What Is the Purpose of Customer Relationship Management?

Alex Newth

The purpose of customer relationship management (CRM) cannot be dwindled down to just one answer, because there are several reasons why a business would want to implement a CRM system. That said, perhaps the most obvious purpose of customer relationship management is to help a business keep customers. Along with that, it helps the business understand what it needs to do to get more customers. Another main purpose of customer relationship management is to reduce costs by managing costly complaints and finding out what services are useless for customers. This also can help a company figure out if its product is working and, ultimately, increases profit.

Effective customer relationship management strategies can help keep businesses profitable.
Effective customer relationship management strategies can help keep businesses profitable.

When it comes to using a CRM system, the prime reason is to log and manage customer relationships. These systems allow administrators to list new customers and include services that each customer should receive, as well as opportunities to make the customer spend more money. This also ensures that employees are doing all they can to make the customer happy within the policies of the company. By managing the relationship, the company is able to keep the customer loyal to the company’s brand.

Customer relationship management is geared toward attracting and retaining loyal customers.
Customer relationship management is geared toward attracting and retaining loyal customers.

By checking to see what services work and which are not receiving much customer response, the company also is able to apply the information to potential customers. If the company sees one service is actually turning off potential customers and they remove that service to focus on another, this can convert more people into customers. Converting new customers and keeping old customers loyal helps the company receive more capital.

Surveys offer a way for a customer to report customer service issues.
Surveys offer a way for a customer to report customer service issues.

Reducing costs is another purpose of customer relationship management. Customers often will complain about something or show dissatisfaction for some product or service. This is normal in business but, if there is a growing trend against a product or service, a CRM system will help the business recognize this quickly. By cutting off these costs, the company can keep from spending money in the wrong places and funnel that money into more effective areas.

Providing good customer service is an important aspect of customer relationship management.
Providing good customer service is an important aspect of customer relationship management.

When companies try out a new product or service, they often send out marketing surveys, which tend to have a low participation rate. With a well-made CRM system, the company will be able to receive instant information from customers about whether the company’s new venture is successful. This reduces the cost of having to send out marketing surveys and also helps the business receive the most accurate information to use in making decisions about the future of the company.

Handling complaints in a timely manner is an important part of customer relationship management.
Handling complaints in a timely manner is an important part of customer relationship management.

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Discussion Comments

indigomoth

Online customer relationship management is really important, just because people are so fickle online. I read somewhere that they once did a study of what stops people from buying from a store once they've selected an item.

Something like 40% of people wouldn't go through with the sale if they were required to sign up in order to do it. They didn't even mind signing up, as long as it was after the purchase, but just giving them a sign up sheet in those few moments in between clicking that they wanted to buy and actually buying was enough to turn them away.

That's completely counter-intuitive and it's the kind of research that really needs to be done when so many companies are online these days.

pleonasm

@browncoat - Yeah, there comes a point where I think big businesses realize that an amazing marketing campaign will only get you so far if your service and your menu isn't that good.

I know that when I find a store that has good, fast service I will go back to it. Although I guess they have to tread the line between being fast and being friendly.

browncoat

I read an article recently about how the fast food industry reacts to customers and how they have developed to take as much advantage of their market share as possible by speeding up their customer service.

It used Taco Bell as an example of a really good system, where they had each employee use a script and had the whole kitchen organized to make sure everything happened as quickly as possible, down to almost the micro second. They had figured out this process by investigating lots of data about how a customer goes through the drive through and how the employees work as well.

And I guess that kind of thing is important, because I know there have definitely been times when I've thought about getting fast food, but have passed a restaurant by because there was too much of a line.

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