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Customer Relationship Management


Customer Relationship Management (CRM) is about the corporate values and systems (IT and Non IT) which help an organisation manage its relationships with it customers. CRM is supported by technology but technology alone will not result in long term fruitful relationships with your customers. A successful CRM strategy involves effectively targeting customers for your products and providing the products in a manner that customers want; technology alone will not do this. Click here to find out more about how to build long term relationships with customers.

The diagram below illustrates the benefits of Customer Relationship Management

CRM Customer Relationship Management Diagram

CRM Using Databases

One aspect of CRM is the use of databases or detailed records about your customers. Ideally customer information should be more than a list of names and addresses as you will use it to help you manage your relationships with customers. The customer information held by each business will differ for example insurance companies will record when a customer's insurance should be renewed whilst a supermarket will record what each customer buys so that they can analyse shopping habits. Whilst other businesses will record date of birth so that they can target the relevant age group and carry out relationship building activities such as sending customers birthday greetings.

CRM Information Analysis Through Software

After information about each customer has been collected, it needs to be collated and analysed. A sole trader may decide to do this manually by looking through customer records but for large companies with million of customers this is impractical. Instead large businesses have IT software to collate and analyse customer information. Once collated, software will analyse the information and automatically carry out relationship management and marketing activities. For example software will automatically send customers renewal letters at the relevant time. Collated customer information may also may be used to run reports which help the business to write business plans and design corporate strategy.

CRM System Benefits

CRM systems can help an organisation build customer relationships in a number of different ways:

CRM databases can help the organisation to segment their most profitable customers so that they know who to direct their marketing activities at.

Help the organisation to identify which products are likely to appeal to customers based on their purchase history/patterns.

Help identify light and medium users of the business with the potential to grow into heavy users.

CRM can help businesses personalise their customer service for each customer

There are many benefits to CRM but these will need to be balanced against the costs of collating, maintaining and analysing CRM data. For large corporations who know how to yield profits through CRM, the benefits will outweigh the costs but small businesses may need to proceed with caution.


CRM has many benefits but companies need to know when to use it. In some industries where it is easy to switch suppliers and where each supplier offers similar products there is little benefit in building relationships with customers as customers will buy from whoever offers the best deal. Whereas if sales require a lot of time and effort from both the supplier and buyer CRM is likely to be more effective.


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