CRM stands for Customer Relationship Management. It is a computer software tool used by companies to manage their relationships with their prospects and customers, with the ultimate aim of increasing sales.
It is a marketing and customer relations system, workflow, and database all in one with all the bells and whistles of the internet age like AI, data analytics, and cloud storage.
It is no longer a question of are you using CRM? Rather it is a question of why not? And when will you start?
In this article, we will introduce you to CRM and will explain its benefits, and future.
Who created CRM?
Tom Siebel and Gartner coined the term in 1995. They used it to explain the convergence of software in Database Marketing (created in the early 80s), Customer Contact Management (late 1980s), and Salesforce Automation (early 1990s). In many ways, these are the modern descendants of the Rolodex and paper address book.
What does a CRM system do?
The aim of CRM is to increase sales both from prospects and existing customers. It does this by tracking interactions with prospects and customers to ensure that they are happy and are engaging with your company.
“The purpose of business is to create and keep a customer”. Peter Drucker
Let us look at 9 features of a typical CRM in more detail to better understand what a CRM does and could do for your company.
Central storage of prospect and customer contact information
All contact information is saved centrally and in real-time. Most CRMs would also have backups. Now you no longer need to worry when your top salesperson is sick!
Tracking of direct interactions with prospects and customers
Interactions with prospects and customers are entered into the CRM by your employees or in some cases are captured automatically by the system. These details can then be viewed by anyone in the organization. Now you can find out if a particular customer has had a phone call or not in the last six months.
Management and tracking of sales and salesforce
CRMs track sales activities including the progress of a prospect to becoming a customer. It also allows targets to be set and progress tracked at different levels of the company. It also allows you to check sales against customer satisfaction – no more salespeople over-exaggerating the benefits of your product.
Management and tracking of marketing
Marketing campaigns can be organized and even initiated from the CRM. Many CRMs have marketing tools like emails and social media integrations. Most CRMs can also track the results of marketing campaigns.
Customer personalization of marketing
Marketing systems within your CRM can leverage your customers’ data to send personalized marketing to your customers at key times. In 2019, personalized emails were the number one tactic for sending marketing emails.
Customer service and support systems
CRMs can track and manage customer service and support interactions, including inquiries, problems, and complaints. Progress on cases is transparent across the company and key metrics like response times and customers’ satisfaction can be tracked. No longer will your customers’ requests be forgotten in someone’s email inbox.
Automation and streamlining
Many of the tasks within a CRM can be streamlined and automated. For example, many CRM systems can automatically detect when a prospect becomes a customer by tracking order and payment data. According to research by Adobe in the UK, 60 percent of marketers at companies with $196m plus in revenues said that outdated workflows were hurting their performance – CRMs can help.
Analysis of system data
CRMs record a lot of data from customer interactions, marketing, related internal processes, etc. This data can be analyzed and converted into metrics and dashboards. This allows a company to improve its performance. Imagine having a dashboard that tracked customers’ satisfaction with sales inquiries.
Concurrent access across a company and devices
A CRM is not locked on one machine. It can be accessed across a company and even across devices by anyone and at any time. Access across mobile phones is popular. This allows data to be easily captured by salespeople in the field. Key details can be entered in at the coffee shop rather than forgotten on the way back to the office. 81 percent of marketers now operate their CRM across multiple devices.
Why is CRM important?
CRM is important because your customers are important.
Without good customer relationships or a continuous stream of new customers, your company will not survive in the long-run.
CRM is a tool that helps put customers at the center of your business.
CRMs are the easiest and best way to manage your company’s relationships with its customers. It provides an overview of all ingoing and outgoing interactions with customers in one place that is accessible to all your employees.
CRMs also help small companies grow faster. It provides them with tools that grow their business and scale with their business.
Benefits of CRM
CRM can provide your company with many benefits. But like any tool, it all depends on how you use it. The potential is enormous.
Some of the typical benefits include:
IBM found that companies increased sales quotas by 65 percent when using a CRM system. Better tracking leads to better follow-ups and improvement in selling techniques and marketing.
More effective marketing campaigns
The effectiveness of marketing campaigns increased by 36 percent according to one CRM vendor. Increased customer data allows for better market segmentation. Marketing can also be personalized and automated based on customer behavior. It can also be sent out across channels. Want to ensure that your best customers receive an email or Facebook post on their birthday? A CRM will also track the success of your campaigns so that you can spend more on the campaign types that work best.
Better quality and faster customer service and support
CRMs can track how happy your customers are with support, how fast resolution took, and who provided the support. Such metrics can drive improvements in your support.
Increased workplace efficiency through streamlined processes and automation
Email revolutionized business processes but sometimes it is like trying to catch a fish with a gun – you shoot it off and hope for the best. CRMs can track tasks and alert employees to new or late tasks. In some cases, humans have been removed altogether and now tasks travel at the speed of the electron.
Wider data collection
CRMs increase the variety of data collected. This is because it makes data entry easier for employees and because some data is collected automatically. With CRMs on mobile phones, your employees can enter data literally anywhere.
Better sharing of data across a company
80 percent of decision-makers are using CRM to standardize data across company silos according to recent research. Better sharing of data promotes collaboration across a company and transparency.
Advanced analytics and reporting including metrics and dashboards
Now you don’t have to wait for that monthly report. Instead, you can check yesterday’s metrics on the bus to work.
Who uses CRM?
Any company that has an ongoing relationship with its customers can benefit from CRM.
Typically this means companies with one or more of the following:
- Expensive products
- Products that require regular services or upgrades
- Long sales cycles
- Customers who purchase or use their services regularly
Examples include vehicle manufacturers, business software vendors, marketing companies, recruiting firms, real estate agencies, gyms, cleaning firms, and healthcare providers.
Types of CRM?
CRMs tend to do a bit of everything but there are some CRMs that have particular flavors. Often this reflects the history of the software or software company itself; many CRMs began life as a focused sales or analytical tool. Other companies have tried to seize upon a niche.
- Operational – collects data to help you manage your company better. It is also big on streamlining and automation
- Analytical – big on providing data visualizations and analytical tools
- Collaborative – promotes the use of shared data across the company and even to vendors and distributors
- Campaign management – focused on running and tracking marketing campaigns
- Strategic – collects and analyzes data to help with strategic decision making
An older distinction is local versus cloud-based CRMs. Cloud has won. Gartner forecasted that cloud-based SaaS CRMs would capture 75 percent of the market in 2019.
CRM and ERP
Many software vendors mention CRM and ERP in the same breath. But what is ERP and how does it relate to CRM?
Enterprise Resource Planning (ERP) systems are software that helps companies streamline and automate internal processes. They are focused on the company, with the aim of improving efficiency. They tend to be used by large companies with complex production and processes.
CRM is focused on customers, with the aim of improving sales and customer experience.
ERP and CRP often overlap because ERP systems can be used to improve many of the tasks and processes associated with CRM. Both systems can also share databases.
The difference between them is their focus: company versus customer. Reflecting the overlap, many ERPs and CRMs offer integration to the other system type. Some ERP systems also include mini CRMs. But these mini CRMs often lack the features of the top CRMs.
Things to be careful of when considering a CRM
CRM is such a buzz word that you could be forgiven in believing that it can deliver world peace! Here are some things you should keep in mind before taking off the bubble wrap.
More data is not always the solution
CRMs are great at collecting and presenting data. And the amount of data they collect will only increase. But too much data can be overwhelming. The best data is the data you can act on. Put limits on your analysis and reports. Don’t buy a CRM focused on analytics if you don’t need all the bells and whistles.
Train your employees
CRMs are not magic. It will not automatically start collecting data or increase your sales. You need to train your staff to use the CRM. Look for a vendor that provides training, good documentation, and support. If you do not support your employees they will not buy-in, no matter how good the CRM is.
One size does not fit all but beware of too much customization
Like any product, CRMs provide different levels of customization. For many companies, using the CRM straight out of the box will be enough.
If your company has some special requirements, look for a CRM that will cater to your needs or which allows some customization. But beware of being seduced by too much customization. Going overboard with customization can slow down implementation and can make the system more difficult to use.
The future of CRM
AI is already making a big difference in CRMs. Companies are using AI to predict when a customer will make a purchase and what products to cross-sell to a customer. For example, Williams-Sonoma uses algorithms for personalized product recommendations on its websites. Domino’s in Australia is trialing AI that can predict pizza purchases three weeks in advance. Expect this trend to continue. Imagine a CRM that handles all the emails to your customers and prompts a sales representative to call a client at critical times.
New types of data
CRMs have revolutionized customer data collection. But we are now heading into a world where your company will be able to collect data you never thought was possible. For example, imagine a car yard where cameras and sensors track what customers look at and for how long. Or imagine being able to identify and record the mood of your customers. Of course in some cases, data collection will need to navigate privacy concerns.
Channel-less customer interaction
As the number of communication and social media tools grows, CRMs will need to adapt. CRMs will need to go beyond omnichannel to channel-less. That is, CRMs will need to communicate with customers with whatever channel the customer prefers.
Hopefully, you now understand what a CRM is and how it can help your company. Those three letters can take your business to a new level. But most of all remember that,
“A satisfied customer is the best business strategy of all.” Michael LeBoeuf.