Unit 7.2
Defining Customer Relationship Management (CRM)
IT 233: Business Information Systems
Learning Objectives
By the end of this chapter, you will be able to:
- ✅ Define CRM as both a strategy and a system.
- ✅ Identify the primary goals of CRM: acquire, retain, and increase profitability.
- ✅ Explain the importance of the "360-degree customer view."
- ✅ Describe the phases of the customer lifecycle that CRM supports.
What is CRM? The Core Idea
Customer Relationship Management (CRM): A business strategy and supporting information systems designed to manage and nurture interactions with current and potential customers.
⚡ It's a Philosophy, Not Just Software! The software is a tool that enables a customer-centric strategy.
The Two Sides of CRM
1. The Strategy 🧠
- A customer-first business philosophy.
- Focuses on building long-term, profitable relationships.
- Guides how every department interacts with customers.
2. The System 💻
- The technology that enables the strategy.
- Software for collecting, storing, and analyzing customer data.
- Examples: Salesforce, HubSpot, Zoho CRM.
🎯 The Primary Goals of CRM
1. Acquire
Manage leads and track the sales pipeline to convert potential customers more effectively.
2. Retain
Improve customer satisfaction and loyalty through better service and personalized interactions.
3. Increase Profitability
Identify high-value customers and focus efforts to maximize their Customer Lifetime Value (CLV).
Why Retention Matters 📊
Acquiring a new customer is almost always more expensive than keeping an existing one.
Fact: It can be 5 to 25 times more expensive to acquire a new customer than to retain an existing one.
Customer Lifetime Value (CLV): CRM helps analyze data to predict the total profit a customer will generate for your business over their entire relationship.
Supporting the Customer Lifecycle
CRM systems are designed to manage interactions across every phase of the customer journey.
Marketing
Engaging prospects & generating leads.
Sales
Converting leads into paying customers.
Service
Providing support & ensuring satisfaction.
The Problem: Information Silos
Before CRM, customer data was scattered across different departments, creating a fragmented view.
Marketing Team
Campaign data
Sales Team
Purchase history
Service Team
Support tickets
Result: No one had a complete picture of the customer's journey.
The Solution: 🔍 The 360° Customer View
A CRM system breaks down silos by creating a single, central database.
360-Degree View: A complete, unified profile of a customer's entire history and interactions with the company, accessible to everyone.
- Sales knows about recent support issues.
- Marketing knows about purchase history for better targeting.
- Service knows about the customer's value and past interactions.
Practical Application: CRM in Nepal
Scenario: A Nepali Bank (e.g., Nabil Bank)
- Acquire: Tracks online loan applications and assigns a relationship manager to follow up with promising leads.
- Retain: A teller sees a "high-value customer" alert in the CRM and can offer them priority service or personalized advice.
- 360° View: A loan officer can see the customer's savings account balance, past support calls about the mobile app, and their investment portfolio, all in one screen, before a meeting.
Key Takeaways
- Philosophy First: CRM is a customer-centric business strategy, enabled by technology.
- The 3 Goals: The core objectives are to acquire, retain, and increase the profitability of customers.
- Unified View: The "360-degree view" is CRM's most powerful benefit, breaking down information silos.
- Full Lifecycle Support: CRM manages the entire customer journey from marketing to sales to service.
Thank You
Any questions?
Next Up: Unit 7.3 - Types of CRM Systems