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Customer relationship management is an effective and efficient way for businesses to manage their relationships with customers.

It's core principle is that you can use every customer interaction or communication with your business. It can help you to better understand the customer and improve your relationship.

This applies to the whole customer journey. Think of identifying a consumer or business as a prospect. But also of booking, visiting and nurturing people into repeat customers.

If you're a small business, it formalises what you do by default. It gives you a single point of contact with all your customers' past interactions with your business.

If you're a large business, it will bundle what would otherwise be lots of conversations with different departments into one place.

In this article:

1. What is customer relationship management?

Businesses can use customer relationship management software to help their day-to-day operations. At the heart of this software is a database to store customer information.

Customer relationship management will allow you to:

  • collate all customer data into one place
  • create a single customer view
  • log all interactions and communications with a customer
  • use what you know about a customer in your conversations and marketing to them

A lot of customer relationship management software can be integrated with other software. Quickbooks would be an example of this. Depending on your experience and needs you may want a combination.

An important by-product of customer relationship management software is business intelligence. By using the software to log communications and actions, you can get very useful reporting.

You can use this reporting and business intelligence to develop a product and to identify staff needs and areas for growth.

There are different modules which can help fulfil different processes in the customer lifecycle

  • Sales

    This section lets you input prospects and potential sales value. You can report on won or lost sales. This is helpful to forecast and understand barriers to a sale, which you can feed into product development.

  • Marketing

    Using the database as the source, you can identify contacts to receive your marketing and log this against the contact. Some systems can send emails directly or integrate with other tools.

    Ultimately, the aim is to record that you sent someone marketing. This way, you can measure its success and avoid over-communication. Your sales team can then use this information to close a sale.

  • Customer service management

    Log and monitor customer service complaints or queries against a customer. It can be helpful to understand the issues a customer has been experiencing.

    This way, at your next interaction with the customer, you can reference the solution and show empathy and that you know about them.

  • Identifying areas for growth

    A lot of customer relationship management software can be integrated with other software. Quickbooks would be an example of this. Depending on your experience and needs you may want a combination.

    An important by-product of customer relationship management software is business intelligence. By using the software to log communications and actions, you can get very useful reporting.

    You can use this reporting and business intelligence to develop a product and to identify staff needs and areas for growth.

2. What are the benefits of customer relationship?

  • Improve processes/efficiencies

    One aim of customer relationship management is to increase customer value and turn people into repeat customers. You can only achieve this by meeting customers' needs.

    It is important to put the consumer front and centre, and to provide more value to your customers. You can do this by not just meeting their expectations, but exceeding them.

  • Customer managed relationships

    Some businesses have changed customer relationship management to customer managed relationships.

    The latter goes beyond serving the needs and wants of customers, and gives them control of all aspects of the relationship.

  • Manage GDPR

    Data management and compliance is a very important benefit of customer relationship management.

    It's a real driver for investing in this kind of software that allows you to manage your customer data effectively. This way, you can more easily comply with data protection legislation.

    It’s important to consider data protection when choosing customer relationship management software. Given that it will store personal data you must consider:

    • is the data stored in the UK, EU or elsewhere?

    • is it secure?

    • who has access?

    • what if I choose to leave?

  • Create single customer views

    Customer relationship management relies on you having the ability to create a single customer view. This essentially means you can recognise a repeat customer and have a database or list of unique customers.

    Attached to each customer record is all their bookings or interactions with you.

    Creating a single customer view can be complex. A very simple way to do so is to always obtain an email address from your customers and match all bookings back to this email address.

  • Be cost effective

    There are many software providers and which you choose depends on the functionality you need and your budget.

    There is even some free customer relationship management software.

  • Log complaints and queries

    Log and monitor customer service complaints or queries against a customer. It can be helpful to understand the issues a customer has been experiencing.

    This way, at your next interaction with the customer, you can reference the solution and show empathy and that you know about them.

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