software ultimately only serves to support the concrete implementation. The introduction of CRM into your company, however, means above all a conscious strategic design as part of the business model and the company philosophy. Accordingly, you should understand it as a mindset that must be communicated to employees as a working basis, so to speak. This is associated with various challenges that often become apparent during implementation: 

 

  • All employees concerned must be behind the introduction and be prepared not only to work out the best strategy together, but also to implement it on a day-to-day basis. 

  • The various departments must be ready to fully engage with the CRM and contribute beyond their departments to make it work. Get everyone on board! 

  • Only if all parties involved can openly communicate their problems and wishes right from the start can the CRM be set up and used optimally. 

  • Always view CRM as a comprehensive strategy rather than a mere system to make work easier. Get involved in a real structural change. 

  • The CRM strategy must always fit your company and your goals. Therefore, it should be reviewed regularly and adjusted if necessary. 

  • Be patient and do not expect any flash results. The positive effects will be seen mainly in the long term. 

  • Of course, on the technical side, the prerequisites must also be right in order to integrate a CRM system into your company and the existing IT structure. 

 

Once you have mastered these challenges together and optimally aligned your customer relationship management, you will not only benefit from the advantages in your daily operations, but also from a significant increase in your revenues thanks to optimized customer relationships. 

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