Classification of CRM: 3 Types

This article throws light upon the three main types of CRM. The types are: 1. Operational CRM 2. Analytical CRM 3. Collaborative CRM.

Type # 1. Operational CRM:

The operational application of CRM enables effective interaction with customers. For this purpose various tools are used. These contact management tools aim to reduce costs by improved process efficiency and use of media based communication channels. These are also aimed to provide customers with a consistent interface across all communication channels.

To achieve this relevant customer data is collected and also displayed at all customer touch points. This is the customer master data. Another set of data where employees’ contact with customers is also logged. This has information like topics discussed, customer requirements, soft customer data like hobbies, preferences, interests, details about children and other minor stuffs.

Banks are an exemplary implementation of CRM as customer contact management. Channel management tools aim to understand how customer interacts with the company. It aims to deliver products and services across multiple channels in effective, efficient, and consistent manner.

Content management tools enable the company to manage what is visible to the customers i.e. what the customers are able to see when they interact with the company. The various processes undertaken are: campaign management, sales management, service management, and complaint management.

Operational CRM generally refers to services that allow an organization to take care of their customers. It provides support for various business processes, which can include sales, marketing and service. Contact and call centers, data aggregation systems and web sites are a few examples of operational CRM.

If your company has a high customer turnover, or perhaps high service costs, Operational CRM Solutions is a tool that can help you solve your problems. The high tech expertise of CRM gives you access to information about your customer as well as giving you a clear view of your customer’s needs.

Type # 2. Analytical CRM:

The data collected in operational management is analyzed to segment customers. The valuable information thus obtained is used to satisfy customers.

Analytical CRM is composed of:

1. Pattern discovery component

2. Product and customer analysis component

3. Multitude component

4. Sorting and customer fractionation component

5. Customer value evaluation component

Analytical solutions provided for most companies are integrated view of customer across all channels and applications, campaign performance analysis, customer profitability analysis, cross-selling and up selling.

The analytical solutions help answer questions like:

1. Who are their best customers?

2. Whom they are likely to loose?

3. How to retain them?

4. How to attract new customers?

5. How to improve profitability of customers?

Examples are data warehousing, online analytical processing (OLAP), and data mining systems.

Note:

Concept of customer segmentation: the value of customer is judged based on RFM analysis i.e. focusing on Recency, Frequency, and Monetary value from customer purchasing data in retail business. Accordingly the customers are divided into various levels.

The four main segments of customers are:

(a) At the top is the VIP customer whose expenditure is most and form 1% of all customers in a certain period.

(b) Then the main customer forming 5%.

(c) Next the ordinary customer forming 20%.

(d) And at the bottom is the scattered customer an overwhelming 80%.

The first three categories create more than 80% of all profits for the company and as a result they are differentiated as the best customers. They are the real targets of Customer Centralization. Analytical CRM supports organizational back-office operations and analysis. It deals with all the operations and processes that do not directly deal with customers.

Hence, there is a key difference between operational CRM and Analytical CRM. Unlike from operational CRM, where automation of marketing, sales-force and services are done by direct interaction with customers and determining customer’s needs, analytical CRM is designed to analyze deeply the customer’s information and data and unwrap or disclose the essential convention and intension of behavior of customers on which capitalization can be done by the organization.

Primary goal of analytical CRM is to develop, support and enhance the work and decision making capability of an organization by determining strong patterns and predictions in customer data and information which are gathered from different operational CRM systems.

The following are the key features of analytical CRM:

(a) Seizing all the relevant and essential information of customers from various channels and sources and collaboratively integrating and inheriting all this data into a central reposi­tory knowledge base with an overall organization view.

(b) Determining, developing and analyzing inclusive set of rules and analytical methods to scale and optimize relationship with customers by analyzing and resolving all the ques­tions which are suitable for business.

(c) Implementing or deploying the results to enhance the efficiency of CRM system and pro­cesses, improve relationship and interaction with customers and the actual business plan­ning with customers.

(d) Combine and integrate the values of customers with strategic business management of organization and value of stakeholders.

Analytical CRM is a solid and consistent platform which provides analytical applications to help predict, scale and optimize customer relations. Advantages of implementing and using an analytical CRM are described below.

1. Leads in making more profitable customer base by providing high value services.

2. Helps in retaining profiable customers through sophisticated analysis and making new customers that are clones of best of the customers.

3. Helps in addressing individual customer’s needs and efficiently improving the relation­ships with new and existing customers.

4. Improves customer satisfaction and loyalty.

The power of CRM provides a lot of managerial opportunities to the organization. It implements the customer information in an intelligent way and creates views on customer values, spending, affinity and segmentation.

Analysis is done in every aspect of business as described below:

1. Customer Analytics:

This is the base analytic used to analyze customer knowledge base. It provides a better view of customer behavior and by modeling, assessing customer values and assessing customer’s portfolio or profiles and creates an exact understanding of all the customers.

2. Marketing Analytics:

This helps discovering new market opportunities and seeks their potential values. It also helps in managing marketing strategies and scale and plan market­ing performance at district, regional and national levels. Marketing analytics also focus on campaign management and planning, product analysis and branding.

3. Sales Analytics:

Sales analytic provides essential environment to plan, simulate and pre­dict sales volumes and profits by constantly analyzing organizational sales behavior. It helps in pipelining all the selling opportunities in an efficient way by indulging and im­proving the sales cycle.

4. Service Analytics:

Analytical CRM has major role in enhancing the services which answer­ing all the questions regarding customer satisfaction, quality and cost of products, com­plaint management etc. It even helps in improving and optimizing the services by sophistically analyzing the service revenue and cost.

5. Channel Analytics:

This type of analysis helps to determine the customer behavior on channel preferences, like web channel, personal interaction, telephone channel etc. This information is efficiently integrated in customers’ knowledge base so that they can be con­tacted accordingly.

The essential results produced by Analytical CRM system could diversely help the organization to tackle customers’ based on values. It also helps in determining which customer is best to invest in, which can be treated at an average level and which should not be invested in.

The Benefits of Analytical CRM:

Analytical CRM provides customer segmentation. To illustrate, it divides customers into those that may or may not utilize your services again, or gives you information that helps in the process of your service. Not only does it determine profitability or which customers generally lead to the most profit over time, it also provides the ability to market specifically to individual customers based on the data collected.

As a predictive modeling tool, Analytical CRM can help your company compare future successes based on the customer knowledge database. Over time, the analysis helps with business decisions founded on earlier analysis.

When it comes to sales, marketing and service, the benefits of CRM analytics are many and usually lead to better and more productive customer relations. Rather than struggling to find out what makes your customer tick, with CRM Analytics you know which people are going to be your best customers and how to find your prospects, quickly and efficiently.

Type # 3. Collaborative CRM:

Collaborative CRM focuses on the interaction with customers (personal interaction, letter, fax, phone, Internet, e-mail etc.)Collaborative CRM deals with synchronization and integration of customer interaction and channels of communications like phone, email, fax, web etc. with the intent of referencing the customers a consistent and systematic way. The idea is not only enhancing the interactions but also to increase and improve customer retention and liberty.

Collaborative CRM entangles various departments of organization like sales, marketing, finance and service and shares the customer information among them to highlight better understanding of customers. For example, the information of preferred products could be shared with marketing department so that analysis can be performed in this aspect to provide preferred products to customers.

The information regarding varied cost or price of a particular product in market defined by customers can be delivered to finance department so that strategies could be created to match the product cost with similar products in market and after analysis bring an affordable and efficient product in market.

The information regarding a specific service which is not installed in the company’s environment and intimated by the customers can be transferred to service department to improve or install that particular service in-house. All this is done efficaciously within the range of channels so that the process automates the needs and minimal time is required for fulfilling these needs.

Collaborative CRM includes:

(a) Providing efficient communication with customers across a variety of communications channels

(b) Providing online services to reduce customer service costs

(c) Providing access to customer information while interacting with customers

d) Driven by authors from the Harvard Business School (Kracklauer/Mills/Seifert), Collabora­tive CRM also seems to be the new paradigma to succeed the leading Efficient Consumer Response and Category Management concept in the industry/ trade relationship.

The various departments of company like the sales, technical support, and marketing, share the information they collect about customers. The objective is to improve the quality of customer service and increase customer loyalty.

It allows the company to synchronize and manage efficient, productive interaction with customers, prospects, partners, and internal associates across all communication channels. The customers’ viewpoint is taken care of at every transaction level thus enabling better service to the customer. Collaborative CRM also reduces web service costs by enabling web collaboration.

Collaborative CRM can be broadly identified by two aspects:

(i) Interaction Management:

This management process deals with designing the communication or interaction channel process within an organization which is specific to customer interaction and finally enhancing the extent of communication between both the parties.

The communication channel depends on the customers’ preference on how they require the interaction to be dealt with. Some customers prefer to be contacted via phone and email because of more comfort ability or non availability of manual interaction due to no time or unavailability of resources. Some of them prefer to have live online meeting or web meeting to reduce the travel time and lack of time or maybe they prefer more clarified real time environment by sitting at desk and transact.

Some of the customers insist for agent conducted services which is often face-to-face interaction as they believe that this way is more efficient and conclusive. Depending on these channels of interaction it is very important for organization to fulfill these needs of customers and gather information from them and implementing it into the CRM before interacting to enhance the interaction power.

(ii) Channel Management:

After analyzing and implementing the interaction medium it’s important to enhance the power of channels through which the customers are interacted. By using latest technological aspects for improving channel interaction could help to contact customers in an efficient way and gather information from them to help organization to understand the customers. Hence it is important for an organization to clearly arrange the channel responsibilities and duties.

Advantages of Collaborative CRM:

(a) Enables valued customer interaction across the channels.

(b) Entangles web or online collaboration to cut down service cost of customers.

(c) Integrates customer interaction with call centers to enable multi-channel interaction with customers and helps them make understand the overall process vales.

(d) Describes a view of integrated customer’s details during interaction to server them in a better way.

This CRM solution brings customers, process and strategies and data together so that organizations could serve and retain customers more efficiently.

Company types that must adopt CRM:

Companies that do not have repeat business from customers will not gain much from CRM. And also that have walk-in customers not providing multiple sales and service channels will not benefit much from CRM. Again if maintaining long term relationship with customer is not a priority for the company, it will be wise not to invest in CRM.

Then who benefits? The more the channels to access customers and more the number of touch points with customers, greater is the need for CRM installation. Companies in:

(a) Banking

(b) Finance

(c) Insurance

(d) Airlines and hotels telecommunications and health care benefit from installing CRM software.