Customer relationship management is a way to identify, acquire, and retain customers, a business' greatest asset. Research has shown that companies that create satisfied, loyal customers have more repeated business, lower customer-acquisition costs, and stronger brand value - all of which translates into better financial performance.

By providing the means to manage and coordinate customer interactions, CRM technology helps companies maximize the value of every customer interaction and in turn drive improved corporate performance.

In today's world customers interact with an organization in a multitude of ways - the Internet, call centers, field salespeople, dealers and partner networks. Many organizations also have multiple lines of business that interact with the same customers. The challenge is to make it easy for customers to do business with the organization the way the customer wants - any time, via any channel, in any language or currency - and to make customers feel that they are dealing with a single, unified organization that recognizes them every step of the way.

Bill Brendler, speaker and author of many articles about CRM implementation, points out that companies are racing to embrace CRM technology. Taking time to rethink relationships with customers is the first step in redesigning any company. Brendler describes it as figuring out how to put the customer in charge of the company. He is quick to point out that software technology cannot figure that one out - the business leader must do it.

CRM requires a customer - centered business philosophy and culture to support effective marketing, sales and service processes. CRM software applications can enable effective CRM, provided that an enterprise has the right leadership, strategy and culture.

The reality is that most who are researching CRM are sincerely interested in the technology. So a similar definition of CRM that spells out the role of technology more plainly would be: CRM is implementing customer-centric business strategies; which drives redefining of functional roles; which demands re-engineering work processes; which is supported, not driven, by CRM technology.

CRM is a four-step process and each step builds on the one prior to it:

1. Implementing customer-centered business strategies.

2. Which drives redefining of functional roles.

3. Which demands re-engineering work processes.

4. Which is supported, not driven, by CRM technology.

Customers First. The time to start going "customer-centric" was back in the 1980s. After forty unbroken years of sellers' markets, the supply-demand curves had started switching from excess demand to excess supply. In other words, in the customers' favor - a direction that continues today with ever-increasing speed. Most companies continued to try to tell their customers how to behave instead of responding to their customers. Responding is the root of customer-centricity.

There was some futile effort made to focus more on customer needs with target marketing, database marketing and even extreme campaigns called such things as, “We love our customers.”

But finally, more companies are becoming customer-centered. Progressive companies are stepping back and figuring out how to create "win-win" with customers and then converting these "win-win" opportunities into customer-centric business strategies. And when one leading company in a business segment "gets it," fear of getting aced out motivates competitors to hop on the customer-centric bandwagon. Domino effect.

This is step one. How CRM starts. It must start at the top with executive management. Middle managers, even functional heads, usually can't initiate enterprise-wide, customer-centric business strategies.

Redefining functional roles. Unfortunately, when it comes to customer-centricity, "doing it" is proving just as hard as "getting it." That's because most business organizations start off organized around internal functions - not customers.

Almost all information systems start out managing customer information across the enterprise, rather than each department holding its own customer information. This is more an organizational problem than a technology limitation.

Consider how roles and responsibilities are usually organized in a company. There’s probably a marketing department, sales department, customer service department, accounting department, credit department, maybe even a product engineering department, either a manufacturing or operations or service delivery department. Each department has its own leader and staff - and turf. Not very customer-centered. Responding to customer needs as the number one priority is most difficult and probably impossible while maintaining this type of organization.

Changes will have to be made in order to respond effectively to customers. Here are some possible changes that may need to be made. Sales and marketing will become twins in the front office. Customer service should move into the front office from the back office, where it's been tied to accounting. Some sales and service functionality had better shift to the Internet - and some other sales functionality should probably migrate to service. Perhaps order entry should move out to sales, along with product configuration. Product engineering may become a customer contact function, and not strictly internal. Product management will almost certainly scale back in importance, replaced by customer segment management. Manufacturing might schedule runs according to customer priorities, rather than strictly manufacturing efficiencies, which means they need sales data. Accounting will have to push transaction data to sales, instead of hoarding it. Legal will have to be more sensitive and thoughtful to the customer’s point of view in setting up contracts.

The good news is that more and more companies are willing to tackle the organizational changes required by CRM. The reason for changing may be because they are forward thinking, or scared or even sometimes because there is less risk in attempting these changes than in standing pat. Whatever the reason, it finally needs to happen.

Re-engineering Work Processes. This step may seem obvious because everyone's roles and responsibilities have changed. If steps one and two are taken carefully, process re-engineering will flow right out of redesigning functional activities - just as redesigning functional activities flows right out of developing customer-centric strategies.

Effective CRM strategy has a multi-channel focus. Companies will have to effectively manage all customer communication channels including traditional letters, fax, and branch / retail outlets through to call centers including IVR (interactive voice response) and speech recognition and the emerging channels including email, the Internet, Video Kiosks and in the near future Interactive TV.

When work processes are being mapped - one step at a time - also detail both process control and information management support requirements - one step at a time. That's step three driving step four, just like it says in the CRM definition. Making requirements explicit - to the organization and later to the CRM software vendors - will prove to be very valuable. As processes are being mapped don’t ignore seemingly minor things like, "Field reps need to work offline with full data and functionality" or "Reps don't have access to telephone connections."

CRM, at its purest, assists in aligning business processes with customer strategies in order to ensure organizations are customer-centric in both behavior and outlook. This will then build customer loyalty and increase profits.

Technology. Almost inevitably, newly defined CRM work processes require more structure and information management support than old ones. In fact, in most instances it will be difficult to carry out steps two and three without additional technology support.

Now, it’s time to find CRM software that will support the organization’s exact processes. Here’s how:

Ignore all the “our system adapts to any requirements” that is heard by many vendors. The developers of systems that come closest to fulfilling that promise are too modest (or realistic) to make presumptive statements like that.

Next, take control of the process of buying software away from the software sellers. The best of the software companies actually encourage buyers to take the lead. Clearly define needs and ask competing vendors to show how those specific needs will be met with their CRM software. It is important that no contract is made until the system is shown and how it will conform to the needs outlined.