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CRM Defined and Understood

Customer Relationship Management Definition


Defining Customer Relationship Management is a bit ironic as its seemingly not difficult to define, however, there is no universally accepted single definition. In fact, there are nearly as many definitions of Customer Relationship Management (CRM) as there are CRM software vendors and system integrators who specialize in the industry. Nonetheless, when you recognize that CRM is a strategy focused on evolving customer relationships, a vendor neutral and industry standard definition of CRM can be easily accepted.

CRM is a business strategy directed to understand, anticipate and respond to the needs of an enterprise's current and potential customers in order to grow the relationship value.

A common misconception during a CRM software compare project is believing that CRM consists of software or that procuring CRM software will in and of itself achieve CRM objectives. This is not the case and it must be recognised that CRM is not equated to just application software but rather a comprehensive and holistic customer focus which evolves with every customer touch point and activity. While CRM is not software or technology, CRM software is a necessary enabler to achieve most CRM strategies and objectives. From an information technology perspective, CRM business systems deliver customer information combined with operational, analytical and support tools which empower knowledge workers and provide customers a consistently superior customer experience.


CRM is not Sales Force Automation (SFA) software, although SFA software is a component of CRM. By most business analyst standards, the minimum suite of software components to achieve a credible and enterprise wide CRM business system includes SFA, Marketing Management and Customer Service.


CRM is also not an implementation or an event; it is a process sponsored from the highest levels of an organization, embedded into the corporate culture and pervasive throughout the organisation. CRM is not a destination, it is a journey of continuous learning, process improvement and customer relationship evolution.


CRM is not confined to business processes within an information technology system. In fact, CRM can consist of virtually any front office or customer facing process designed to improve the company's relationship with customers. As an example of a CRM business process that doesn't require any technology, think of the old adage 'service with a smile' or 'the customer is always right'. These are examples of CRM processes made popular long before the introduction of CRM software technology.

CRM 2.0 | The Evolution Continues

CRM strategies and CRM software solutions have already migrated from managing and streamlining customer-facing transactional processes to harnessing customer information in order to better interact and collaborative with customers. While there is clearly a maturation process which will continue to improve customer data aggregation, customer analysis, and customer learning, the next CRM wave is clearly focused on CRM 2.0.


CRM 2.0 was born of Web 2.0 and the social media phenomenon characterized by user-generated content manifested through social networking sites, blogs, wikis, community forums and RSS syndication. CRM thought leaders are experimenting with new methods to communicate in the way the customer wants, to elevate the communication to bi-directional exchange, and to engage the customer in a way that delivers useful knowledge and content to both parties. For companies on the leading edge of CRM, this strategy goes well beyond just making the customer feel important and in fact, makes the customer an extension of the R&D team, the marketing team, the advertising team, or any other line of business that can benefit from direct contribution by the ultimate recipient.


CRM 2.0 requires new thinking and recognition that the customer relationship balance with the 'social customer' has shifted from the company believing it controls the relationship with its product and service directed activities to one where the customer is proactive, part of a much larger virtual community and more intent on being heard and recognized as part of the solution.


Some organisations view CRM 2.0 and Web 2.0 as a corporate threat rather than knowledge to be harnessed, leveraged and incorporated into the development of products and services for improved market acceptance and market share growth. It is true that the Internet can put companies under a microscope of increased scrutiny, buyers can review independent evaluations of products and services never before available and social communities can impose their wrath on obstinate or uncooperative businesses. However, corporate transparency can also be used as a sustainable strategic benefit. It's hard to imagine the product or service that couldn't profit from the candid or passionate input of the customer.


CRM 2.0 need not be viewed as a threat as customer relationships will always continue to strive for a win-win result. In fact, when companies realize that social customers have a new avenue to get what they want, when the want it and how they want it, these companies also recognize they have an ideal opportunity to reduce market demand guess work, clearly architect higher fit products and services, achieve go to market solutions in reduced cycle times, deliver solutions which will achieve far greater market acceptance and secure more meaningful and more profitable client relationships.

  CRM 2.0

Now that CRM has finally become an industry accepted and universally understood term, the most forward thinking pundits have come along to introduce the next incarceration of CRM, referred to as CRM 2.0. Similar to CRM, there is no consensus for a single CRM 2.0 definition, however, a generally accepted view suggests that CRM 2.0 is an extension of web 2.0 and social media and acts as a strategy to collaborate with customers through the use of culture, technology and tools in order to generate value for all parties and grow the relationship. CRM 2.0 has clearly elevated the CRM industry from a business to business relationship to finally include the business to consumer relationship.


CRM defined

CRM 2.0 Expanded




CRM 2.0

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