What Is Customer Relationship Management (CRM)?
Customer relationship management (CRM) refers to the principles, practices, and guidelines that an organization follows when interacting with its customers.
From the organization's point of view, this entire relationship encompasses direct interactions with customers, such as sales and service-related processes, forecasting, and the analysis of customer trends and behaviors. Ultimately, CRM serves to enhance the customer's overall experience.
- Customer relationship management includes the principles, practices, and guidelines an organization follows when interacting with its customers.
- CRM is often used to refer to technology companies and systems that help manage external interactions with customers.
- Major areas of growth in CRM technology include software, cloud computing, and artificial intelligence.
Understanding Customer Relationship Management (CRM)
Elements of CRM range from a company's website and emails to mass mailings and telephone calls. Social media is one-way companies adapt to trends that benefit their bottom line. The entire point of CRM is to build positive experiences with customers to keep them coming back so that a company can create a growing base of returning customers.
Increasingly, the term CRM is being used to refer to the technology systems companies can engage to manage their external interactions with customers at all points during the customer lifecycle, from discovery to education, purchase, and post-purchase.
With an estimated global market value of over $40 billion in 2018, CRM technology is widely cited as the fastest-growing enterprise-software category, which largely encompasses the broader software-as-a-service (SaaS) market. Five of the largest players in the CRM market today include cloud computing giant Salesforce, Microsoft, SAP, Oracle, and Adobe Systems.
CRM includes all aspects in which a company interacts with customers, but more commonly refers to the technology used to manage these relationships.
Benefits of CRM
A CRM system helps businesses organize and centralize their information on customers, allowing for easier access and customer support. Businesses use CRM systems to optimize sales and marketing and improve customer retention. Data analytics is also much easier, where businesses can track the success of various projects or campaigns, identify trends, infer associations, and create visually intuitive data dashboards.
Customers enjoy better service and are more likely to report higher satisfaction as a result. Customer interactions including complaints are stored and can be easily recalled so that customers do not have to constantly repeat themselves.
Special CRM software aggregates customer information in one place to give businesses easy access to data, such as contact data, purchase history, and any previous contact with customer service representatives. This data helps employees interact with clients, anticipate customer needs, recognize customer updates, and track performance goals when it comes to sales.
CRM software's main purpose is to make interactions more efficient and productive. Automated procedures within a CRM module include sending sales team marketing materials based on a customer's selection of a product or service. Programs also assess a customer's needs to reduce the time it takes to fulfill a request.
CRM Cloud Solutions
Cloud-based systems provide real-time data to sales agents at the office and in the field as long as a computer, smartphone, laptop or tablet connects to the internet. Such systems boast heightened accessibility to customer information and eliminate the sometimes-complicated installation process involved with other CRM products or software.
The convenience of this type of system, however, has a trade-off. If a company goes out of business or faces an acquisition, access to customer information may become compromised. A business might have compatibility issues when and if it migrates to a different vendor for this kind of software. Also, cloud-based CRM programs typically cost more than in-house programs.
CRM Human Management and Artificial Intelligence
All of the computer software in the world to help with CRM means nothing without proper management and decision-making from humans. Plus, the best programs organize data in a way that humans can interpret readily and use to their advantage. For successful CRM, companies must learn to discern useful information and superfluous data and must weed out any duplicate and incomplete records that may give employees inaccurate information about customers.
Despite this human need, industry analysts are increasingly discussing the impact that artificial intelligence applications may have on CRM management and the CRM market in the near future. AI is expected to strengthen CRM activities by speeding up sales cycles, optimizing pricing and distribution logistics, lowering costs of support calls, increasing resolution rates, and preventing loss through fraud detection.
Tangible AI applications for CRM, however, are in the early stages of adoption, although Salesforce and Microsoft have already started to integrate AI components into their existing CRM systems.
Industry research estimates that the CRM market was valued at $52.4 billion in 2021, and will grow at an average annualized growth rate of 13.3% through 2030.
Types of CRM
Today, many comprehensive CRM platforms integrate all parts of the customer relationship the business may have. However, some CRMs are still designed to target a specific aspect of it:
- Sales CRM: to drive sales and increase the pipeline of new customers and prospects. Emphasis is placed on the sales cycle from tracking leads to closing deals.
- Marketing CRM: to build, automate, and track marketing campaigns (especially online or via email), including identifying targeted customer segments. These CRMs provide real-time statistics and can use A/B testing to optimize strategies.
- Service CRM: integrated dedicated customer service support with sales and marketing. Often features multiple contact points including responsive online chat, mobile, email, and social media.
- Collaborative CRM: encourages the sharing of customer data across business segments and among teams to improve efficiency and communication and work seamlessly together.
- Small Business CRM: optimized for smaller businesses with fewer customers to give those customers the best possible experience. These systems are often much simpler, intuitive, and less expensive to implement than enterprise CRM.
Frequently Asked Questions
How Much Does a CRM System Cost?
CRM pricing will depend on the size of the business, scope of features in the platform, number of users, and software vendor. Set-up and implementation fees can run in the thousands of dollars. CRM is then typically billed on a per-user per-month basis and can range from $15 to $300 or more per-user per-month depending on the complexity of the implementation.
How Do Businesses Choose Which CRM to Go With?
Today, there are several vendors of CRM platforms, so choosing a CRM boils down to cost, service, and functionality. That means you want the best bang for your buck, and not to spend extra money on added features that you won't use. Establish a budget that revolves around the business' goals and then select the features or functions that you require. Then, shop around and research vendors' customer reviews and feedback.
What Is an Example of Customer Relationship Management?
CRM can come in many forms, from tracking customers' purchasing behavior to fielding complaints and returns. One example of CRM might be sending out a tailored thank you note to customers after making a key purchase, both to improve their experience with the company but also in an attempt for a cross-sale or to upsell them in the future.