What is CRM and why is it important? Summary of the purpose and success factors of customer relationship management
- CRM is a management method that manages long-term relationships based on customer information.
- There is research that shows that retaining existing customers has a significant impact on profits.
- Customer-centered culture and organizational execution rather than technology determine success.
Contents
If a store I frequently visit remembers my tastes, I will return there again. CRM is a company's effort to systematically provide this experience to numerous customers. Let's take a look at what CRM is, why it's important, and how to make it effective.
What is CRM?
Customer Relationship Management (CRM) is a management method that seeks to maintain and grow long-term relationships with customers by collecting and analyzing information about customers. The key is to view the entire relationship with a customer as a management target rather than a one-time sales transaction.
Since the 1990s, CRM has attracted attention as information technology has developed and the market has matured, making it difficult to find new customers. There has been a shift from mass marketing, which sent the same message to all customers, to approaching each customer differently.
What is the purpose of CRM?
The purpose of CRM can be broadly divided into securing new customers, retaining existing customers, and expanding customer value. Among these, retention of existing customers is particularly emphasized.
In an article published in 『Harvard Business Review』 in 1990, Likeheld and Sasser analyzed that reducing customer churn by 5% could increase profits by 25% to 85% depending on the industry. This is because the longer a customer has been in business, the more purchases they make and the lower the management costs.
할 일을 삼십 분 단위로 나눠 적어 두니까 미루는 일이 확실히 줄더라고요. 일주일 일정을 한눈에 보이게 적어 두는 것도 한번 챙겨보면 좋을 것 같아요.
How do we use customer data?
Companies divide customers using data such as purchase records and consultation records and develop strategies tailored to each group. The concept of Customer Lifetime Value, which calculates the future profits a customer will bring, serves as a standard for deciding which customer to invest more in.
Time of recent purchase, RFM analysis, which divides customers by purchase frequency and purchase amount, is also widely used. It's a simple analysis, but it's effective in distinguishing between customers at risk of leaving and loyal customers.
Why is CRM important in the insurance industry?
Insurance is a product that, once you sign up, a relationship lasts for years or even decades. Even after signing up, contact points such as coverage checks, product information tailored to your life stage, and insurance claim support continue to arise.
So, in insurance companies, the planner's customer management activities and the company's data system must work together. Providing the necessary information first before the customer waits for a call is considered a key factor in the success of insurance CRM.
Why does CRM fail and what is the direction for improvement?
The reason why many companies do not see results even after installing an expensive CRM system is because they only change the technology but leave the working method the same. If customer information is managed separately for each department, customers have to tell the same story multiple times.
The starting point for improvement is to collect customer information in one place and adjust evaluation and rewards so that employees use that information for actual response. You must adhere to the Personal Information Protection Act and have the trust to use data within the scope of customer consent.
If you are writing a CRM case report, collect the communications the company sends to one customer over the course of a month and arrange them in chronological order. The level of a company's CRM can be revealed by looking at whether the frequency and content of contact varies according to the customer's stage.
This article was compiled by the Campus Down editorial department after checking major textbooks and open literature. · Reviewed 2026-10-26. References: Reichheld, F. F. & Sasser, W. E., Zero Defects: Quality Comes to Services, Harvard Business Review (1990); Payne, A. & Frow, P., A Strategic Framework for Customer Relationship Management, Journal of Marketing (2005); Kotler, P. & Keller, K. L., Marketing Management; Personal Information Protection Act (National Legislation Information Center). This is an introductory level summary, so we recommend that you read the original text directly for an in-depth discussion.
FAQ
What are the three purposes of CRM?
Acquiring new customers, retaining existing customers, and expanding customer value.
What are the three criteria for RFM analysis?
These are the time of recent purchase, frequency of purchase, and purchase amount.
What are the common causes of CRM failure?
All you have to do is change the technology and leave the organization's working methods the same.