Customer Relationship Management (CRM)
Analyst Coverage: Simon Holloway
Customer relationship management (CRM) is an approach to managing an organisation’s interaction with current and future customers through its practices, strategies and technology. The CRM approach serves both internally within an organisation its management and staff and externally with its stakeholders, including customers and suppliers as well as investors.
From a management viewpoint it allows the management and analysis of customer interactions and data through the whole customer lifecycle, with the goal of improving business relationships with customers, assisting in customer retention and driving sales growth.
From an employee’s perspective it provides a collated profile of a customer or potential customer from various sources to enable a successful interaction. This could include customers’ personal information, purchase history, buying preferences and concerns.
The primary goal of a CRM system is to integrate and automate sales, marketing, and customer support (services). The information required is compiled from a range of different communication channels, including a company’s website, telephone, email, live chat, marketing materials, social media, and more. There are 3 categories of CRM systems:
- Operational CRM which are made up of 3 main components: sales force automation, marketing automation, and service automation;
- Analytical CRM systems use techniques such as data mining, correlation, and pattern recognition to analyse the customer data and having collected the information from different sources present it so that business managers can make more informed decisions; and
- Collaborative CRM systems involve external stakeholders such as suppliers, vendors, and distributors, and share customer information across organisations.
Another way of categorising CRM solutions is by the manner of implementation:
- Outsourced solutions: here application service providers provide web-based CRM solutions to organisations. This approach is a good choice if the organisation needs to implement a solution quickly and does not have the in-house skills necessary to tackle the job from scratch.
- Off-the-shelf solutions: Several software companies offer CRM applications that integrate with existing packages. This approach is generally the cheapest option as it involves implementing standard software components. The downside is that the software may not always do precisely what an organisation wants.
- Custom software: This is the ultimate in tailored CRM solutions. It involves consultants and software engineers customising or creating a CRM system and integrate it with an organisation’s existing software. This can be expensive and time consuming.
- Managed solutions: This is a half-way house between custom and outsourced solutions. It involves renting a customised suite of CRM applications as a tailored package.
CRM is vital to build and maintain strong, loyal relationships with customers and prospects. The better a business can manage the relationships it has with its customers the more successful it will become. There are a number of articles out there on the net that give reasons for CRM. Here are some references:
- 10 Reasons Why You Need a CRM
- 3 reasons why CRM is important for small businesses
- 5 Reasons Why CRM Is Important for Small Businesses
- 4 reasons why your CRM system is your most valuable asset
- Importance of Customer Relationship Management
- The importance of CRM in the current business climate
- The Importance of CRM
From the management of an organisation CRM provides them with the means to optimise revenue and profitability while promoting customer satisfaction and loyalty. By analysing data from many sources management can learn more about their target audiences and how to best cater to their needs.
From the perspective of the personnel of an organisation who are custom-facing, such as call centre stuff or sales people, CRM provides detailed information on customers’ personal information, purchase history, buying preferences and concerns.
Traditionally, data input for CRM systems has been done by sales and marketing departments in conjunction with contact centre personnel. Sales and marketing teams procure leads and update the system with information throughout the customer lifecycle and contact centres gather data and revise customer history records through service call and technical support interactions.
The advent of social media and the proliferation of mobile devices has caused CRM providers to upgrade their offerings to include new features that cater to customers who use these technologies. CRM systems are having wide-scale changes because of customers’ increasing use of these technologies to communicate and share thoughts.
On social media, businesses use various tools that monitor social conversations, from specific mentions of a brand to the frequency of keywords used, to determine their target audience and which platforms they use. Other tools are designed to analyse social media feedback and address customer queries and issues. Companies are interested in capturing sentiments such as a customer’s likelihood of recommending their products and the customer’s overall satisfaction in order to develop marketing and service strategies. All these tools are used to add value to customer interactions.
Another added value of social media for companies and customers is customer communities. Customers are enabled to post reviews of products and can engage with other customers to troubleshoot issues. Thus they provide low-level customer service for certain kinds of problems and reduce the number of contact centre calls. Customer communities can also benefit companies by providing new product ideas or feedback without requiring companies to enlist feedback groups.
Mobile CRM is becoming a must-have for sales representatives and marketing professionals who want to access customer information and perform tasks when they are not physically in their offices. Mobile CRM apps take advantage of features that are unique to mobile devices, such as GPS and voice-recognition capabilities, in order to better serve customers by giving employees access to this information on the go.
Recent studies have shown that customers, particularly Millennials, are increasingly dissatisfied with the contact centre experience. They demand multiple avenues of communication with a company and expect a seamless interaction across many different channels, the most popular of which tend to be Web chat, mobile apps and social media. The main challenge for a CRM system is delivering a cross-channel customer experience that is consistent and reliable.
There are a large number of vendors offering CRM software. These cater for different industries as well as size of company. Capterra suggests the size of the CRM industry is now over $10 billion. Software Advice suggests that there are some 382 vendors in the market. When looking at the various reviews of software it is interesting to note that each review comes up with a different set. However all the reviews do include the following vendors:
- Oracle – who acquired 2 of the initial pioneers of Siebel and PeopleSoft as well as providing support through their E-Business Suite and sector-specific offerings CRM on Demand, Contact Center Anywhere and RightNow.
- SAP – not only offer support through their ERP offerings but also through a specialised CRM product.
- Microsoft Dynamics CRM – besides the specialised CRM product the company offers CRM support through its ERP products. The company has grown its CRM customers at the enterprise level as well as SME.
- NetSuite – NetSuite CRM+ is a CRM solution for small and midsize organisations. It offers sales force automation, e-commerce, customer data management, partner relationship management and marketing analytics.
- salesforce.com – was the initial leader of providing a SaaS offering for CRM.
- Hubspot – Web-based marketing software platform, for all sizes of companies. It allows users to create a Web presence, convert online traffic into leads that can be tracked and nurtured and analyse business metrics to ensure effective marketing spend
- Infusionsoft – is an online sales and marketing solution for small businesses.It features lead generation tools and marketing automation, email and social media tools to engage and convert leads.
- SugarCRM – built on an open-source platform and is available as SaaS or an on-premise solution. It supports sales automation, marketing automation, account management as well as other CRM functionality.
- Zoho – provides support for both large enterprises and SMEs. It provides support for Sales Force Automation, Marketing Automation, Customer Support and Service and Inventory Management.