Need to Know: CRM

CRM isn't any easy term to understand, but it's important for retail and other sectors.

Customer Relationship Management is a term bandied about by both businesses and those in charge of IT, but there's some confusion about what it is and what it's really for.

We examine what it has meant, what it does mean, and its relevance for businesses today.

What is CRM?

CRM started in about 1983 as an academic term, although it could go back even further. It was about being customer-centric' and very clearly a business strategy putting the customer first and at the centre of the organisation.

In the early 1990s it morphed from being about business strategy consulting into being more about implementing changes in sales, marketing and customer service.

It was by the middle of the 1990s when IT people started to get involved in CRM.

"I would say that when people are now talking about CRM, they are talking about the technology," said Gartner analyst Ed Thompson.

"Lots of companies [still] talk about a customer strategy or a customer-centric strategy for CRM, and also for the technology used to support it... It's got a double-meaning, and that's why it's a bit complicated," he added.

In terms of a simple IT definition, it's probably easiest to think of CRM as methodologies, software and even internet tools that help businesses organise their relationships with customers.

Oracle, SAP, Microsoft and Salesforce.com all offer CRM software.

OK - so I know what it means, but how important is it for retail?

In terms of retail, Thompson said that CRM was less important than many might believe.

"CRM is not really a term that's caught hold in retail. It caught on in high-tech and in areas like professional services. The real big ones [that use CRM] are the banking, telco and insurance sectors."

In retail, he said that Customer Experience Management (CEM) was more relevant.

So what's the difference between CRM and CEM?

CRM had a broad set of goals but it was narrower on who it affected; it is more about sales, marketing and service people.

CEM is more about securing the goals of a customer and retaining them. This included areas such as websites, invoicing and the checkout processes.

"The person at the checkout isn't a customer service person or a sales person. They are a checkout person, but they are critical," said Thompson. "In any survey you do about customer service they will tell you that the most important things are the checkout process and how fast it is, and how much you have to queue."

Retailers also concentrated on how easy it was to find a product once you were in a store. This was in particular focus in DIY and high-tech, where customers might often need assistance.

Want to read more background on the latest IT topics? Click here for all the tech cheatsheets in our Need to Know series.

Click here to return to the main Focus On Retail page, or reading on to find out about Tesco's security, New Look's SOA and the top ten retail technologies.

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