What is a Customer Relationship Management (CRM) System?
Tuesday, December 14, 2010
Posted by: Joseph Aloi
Introduction to Customer Relationship Management (CRM):
As global markets become increasingly competitive, companies continuously strive to improve operations and provide faster customer response. Tougher competition in the business environment has been generating the need to better optimize resources, improve profitability, and keep existing customers satisfied.
Businesses are looking to leverage information technology (IT) for sales, marketing, and customer service processes and deploy Customer Relationship Management (CRM) systems for improving sales effectiveness, expanding distribution channels, raising sales productivity, and increasing revenues (Pliskin and Ben-Zion, 2005).
By analyzing the existing technology within an organization, the business justification to propose a change to better utilize enterprise software that is readily accessible via the web may be warranted. It is worth the due diligence, time, and investment for an organization to fully integrate a 'best-of-breed' Customer Relationship Manager (CRM) system into their infrastructure.
The Role of CRM:
The overall business philosophy of a CRM is basically two-fold: to help organizations leverage technology to gain insight into the behavior of their customer base; and to increase sales productivity (Bligh, 2004).
With a robust and comprehensive web-based CRM, a business can increase revenues by: providing services and products that are exactly what your customers want; offering better customer service; cross selling products more effectively; helping sales staff close deals faster; and retaining existing customers and discovering new ones (Bush and Rocco, 2005).
Through extensive research, CRM is commonly defined as a customer-centric business strategy with the goal of maximizing profitability, revenue, and customer satisfaction. Technologies that support this business purpose include the capture, storage, and analysis of customer, vendor, partner, and internal process information (Mallin and DelVecchio, 2008).
Companies today whether, small, mid-sized, or enterprise-level ultimately need a better way to efficiently manage their business and provide improved customer service in all facets of their business --- sales, support, technology, operations, projects, and administration.
Prior to integrating and implementing a CRM, customer data and other vital business information can be located in various parts of a network or on paper, and departments may have different processes for dealing with information. Ultimately, an organization should have one central, comprehensive solution that is robust, intuitive, flexible, easy-to-use, and fits their budget.
What a CRM will provide is the processes essential to the backbone of an organization that may be lacking with an outdated or proprietary in-house system. At the organizational level, a CRM must provide the context that allows it to translate its technological competences into value for its stakeholders (Rigby and Reichheld, 2002). A top-down component tightly aligns the CRM initiative with the direction of the overall business and secures executive level support (Goldenberg, 2010).
Achieving profitable organic growth essentially depends on an organization's ability to attract, keep, and develop profitable customer relationships. In order for an organization to experience growth and profitability, it must enable their sales people with the appropriate and proper tools to be successful and increase revenues. By leveraging the inherent capabilities of a CRM, such as the industry leader Salesforce.com for example, companies can not only improve operating efficiencies but also increase productivity and communications, both internally and externally. Not only will a CRM increase sales productivity, but also promote information sharing across various departments and allow for collaboration, even if the employees are not centrally located.
Data clearly demonstrates that a CRM will make a significant positive impact on any business. At Vuepoint, they dramatically improved their operating efficiencies companywide. CRM has the inherent capabilities to handle processes, such as workflow, SAS 70 procedures, customer service, sales, marketing, technical support, and administration - all in a single platform. Essentially it helped Vuepoint become more proactive instead of reactive. In addition, it eliminated the need to subscribe to multiple service providers by providing one integrated solution for all departments of a company at lower cost.
Required Strategy Behind Implementation:
Studies prove that the implementation and integration of a CRM system can be challenging and difficult without a detailed strategy in place and a written communication plan. It is imperative to organize an internal team who should formulate an effective strategy properly aligned with the business objectives of the company. The team should capture the critical business needs, expectations, and how to best utilize the CRM once implemented. An effective CRM implementation strategy should lead to maximum business returns, early management sponsorship, and low-cost maintenance (Pliskin and Ben-Zion, 2005).
Editor's Note: Joseph Aloi is an MBA student enrolled in St. Joseph's Graduate Management Studies program in Long Island, New York. This article is a paper he submitted for his Integrative Analysis in Management class.