Managing Customer Information in CRM
The primary goal of Customer Relationship Management (CRM) is to satisfy customers to the extent that they will remain loyal to your company and continue to come back time and time again. It should be obvious that it costs your company much less to retain an existing customer rather than to try to attract new customers. Thus, profits can be hurt much more drastically when a loyal customer is lost to another company. Providing quality customer service and prompt delivery of your product to your customer can build trust and loyalty. Effective marketing strategies will also create a positive view of your company in the eyes of your customers. Nevertheless, these qualities are only a small portion of what makes up quality CRM.
Many companies who begin implementing CRM into their business organization fail to take full advantage of the many additional strategies of efficient customer relationship management. These companies often mistakenly consider CRM to be simply a technology solution, rather than a complete modification of the way they manage and utilize customer data. Customer information must be managed differently when implementing CRM technologies in order to effectively promote customer loyalty, increase profits, and attain additional customers on a regular basis. Your company must learn how to manage customer information through the CRM technology in order to truly begin “treating different customers differently” and get the highest possible returns on investment.
When CRM merchants first began marketing their valuable technology in the late 1990s, focusing on the idea that CRM technologies would greatly improve relationships with customers and increase profitability, the rest of the business world was still focused mainly on Enterprise Resource Planning (ERP), and e-Businesses. Fortunately, toward the beginning of the new millennium, business consulting firms began to encourage companies to implement CRM tactics in their business models in order to leverage those technologies successfully.
Consequently, many companies maintain the idea that CRM strategies are primarily advancements in technology, and not advancements in business management as a whole. Therefore, a large number of companies failed to realize the ROI they had hoped for and lost confidence in the CRM technologies. They didn’t understand that CRM only works when its technologies are used to meet the particular needs of their company’s most profitable customer segments and to attract new clients who fit those profiles.
A bank's ability to identify customer needs, segment customers, and build accurate customer profiles all depend on how effectively it collects, manages and uses customer data. The importance of applying customer data to the development of CRM strategies and the deployment of CRM technology has led us to coin the acronym "CIM", or Customer Information Management - our own alternative to the now infamous "CRM."
Successful CRM Hinges on CIM
The CIM process includes determining not only the current or static profitability of customers, but also their lifetime and potential ("strategic") value. It involves learning exactly why some customers are (or will be) more profitable than others. It entails understanding the needs and behaviors of various groups of customers and determining how to influence those behaviors. Finally, it means knowing how to leverage all of this information to balance the value derived from each customer segment with the value provided to each of those segments.
The CIM Framework
CIM provides management with the most relevant and actionable customer information for addressing each of these issues. The CIM framework consists of three core components:
- Segmenting customers by relative value contribution
- Determining the customer-centric Key Performance Indicators (KPIs) that drive customer profitability and customer loyalty
- Profiling each customer segment by understanding their distinct attributes, buying behaviors and needs
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