You don't have to be a marketing genius to know that good customer relations are desirable. We've all played the part of the customer, and we all know how important it is to feel that our business is valued.

Taking care of customers is not a new idea, but over the last decade companies have been paying more and more attention to making their customers feel good. The customer experience is increasingly part of the product. But in the last couple of years, the idea has grown up, got itself some capital letters and spawned a billion-dollar industry. Ladies and gentleman, Customer Relationship Management has well and truly arrived.

CRM is becoming such a hot issue that, like JFK and the BBC, we can recognize it by its initials. Yet people have varying levels of knowledge about CRM and differing ideas about what it is. So let's take this opportunity to get to know it a little better and see what we can learn from those who've already got intimate.

What is CRM?
With so many expert opinions battling for our attention there is no single, agreed definition of CRM. But whether you look at a brand leader in a mass market or a small firm with a few customers you'll find the same driving force behind every CRM strategy: to make more revenue and more profit by putting customers first.

In the words of Bindi Bhullar, "It's a business strategy that puts the customer at the heart of your company. Imagine what your company would look like if your customer could redesign it to suit himself. That is the company you need to be."

That may sound strange, but why not? After all, profitability and keeping customers happy are two sides of the same coin. It is the value a customer attaches to the good service he gets that makes him happy and loyal. And the more happy and loyal he is, the longer he will remain a customer.

"We've all heard that it costs seven or eight times as much to win a new customer as it does to service an existing customer. So in today's economic climate CRM is resonating strongly among CEOs."

Not that CRM is simply about retaining customers. As important as that is, it is only a means to an end. The real goal is increasing customer profitability. That's why companies are gathering knowledge about their customers that will identify opportunities for up-selling and cross-selling.

Who is CRM For?
"Many industries have long demonstrated their appreciation of good customer relations," says Bhullar. Telecommunications, insurance, banking, brokerage and other financial services have long been committed to CRM and see continuing returns. "But," he says, "there are still huge opportunities in the business-to-business world, especially for process and discrete manufacturers who have never really been great at customer relationships."

Even companies with only a few customers can benefit from rethinking their processes to favor the customer. "They should strengthen what they already have. There's always room for improvement. Things can change. Just look at the current animosity between Ford and Firestone, its tire supplier since 1906. A good CRM strategy would have helped them identify their problems before they got out of hand."

But the majority of companies, if asked, would probably say they already treat the customer as number one. According to Bhullar, the reality is quite different. "They have always arranged themselves internally around the product. Now the competitive advantage will go to companies that truly put the customer first. And that doesn't mean simply buying a CRM application."

How to Make CRM Work
Bhullar sees the software as only 25 percent of the story. "CRM is first and foremost a business strategy. To create a better customer experience, companies will need to adapt all the processes, attitudes, behavior and technologies that support customer interactions throughout the business." For example, no matter how the customer contacts a company-via e-mail, phone, fax, or face-to-face-he should be served without being bounced around different departments.

But what practical steps can a company take to become more customer-focused? Gartner Group has some ideas. For one, it proposes the appointment of a Chief Customer Officer to a company's management board.

"At the moment, no one really has responsibility for the customer," says Bhullar. "The CEO is probably the nearest equivalent in most companies but CEOs have plenty else to do. An alternative is to appoint your most strategic customer to the board. Then a company knows for certain it is customer-focused."

But the thought of far-reaching change to well-established methods will send shivers throughout boardrooms across the land. Bhullar thinks that is only the half of it. "The major challenge for companies is that they underestimate the change, politics and resistance they will face. Although the systems integrator can help, CRM has to be driven from the top, by the CEO, if there is to be any chance of success."

Learning From Past Experience In fact, a lack of senior management buy-in is a major cause of many CRM failures. It is essential in securing the required resources for educating and training employees and driving an all-encompassing CRM strategy for the whole organization. To overcome possible resistance from employees, Gartner knows how to sweeten the pill.

"We think that everyone in the organization from secretaries to the CEO should have their remuneration linked in some way to customer satisfaction. That will help bring about a change in attitude towards dealing with customers more quickly."

In addition to management and employee support, an equally important success factor is having a clear definition of your CRM aims. Among the early adopters especially, too many rushed in on a wave of hype and excitement with little idea why.

"Companies haven't been doing enough due diligence, identifying the metrics they need. They need to decide up-front whether they are trying to improve revenues, reduce the sales cycle or reduce expenses and then measure those metrics as the CRM system comes into play."

Another common mistake is trying to do too much at once. Companies with little experience in CRM are especially at risk. As long as companies have a single corporate CRM strategy, they can successfully implement it one department at a time.

The Value Approach
"Don't try a big bang. Take it step by step. Start where you can get quick wins, where you can show a quick ROI, and you'll get the green light for the next round. This approach has shown to bring the most success," says Bhullar.

Bhullar is quick to point out, however, that the companies that have implemented their CRM strategy throughout, not just in one or two departments, are seeing the most happy and loyal customers and the best return on their investment. The reason for this is that the company's customer interactions get integrated with the rest of its business processes.

In a recent report, CRM at Work, Gartner says, "Less than 10 percent of companies today have a single, integrated view of their customers, a critical milestone in achieving customer loyalty."

One important part of having a single, integrated view is having a single, integrated system, with both back-office and front-office functionality. Bhullar explains the advantages, "If CRM is integrated into the back office, it'll give better transparency of the business process workflow, which should give better customer service-the bottom line being higher profitability."

In addition, "Integrated solutions give as much functionality as possible from one vendor and are cheaper, easier to maintain, train on, and upgrade. That makes them the most appropriate solution for the mainstream of companies looking for a tactical advantage and a value-based return."