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One of the rapidly growing areas of marketing is customer relationship management or CRM. Customer relationship management (CRM), formerly known as database management (DBM), is a combination of technology, training, and business strategy that results in a system for gathering and using the information on current and prospective customers, with the goal of increasing profitability.


This critical component of any successful marketing strategy has long been a mainstay of large corporation, but until a few years ago it was too costly for smaller companies. Today, however, affordable database software with sample templates makes it easy to set up a CRM in a relatively short period of time. A good CRM system can generate better sales leads, allow rapid responses to changing customer needs, and ensure all employees who need customer information have it when they need it in the form they need.


A well-constructed database contains names, addresses, and attributes of people who are likely to purchase what the company has to offer. It will help the entrepreneur define a trading area, reach new customers in the market place, select specific target audiences, and survey current customers.


CRM is not merely a way to reach customers by mail more easily. Today, retaining and maintaining current customers is more important than spending money to find new customers. It has been reported that 65 per cent of a company’s business comes from current customers. In fact, it costs  five to ten times more to go after a new customer than to serve an existing one.


Furthermore, with good customer profiles, an entrepreneur cam match demographic information about current customers with demographic data in the geographic area of interest to find prospects more effectively. Information contained in the database can be used in advertising, sales promotion, public relations, direct mail, and personal selling.


The competitive advantages of CRM are many:

Customer relationship management helps entrepreneurs to increase their response rates;

Enhances the development of new products;

Aids in the forecasting of sales;

Improves decision about mas marketing;

Enables the company to personalize advertisement,crosses-sell related products, and increase customer loyalty


For example, an entrepreneur with a combination of book, video, and CD outlet can begin to track customers by offering a “frequent buyer” card that entitles customers to free items once they have made a specific amount of purchases. To receive the card, the customer fills out an information form. Every time the customer purchases something, the item is recorded in the customer’s database record. Over time, the entrepreneur can detect patterns in the kinds of items this customer buys and suggest purchases to the customer that match those patterns.


CRM is really an overall approach to doing business, an approach that requires the total commitment of everyone in the organization. As in any marketing effort, the payoff to this approach takes time, and many frustrated entrepreneurs give up before seeing the results of their efforts.