Levels of CRM – What is the difference between Strategic, Operational and Analytical CRM?

It is generally accepted that CRM has three levels - strategic, operational and analytical. These levels differ according to part of CRM they focus on. In this article we describe these levels in detail.

According to Buttle these levels can be defined as follows: Strategic CRM is focused on development of a customer-centric business culture. This culture is there to win and keep customers by creating and delivering value that is better than competitors. Customer-centricity competes with other business logics. Marketing guru Kotler has identified them as products, production and selling.

 

 

A customer or market-oriented company (developed by strategic CRM) believes that customer should be put first, customer and competitive information is there to develop better value propositions for customers and the firm should be constantly learning and adapting to customer requirements and competitive conditions. 

Marketing Automation applies technology to marketing processes. Software enables users to explore their customer data in order to develop targeted communications and offers. Usually this is done by automating multiperson workflows that deliver the communication output. This comes handy especially in multichannel environments, where the campaign management is particularly challenging. Integration of communication strategies requires a substantial amount of information collection and distribution, and of people management, which would be hardly possible without information technology. Last but not least, event-based marketing (also known as trigger-based marketing) is typically preceded by customer action, which triggers company response. Companies can also trawl their transactional histories to identify exploitable connections between events and outcomes.

Sales Force Automation (SFA) was the original form of CRM. It is concerned with introducing technology to the management of a company’s selling activities. The selling process is decomposed into many stages such as activities involving leads, proposals, objections and finalizing the sale. Sales force automation has several capabilities, including opportunity management, contact management, proposal generation and product configuration. These customer data are available to salespeople via various media, including mobile devices. SFA is particularly useful to companies where the selling process (method) consists of several steps, involves lot of salespeople and takes some time to complete.

 

Service Automation allows companies to automate their service operations, whether this means a call center, a contact center (contact center differs from call center in that it handles not only phone calls, but also communications in other media such as mail, e-mail, SMS, fax or social media), the web or personal meeting in the field. CRM application enables companies to manage and coordinate their service-related in-bound and out-bound communications across all channels. This should mean reduction in service costs, better service quality, higher productivity and increased customer satisfaction. Technologies used in service automation include call‑routing or interactive voice response (IVR). 

Finally, the last level is Analytical CRM, concerned with exploiting customer data to enhance value delivered to customer and company owners. It builds on customer information, which can be found in enterprise-wide repositories: sales data, financial data, marketing data and service data. These internally gathered data can be enriched by data from external sources such as geodemographic and lifestyle data. Afterwards, data mining techniques can be applied giving company answers to questions such as who are their most valuable customers and what are they willing to buy. From the customer’s point of view analytical CRM brings more personalized solutions to customer problems, enhancing his/her satisfaction.

Just like the different levels of CRM evolved, so did the CRM concept and technology. In the next review we will bring you an overview of how CRM evolved and what were the main milestones in that proces.

 

Sources:

BUTTLE, Francis. Customer relationship management: concepts and tools. 1st ed. Amsterdam: Elsevier, 2004.


Articles Worth Reading