Customer Relationship Management (CRM) is about using data to understand your customers and increase sales.
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Definition of CRM
CRM is an abbreviation for Customer Relationship Management, a method of managing a company's interactions with current and potential customers, as well as storing and analyzing data about past interactions. Management consulting firm Bain defines CRM as “a process by which companies understand their customer groups and react quickly and sometimes immediately to customer requests.” However, CRM can be both the process and philosophy for achieving these goals, as well as the technology to to implement this process.
According to Salesforce, the leading CRM provider, the CRM software developed from the contact management software of the 80s, which in turn was supposed to provide a digital version of the Rolodexes, which are so important for sales. Initially, the CRM software lived on individual PCs. It was later migrated to servers that could provide services for an entire company. At this point the term was used CRM system started, reflecting the fact that it encompasses a company's infrastructure.
One of the most important things to keep in mind about a CRM system is that it ultimately matters less than the data you put into that system. This is one reason to view customer relationship management as a philosophy and set of procedures for recording data about customer interactions, rather than just a software package.
What is CRM software used for?
Customer Relationship Management is a strategic process that helps you better understand your customers' needs and how to meet those needs and increase your bottom line. CRM software links information about customers from various sources including email, websites, physical stores, call center, Mobile device sales, and marketing and promotional activities. CRM data streams exist between operational systems (such as sales and warehouse systems) and analysis systems that sort the CRM data according to patterns.
If you don't have a clear idea of who your customers are and what their needs or wants are or will be at any given point in their life, or if you lose customers to a competitor, this is a clear indication that you are in dire need of a CRM - need software.
CRM systems have many technological components, but it is a mistake to think of CRM primarily in technological terms. Instead, CRM should be viewed as a strategic process to better understand and meet your customers' needs. A successful CRM strategy requires a lot of information about customers and market trends to be gathered so that you can market and sell your products and services more effectively.
With an effective CRM strategy, a company can increase sales by:
- Provision of services and products that exactly meet the needs of your customers
- provide better customer service
- effective cross-selling products
- Sales reps can close deals faster, retain existing customers, and discover new customers
These revenues are not generated by simply buying and installing software. For CRM to be truly effective, a company must first understand who its customers are, their value, their needs, and how those needs can best be met. For example, many financial institutions track the stages of their customers' lives in order to get them banking products like mortgages at the right time.
Next, the company needs to examine the various ways in which information about customers enters a company, where and how that data is stored, and how it is currently used. For example, a company can interact with customers in a variety of ways, including email campaigns, websites, brick and mortar stores, call centers, mobile salespeople, and marketing and promotional activities.
CRM software links each of these points. This records data flows between operational systems (such as sales and warehouse systems) and analysis systems, with the help of which these data records can be searched for patterns. In-house analysts can then sift through the data to get a holistic view of each customer and identify areas where better service is needed.
CRM vs. ERP vs. Marketing Automation
Before we go any further, we need to clarify the difference between CRM and some other terms you may have heard in this area: marketing automation and ERP.
While there is some conceptual overlap - all three involve storing, analyzing, and using customer data to improve business processes. However, the three areas occupy different niches. Knowing what these are, you can clarify how each tool works:
Marketing automation - Marketing automation is about inexpensive and effective communication with potential customers or prospects, mainly in the form of email and social media contacts. Ultimately, the goal is to collect leads (prospect contact information) to pass on to the sales team.
CRM (Customer Relationship Management) - CRM aims to convert leads into contacts, that is, leads who have expressed interest in buying your products or in the past and who you hope will buy again in the future.
ERP (Enterprise Resource Planning) - ERP coordinates the process of actually producing and delivering products to the people you sold them to and manages the financial information on those sales.
These three tools can work in sequence - the output of the marketing automation process goes into CRM and the CRM information about completed sales should go into ERP - but each of them represents a separate domain and only IT staff should have login permissions for all three Systems.
Salesforce: CRM software and more
One of the reasons why the automation of CRM, ERP and marketing systems is not as different as it is perceived by the general public is that Salesforce has so far been very successfully integrated into the areas of ERP and marketing automation. With a 26 percent market share, Salesforce has a massive lead over its competitors in the CRM area. Other big names in this space are Oracle, SAP, Adobe, and Microsoft.
Types of CRM software
In addition to brand names, there are two main types of CRM:
On-premise - means the CRM software is installed on a server under the control of the customer
Cloud or on-demand - the CRM software runs on the manufacturer's cloud infrastructure (pay-as-you-go approach).
The market for on-demand CRM has risen sharply, especially in small and medium-sized businesses, largely due to concerns about the cost and complexity of large local CRM implementations. Indeed, on-demand CRM is often a good choice for companies that want to implement standardized CRM processes in order to have ready-to-use data structures with little internal IT support.
However, on-demand CRM software is not always as simple as the vendors think it is. For example, customization can be problematic and the API tools from hosted CRM providers cannot provide the level of integration that on-premise applications can provide. Deploying a hosted CRM system shouldn't take as long as a traditional software package.
However, larger and more complex rollouts can sometimes take a year or more. While the hosted option reduces internal technical support, upgrades can sometimes be technically difficult. In addition, some companies with particularly sensitive customer data, such as those in the financial services and healthcare sectors, do not want to leave control of their data to a hosted third party for security reasons.
Free CRM software
A hosted CRM system costs EUR 50 to 100 per user per month. If you want more sophisticated features and better support, you pay a lot more. An in-house CRM package can cost between several thousand and several million euros. Again, this depends on how many features you purchase and how many computers, or "clients", have access to the software.
For example, a company or department can send an emailMarketing managementApplication or a Salesforce automation application while a larger company wants to purchase an integrated package that includes a database and applications for marketing, sales, customer service and support (through call centers and online). As can be guessed, the integrated software package is much more expensive.
free open source CRM software
That cost, even for the hosted options, is well above what many small businesses can afford. Fortunately, there is a market for free CRM software that, while less mature, is usually more than adequate for the needs of a small or medium-sized business. This category includes open source offerings such as B. SuiteCRM and SugarCRM.
Manage CRM properly
As we mentioned earlier, CRM is as much a process and a mindset as is a software platform. For this reason, the greatest returns are achieved when the business, CRM and IT strategies in all departments are coordinated and not left to just one group.
The reason for this, according to Moira Alexander, is that “in most companies, individual departments or teams believe that they are the only ones who have the key to understanding customer needs. The reality is like this, however, and different departments simply have a different view of customer expectations and no one has an all-encompassing view. "
CRM rollouts are very complex and have a certain level of awareness as they are doomed to fail. A lack of communication between all those involved in the customer relationship chain can lead to an incomplete picture of the customer right from the start. Poor communication can result in technology being implemented without proper support or buy-in from users. For example, if the field service is not fully enjoying the benefits of the system, they may not enter the types of demographics that are essential to the success of the program.
Avoid data silos at all costs
The last thing to keep in mind when managing your CRM project is that you need to eliminate the data silos in order to be successful. Users must have access to data beyond what they themselves enter into the system.