Customer relationship management

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Customer relationship management (CRM) is a broadly recognized, widely-

implemented strategy for managing a company’s interactions with customers, clients and
sales prospects. It involves using technology to organize, automate, and synchronize
business processes—principally sales activities, but also those for marketing, customer
service, and technical support. The overall goals are to find, attract, and win new clients,
nurture and retain those the company already has, entice former clients back into the fold,
and reduce the costs of marketing and client service.[1] Customer relationship
management denotes a company-wide business strategy embracing all client-facing
departments and even beyond. When an implementation is effective, people, processes,
and technology work together to increase profitability, and reduce operational costs.[2]

Related Trends

Many CRM vendors offer Web-based tools (cloud computing) and software as a service
(SaaS), which are accessed via a secure Internet connection and displayed in a Web
browser. These applications are sold as subscriptions, with customers not needing to
invest in the acquisition and maintenance of IT hardware, and subscription fees are a
fraction of the cost of purchasing software outright.

Phases of CRM

The three phases in which CRM help to support the relationship between a business and
its customers are, to:

• Acquire: a CRM can help a business in acquiring new customers through

excellent contact management, direct marketing, selling and fulfillment.[3]
• Enhance: a web-enabled CRM combined with customer service tools offers
customers excellent service from a team of trained and skilled sales and service
specialists, which offers customers the convenience of one-stop shopping.[3]
• Retain: CRM software and databases enable a business to identify and reward its
loyal customers and further develop its targeted marketing and relationship
marketing initiatives.[4]

Challenges

Tools and workflows can be complex to implement, especially for large enterprises.
Previously these tools were generally limited to contact management: monitoring and
recording interactions and communications. Software solutions then expanded to embrace
deal tracking, territories, opportunities, and at the sales pipeline itself. Next came the
advent of tools for other client-facing business functions, as described below. These
technologies have been, and still are, offered as on-premises software that companies
purchase and run on their own IT infrastructure.

Often, implementations are fragmented; isolated initiatives by individual departments to

address their own needs. Systems that start disunited usually stay that way: siloed
thinking and decision processes frequently lead to separate and incompatible systems,
and dysfunctional processes.

Types/variations
Sales force automation

Sales force automation (SFA) involves using software to streamline all phases of the
sales process, minimizing the time that sales representatives need to spend on each phase.
This allows sales representatives to pursue more clients in a shorter amount of time than
would otherwise be possible. At the heart of SFA is a Contact management system for
tracking and recording every stage in the sales process for each prospective client, from
initial contact to final disposition. Many SFA applications also include insights into
opportunities, territories, sales forecasts and workflow automation, quote generation, and
product knowledge. Newly-emerged priorities are modules for Web 2.0 e-commerce and
pricing.[1]

Marketing

CRM systems for marketing help the enterprise identify and target potential clients and
generate qualified leads for the sales team. A key marketing capability is tracking and
measuring multichannel campaigns, including email, search, social media, telephone and
direct mail. Metrics monitored include clicks, responses, leads, deals, and revenue. This
has been superseded by marketing automation and Prospect Relationship Management
(PRM) solutions which track customer behaviour and nurture them from first contact to
sale, often cutting out the active sales process altogether.

Customer Service and Support

Recognizing that service is an important differentiator, organizations are increasingly

turning to technology platforms to help them improve their clients’ experience while
aiming to increase efficiency and minimize costs.[5] Even so, a 2009 study revealed that
only 39% of corporate executives believe their employees have the right tools and
authority to solve client problems.“.[6] The core for these applications has been and still is
comprehensive call center solutions, including such features as intelligent call routing,
computer telephone integration (CTI), and escalation capabilities.

Analytics
Relevant analytics capabilities are often interwoven into applications for sales, marketing,
and service. These features can be complemented and augmented with links to separate,
purpose-built applications for analytics and business intelligence. Sales analytics let
companies monitor and understand client actions and preferences, through sales
forecasting, data quality, and dashboards that graphically display

Marketing applications generally come with predictive analytics to improve segmentation

and targeting, and features for measuring the effectiveness of online, offline, and search
marketing campaign. Web analytics have evolved significantly from their starting point
of merely tracking mouse clicks on Web sites. By evaluating “buy signals,” marketers
can see which prospects are most likely to transact and also identify those who are
bogged down in a sales process and need assistance. Marketing and finance personnel
also use analytics to assess the value of multi-faceted programs as a whole.

These types of analytics are increasing in popularity as companies demand greater

visibility into the performance of call centers and other service and support channels,[5] in
order to correct problems before they affect satisfaction levels. Support-focused
applications typically include dashboards similar to those for sales, plus capabilities to
measure and analyze response times, service quality, agent performance, and the
frequency of various issues.

Integrated/Collaborative

Departments within enterprises — especially large enterprises — tend to function with

little collaboration.[7] More recently, the development and adoption of these tools and
services have fostered greater fluidity and cooperation among sales, service, and
marketing. This finds expression in the concept of collaborative systems which uses
technology to build bridges between departments. For example, feedback from a
technical support center can enlighten marketers about specific services and product
features clients are asking for. Reps, in their turn, want to be able to pursue these
opportunities without the burden of re-entering records and contact data into a separate
SFA system. Owing to these factors, many of the top-rated and most popular products
come as integrated suites.

Small Business

Basic client service can be accomplished by a contact manager system, an integrated

solution that lets organizations and individuals efficiently track and record interactions,
including emails, documents, jobs, faxes, scheduling, and more. These tools usually focus
on accounts rather than individual contacts. They also generally include opportunity
insight for tracking sales pipelines plus added functionality for marketing and service. As
with larger enterprises, small businesses are finding value in online solutions, especially
for mobile and telecommuting workers.

Social Media
Social media sites like Twitter, LinkedIn and Facebook are amplifying the voice of
people in the marketplace and are having profound and far-reaching effects on the ways
in which people buy. Customers can now research companies online and then ask for
recommendations through social media channels, making their buying decision without
contacting the company.

Details on companies are now also shared online. People are using social media to share
opinions and experiences on companies, products and services. As social media is not as
widely moderated or censored as mainstream media, individuals can say anything they
want about a company or brand, whether pro or con.

Increasingly, companies are looking to gain access to these conversations and take part in
the dialogue. More than a few systems are now integrating to social networking sites.
Social media promoters cite a number of business advantages, such as using online
communities as a source of high-quality leads and a vehicle for crowd sourcing solutions
to client-support problems. Companies can also leverage client stated habits and
preferences to personalize and even “hyper-target” their sales and marketing
communications.[8]

Some analysts take the view that business-to-business marketers should proceed
cautiously when weaving social media into their business processes. These observers
recommend careful market research to determine if and where the phenomenon can
provide measurable benefits for client interactions, sales and support.[9]. It is often found
that people feel that interaction is peer to peer between them and their contacts and resent
the company involvement, responding with negatives about that company.

Non-profit and Membership-based

Systems for non-profit and membership-based organizations help track constituents and
their involvement in the organization. Capabilities typically include tracking the
following: fund-raising, demographics, membership levels, membership directories,
volunteering and communications with individuals.

Many include tools for identifying potential donors based on previous donations and
participation. In light of the growth of social networking tools, there may be some
overlap between social/community driven tools and non-profit/membership tools.

Strategy
For larger-scale enterprises, a complete and detailed plan is required to obtain the
funding, resources, and company-wide support that can make the initiative of choosing
and implementing a system successful. Benefits must be defined, risks assessed, and cost
quantified in three general areas:

• Processes: Though these systems have many technological components, business

processes lie at its core. It can be seen as a more client-centric way of doing
 business, enabled by technology that consolidates and intelligently distributes
pertinent information about clients, sales, marketing effectiveness,
responsiveness, and market trends. Therefore, a company must analyze its
business workflows and processes before choosing a technology platform; some
will likely need re-engineering to better serve the overall goal of winning and
satisfying clients. Moreover, planners need to determine the types of client
information that are most relevant, and how best to employ them.[2]

• People: For an initiative to be effective, an organization must convince its staff

that the new technology and workflows will benefit employees as well as clients.
Senior executives need to be strong and visible advocates who can clearly state
and support the case for change. Collaboration, teamwork, and two-way
communication should be encouraged across hierarchical boundaries, especially
with respect to process improvement.[10]

• Technology: In evaluating technology, key factors include alignment with the

company’s business process strategy and goals, including the ability to deliver the
right data to the right employees and sufficient ease of adoption and use. Platform
selection is best undertaken by a carefully chosen group of executives who
understand the business processes to be automated as well as the software issues.
Depending upon the size of the company and the breadth of data, choosing an
application can take anywhere from a few weeks to a year or more.[2]

Implementation
Implementation Issues

Increases in revenue, higher rates of client satisfaction, and significant savings in

operating costs are some of the benefits to an enterprise. Proponents emphasize that
technology should be implemented only in the context of careful strategic and operational
planning.[11] Implementations almost invariably fall short when one or more facets of this
prescription are ignored:

• Poor planning: Initiatives can easily fail when efforts are limited to choosing and
deploying software, without an accompanying rationale, context, and support for
the workforce.[12] In other instances, enterprises simply automate flawed client-
facing processes rather than redesign them according to best practices.

• Poor integration: For many companies, integrations are piecemeal initiatives that
address a glaring need: improving a particular client-facing process or two or
automating a favored sales or client support channel.[13] Such “point solutions”
offer little or no integration or alignment with a company’s overall strategy. They
offer a less than complete client view and often lead to unsatisfactory user
experiences.
 • Toward a solution: overcoming siloed thinking. Experts advise organizations to
recognize the immense value of integrating their client-facing operations. In this
view, internally-focused, department-centric views should be discarded in favor
of reorienting processes toward information-sharing across marketing, sales, and
service. For example, sales representatives need to know about current issues and
relevant marketing promotions before attempting to cross-sell to a specific client.
Marketing staff should be able to leverage client information from sales and
service to better target campaigns and offers. And support agents require quick
and complete access to a client’s sales and service history.[13]

Adoption Issues

Historically, the landscape is littered with instances of low adoption rates. In 2003, a
Gartner report estimated that more than $1 billion had been spent on software that was
not being used. More recent research indicates that the problem, while perhaps less
severe, is a long way from being solved. According to CSO Insights, less than 40 percent
of 1,275 participating companies had end-user adoption rates above 90 percent.[14]

In a 2007 survey from the U.K., four-fifths of senior executives reported that their biggest
challenge is getting their staff to use the systems they had installed. Further, 43 percent of
respondents said they use less than half the functionality of their existing system; 72
percent indicated they would trade functionality for ease of use; 51 percent cited data
synchronization as a major issue; and 67 percent said that finding time to evaluate
systems was a major problem.[15] With expenditures expected to exceed $11 billion in
2010,[15] enterprises need to address and overcome persistent adoption challenges.
Specialists offer these recommendations[14] for boosting adoptions rates and coaxing users
to blend these tools into their daily workflow:

• Choose a system that is easy to use: All solutions are not created equal. Some
vendors offer more user-friendly applications than others, and simplicity should
be as important a decision factor as functionality.

• Choose the right capabilities: Employees need to know that time invested in
learning and usage will yield personal advantages. If not, they will work around
or ignore the system.

• Provide training: Changing the way people work is no small task, and help is
usually a requirement. Even with today’s more usable systems, many staffers still
need assistance with learning and adoption

• Lead by example: Showing employees that upper management fully supports the
use of a new application by using the application themselves may increase the
likelihood that employees will adopt the application.[citation needed]

Privacy and data security system

One of the primary functions of these tools is to collect information about clients, thus a
company must consider the desire for privacy and data security, as well as the legislative
and cultural norms. Some clients prefer assurances that their data will not be shared with
third parties without their prior consent and that safeguards are in place to prevent illegal
access by third parties.

Market structures
This market grew by 12.5 percent in 2008, from revenue of $8.13 billion in 2007 to $9.15
billion in 2008.[16] The following table lists the top vendors in 2006-2008 (figures in
millions of US dollars) published in Gartner studies.[17][18]

2008 2007 2006

2008 2007 2006
Vendor Share Share Share (%)
Revenue Revenue Revenue
(%) (%)
SAP 2,055 22.5 (-2.8) 2,050.8 25.3 1,681.7 26.6
Oracle 1,475 16.1 1,319.8 16.3 1,016.8 15.5
Salesforce.com 965 10.6 676.5 8.3 451.7 6.9
Microsoft 581 6.4 332.1 4.1 176.1 2.7
Amdocs 451 4.9 421.0 5.2 365.9 5.6
Others 3,620 39.6 3,289.1 40.6 2,881.6 43.7
Total 9,147 100 8,089.3 100 6,573.8 100

See also
• Business intelligence • Data mining • Professional services
• Business Relationship • Database marketing automation software
Management • E-crm (PSA)
• Comparison of CRM • Employee experience • Public relations
systems management (EEM) • Sales force
• Consumer • Enterprise Feedback management system
Relationship System Management (EFM) • Sales intelligence
• Customer Experience • Enterprise • Sales process
• Customer experience relationship engineering
transformation management (ERM) • Support automation
• Customer Intelligence • Help desk • Supplier relationship
• Customer service - • Mystery shopping management
contains ISO
standards • Predictive analytics • The International
Customer Service
• Data management Institute - contains
customer service
standards
Notes and references
1. ^ a b Gartner, Inc. (6 June 2009) What's 'Hot' in CRM Applications in 2009
2. ^ a b c DestinationCRM.com (2002) What Is CRM?
3. ^ a b James A. O'Brien & George M. Marakas (2009). "Enterprise Business Systems, p.304.".
Management Information Systems. McGraw-Hill/Irwin..
4. ^ James A. O'Brien & George M. Marakas (2009). "Enterprise Business Systems, p.305.".
Management Information Systems. McGraw-Hill/Irwin..
5. ^ a b SAP Insider (15 November 2007) Still Struggling to Reduce Call Center Costs Without
Losing Customers?
6. ^ Strativity Group, Inc. (2009) Global Customer Experience Management Benchmark Study
7. ^ InsideCRM (2007) Get It Together with Collaborative CRM
8. ^ DestinationCRM.com (2009) Who Owns the Social Customer?
9. ^ Clara Shih, DestinationCRM.com (2009) Sales and Social Media: No One’s social (Yet)
10. ^ TechTarget (2009) Strategy Checklist: Planning for CRM and Customer Service Success
11. ^ Lior Arussy (2005). "Understanding the Fatal Mistakes". Passionate and Profitable. John
Wiley & Sons, Inc..
12. ^ "Avoid the Four Perils of CRM". Harvard Business Review.
13. ^ a b SAP white paper (2003) CRM Without Compromise
14. ^ a b Jim Dickie, CSO Insights (2006) Demystifying CRM Adoption Rates
15. ^ a b David Sims, TMC.net (2007) CRM Adoption ‘Biggest Problem’ in 83 Percent of Cases
16. ^ DestinationCRM.com (2009) CRM Market Grows for Fifth Straight Year
17. ^ Gartner, Inc (2008-09-12). "Gartner Says Worldwide Customer Relationship Management
Market Grew 23 Percent in 2007". Press release. http://www.gartner.com/it/page.jsp?
id=715308. Retrieved 2008-08-15.
18. ^ Gartner, Inc (2009-06-15). "Gartner Says Worldwide CRM Market Grew 12.5 Percent in
2008". Press release. http://www.gartner.com/it/page.jsp?id=1074615. Retrieved 2009-10-27.