Journey to the Center of CRM

Image from the movie "Journey to the Center of the Earth," based on the famous book by Jules Verne

In last week’s post we saw that CRM (Customer Relations Management) is not only a technological tool, but a strategy that involves the entire business, attracting and retaining clients as well as lowering marketing costs. CRM was summed up in three actions: data storage, data analysis and client relations.

In today’s post we are going to scrutinize the innards of CRM, analyzing its three components: operational CRM, analytical CRM and collaborative CRM.

• Operational CRM deals with automating the processes of marketing, sales and services thanks to the storage of client data each time he or she is in contact with the business. In the case of hotels, management systems (PMS, or Property Management Systems) undertake certain functions of operational CRM, but PMS alone is not enough. In fact, only partial data collection can negatively affect the CRM process of a business.
• Analytical CRM analyzes client information and behavior collected by the operational CRM and other sources with the goal of providing knowledge to improve the company’s client relations. The results of these analyses are used mainly in campaigns to acquire and retain clients and to provide them with tailored information. In addition, the knowledge gained thanks to analysis can be used to evaluate and improve client satisfaction, optimize prices, develop products and manage risk. Cross-selling and up-selling are examples of sales and marketing campaigns that can be created thanks to CRM analysis.
• Collaborative CRM deals with client relations through all means of communication  in a business, such as personal relations, e-mail and social networks.

In recent years, technological advances have greatly improved the operational and analytical possibilities of CRM, but perhaps the most important transformation is found in the third component – collaboration. As the Harvard Business School authors assert (Collaborative Customer Relationship Management: Taking CRM to the Next Level, by A.H. Kracklauer, D.Q. Mills, D.Seifert), collaboration through the chain of value creation (from providers, through intermediaries to the final consumers) becomes a necessary strategy for creating a competitive advantage. Not only is it necessary to collaborate among business partners, but the consumer himself now forms part of the production process, and, therefore, his collaboration is essential to CRM operations.

In the next post, we will look at a concrete example of how proper information analysis can be transformed into an extraordinary strategy of cross-selling and up-selling. And I will give you a hint: we may be talking about the best example of cross sales of our time.