How to use CRM as a business strategy, not just a software tool

This is a post by David Beard that originally appeared here on the Sage CRM Community.
I’ve just run another of our “Articulating the CRM Proposition” courses.  Delivered to our partners located in Ireland, the course is designed for attendees to understand how to identify & map business needs to CRM for their prospects. All organizations and companies can benefit profoundly from using CRM as a business strategy.
We had the beginnings of a conversation on the differences between “operational” versus “analytical” CRM – what these terms meant & why are they important.  But we never quite completed it — so, for this blog, I’d like to link back to some earlier thoughts and put them into a current context.
It’s important for all of us to remember how CRM needs can “appear” within organizations and, consequently, the way these needs should be addressed.  A fellow CRM practitioner, Francis Buttle, (visiting Adjunct Professor at Macquarie Graduate School of Management, Sydney), works in areas of CRM and Service Organization Management. He’s coined a number of ideas that I think speak clearly about CRM drivers in business.  In particular, he talked of four major perspectives on CRM: strategic, operational, analytical and collaborative — so I thought I remind ourselves of some of his top-level ideas.
Strategic CRM
A customer-centric business strategy that aims at winning & keeping profitable customers. Typically, customer information is collected, shared and applied across the  business – delivering “customer-centricity”. Sometimes the CRM initiative aims to shape employee behaviours such that they enhance customer satisfaction and retention.
The challenge, as Francis points out, is that customer-centricity is often at odds with other chosen company strategies such as “product excellence” (customers choose products with the best quality, performance or features) or “efficiency excellence” (customers choose lowest price products).   Nevertheless, in today’s world, customer-centricity is a key feature of many CRM initiatives – particularly when we consider evolutions of social tools and the morphing into Social CRM.
Operational CRM 
Typically focuses on the automation of customer-facing processes such as marketing, selling and customer service. In the case of marketing, it’s usually about applying technology to marketing processes, using customer-related data to develop, execute and evaluate targeted communications and offers. In the case of selling, operational CRM is often linked to efforts to improve and standardize the selling process.  These initiatives can help understand & drive standard behaviours around activities such as lead generation & qualification, needs identification, proposal generation, proposal presentation, objection handling & sale closing.  Physically, better enablement of operational processes lends itself neatly to taking CRM on the road, bringing data to the customers as Mobile CRM.
Analytical CRM 
This approach focuses on the mining of customer-related data for strategic or tactical purposes. It’s all about the capture, storage, extraction & using of customer-related data, with data found in enterprise-wide repositories: sales data (purchase history), financial data (payment history,credit score), marketing data (campaign response information) and service data.   This data, overlaid with third party information (e.g. geo / demographic & lifestyle data) allows companies to derive answers to questions such as: Who are our most valuable customers? In what sector do they exist? What else might they buy? (etc.)
Collaborative CRM 
This approach applies technology across organizational boundaries with a view to optimising interactions between company, partners and customers.  It’s often described as the alignment of normally separate enterprises in a supply chain for the profitable identification, attraction, retention and development of customers.  A simple example would be co-marketing, joint new product development and/or joint market research when large consumer food products manufacturers work together in bringing a new product to market.
So, as we say to attendees on our own course, CRM is not just a software tool.   It’s not about just database marketing.  It’s not just a sales contact tool. It’s not a service management offering.   And, it’s certainly not an IT issue.   It’s a business strategy.  Understanding your strategic aim is critical in shaping your response & articulating your product needs and, for our own partners, how to talk about the relevance of the Sage CRM product in response.
-= David