What does CRM really mean and why to choose it

Here you are the result of my research about CRM.

The real title is: Songs of Business and CRM

Part 1. A game of strategies.

What is CRM? Easy to answer with the definition: Customer Relationship Management. We think instinctively to software for business. But the CRM is a modern tool that have become what it actually is today, because its acronym hides a strategy or even a philosophy.
A more complete definition of CRM could be: "a business strategy that aims to define a set of activities and business processes to better manage the relationships between the company and its customers" (M. Costabile).
So we can see the CRM as a set of four points: among them, technology is only the final one, it puts into practice the other points.

1. Culture: the CRM is a customer-centered business approach
2. Processes: the CRM comes into play in all business processes which are related to the customer
3. Strategy: the CRM involves strategic choices
4. Technology: the CRM benefits from technological tools

These concepts are the basis of the common CRM distinction into three types (or macro-areas). Today's CRMs applications try to integrate them at best. In fact a CRM must be able to satisfy all three the following requirements (the third one even through integration with business intelligence applications or tools for big data).

1. Operational CRM: methodological and technological solutions to automate the business processes that involve direct contact with customers (call center, customer service, etc);
2. Collaborative CRM: methods and technologies integrated with communication tools (phone, email, tablet, shared calendar) to manage communication;
3. Analytic CRM: procedures and tools to improve the company's knowledge of its own customers and their behavior, through the extraction of data from the operational/collaborative CRM.

Part 2. A dance of markets.
If you look at CRM as a software application, you may think that its invention was the simple result of the evolution of information technology, during the last quarter century. In fact, the question "why the CRM was born?" finds its first answer in market and business changes. It also helps to understand the meaning of Customer Relationship Management: why a centralized management of relationships and data is essential for today's business.
We can see two big changes of direction (and change of thought) that occurred over the last 50 years or so.

• Thanks to the greater welfare, from an economy of supply the market has turned into an economy of demand, where suppliers are more than customers;
• as result, the competition has become much stronger and new markets opened up;
• the customer has a greater awareness, he gathers information before making a purchase, his decisions are based also on ethical and social aspects;
• the concept of enterprise has turned into “customer as a person”: he is not passive, he has the knowledge and ability to react to market situation.

Let's make a comparison between the mentality that drives the business forward today (90s>today) and in the last century (50s-80s).

• In the past, the keywords in the market were "production" and "sales", today are "marketing" and "relationship" (and of course "relationship marketing");
• in the past, the only purpose was to produce and sell in the short term, now is to build relationships and gain customer's loyalty in the long term;
• in the past, the keywords to define the person who represents the company were "supplier" and "persuader", today are "problem solver" and "creator of value".

The idea of producing and selling in order to satisfy common needs (needs shared by the biggest part of the market) has been gradually supplanted by the idea of creating the need itself: a need that you are ready to satisfy with customized solutions. Relationships are closer and customized, orientation is towards individual customers and their unique needs.
In this scenario, the birth of computer applications (in the early 90s) thought to make the customer-centered actions more effective, and increase the opportunity of success in terms of customer's loyalty, was spontaneous.

Part 3. A storm of purposes.

Why to choose a CRM software? What are the most important purposes behind this decision?
One decides to use a CRM in order to reach three main point. On one hand they are common to any business or management, but on the other hand they are achieved in a easier and more effective way through a CRM.

1. Acquisition of new customer through better and more accurate communication, saving money and time.
2. Customer's loyalty through better knowledge of customers, targeted communication and faster responses, saving time, money and resources.
3. Increasing the customer's LTV (Life Time Value), as final result of the two previous points.

A profiled and targeted database (paying attention to both potentials and actual customers) is the basis for data centralization, effective communication and effective management of ordinary and extraordinary daily activities.
The CRM is relationship-centered:

• making new relationships
• maintaining relationships
• increasing relationships

The life cycle of the customer defines activities and purposes of the CRM. This cycle includes five phases, each one with different ways of relating:

1. prospect (acquisition process)
2. first-time buyer (entrance, first purchase)
3. renewal customer (growth of the relationship)
4. loyal customer (maintaining the relationship)
5. potential churn customer (beginning of decline)

(What have you enjoyed more? The CRM research or the G.R.R.Martin-style titles? :D :D )