CRM software is chalk full of best practices that will increase customer loyalty.

This common misconception is why CRM initiatives have such a poor return on investment. Seriously, can you name a piece of software that solves everyone’s problems? Software companies did a great job hi-jacking the term CRM after their SFA initiative failed and have made the term synonymous with software. They’ve been tied together so many times that they might as well be “Scotch” and “Tape”.

CRM actually stands for “Customer Relationship Management.” I don’t see the word software in there, do you? CRM is actually a customer-centric way of doing business. It’s a philosophy that if you truly know your customer, you will be able to deliver the products and services they need, instead of the products and services you need to sell. The end result should be more than customer satisfaction. It should be increasing customer loyalty.

CRM is also a strategy which is based on an acute understanding of your customers. Knowing which customers are profitable and which customers are not. Knowing what they need, and what they don’t need. A solid CRM strategy will help you manage the four bottomline corners of your business: Revenue, Costs, Profitability and Lost Opportunity Costs.

If you are considering that first step into the CRM abyss, or if your looking for some help getting out of it, start with this CRM Definition:

CRM is not software. CRM is your commitment to know your customer better. CRM requires you to develop a solid strategy to increase customer loyalty through a better understanding of those customers. CRM is about setting measurable economic goals, justifying the investment to achieve them and measuring them. CRM is about communicating a customer focused vision to your customer facing business units. CRM is about leading your customer facing business units to work together so your customer sees a clear and unified message. CRM is not about Sales. It’s about Sales, Marketing, Customer Service and Customer Support working together.

And once you’ve done all of this, you will know what you need and don’t need in a CRM software package. Don’t develop a CRM Plan based on the features of some CRM software. Your requirements should be derived from your strategy, not from your software.