What Exactly is CRM and How Do I Make it Work for My Company?
CRM. It’s one of those business buzzwords that often makes an appearance in discussions about customer experience (CX) journeys. The general consensus seems to agree that CRM is often used in business environments where communication channels are increasingly digitized. However, not every concern has been fully eliminated. Many companies who hesitate to adopt a CRM system do so out of distaste for the typically-high, upfront cost of implementation. The fact of the matter is, the benefits of a CRM system will more than likely outweigh the cost. In this post, we’ll take a deeper dive into what exactly a CRM system is and how it will improve your company.
Before investing money into the installation of a CRM for your business, it’s important to have a broad understanding of what it is and why you’re implementing it. Ask yourself:
1. Do you know what a CRM actually is?
2. How will it help drive profits for your business?
3. What can go wrong and how will you prevent that?
How it All Began
CRM is an acronym for Customer Relationship Management. In short, these are technologies that manage all your company’s relationships and interactions with your customers in one streamlined location – driven by the underlying goal of improving business relationships and increasing brand loyalty. These tools span the gap between organizational silos and are heavily used in contact management, sales management, marketing, productivity, customer support and more.
A careful distinction: a CRM system is not a software tool that will manage customer relations for you — it is simply the bundling of customer strategy and processes, supported by the relevant software, for the purpose of improving customer loyalty and company profit.
A quick background: CRM systems weren’t always so cross-functional. The humble beginnings of CRM technology began in 1987 with the release of the first ever contact management system, called ACT!, by creators Pat Sullivan and Mike Muhney. This basic system enabled ACT!’s users to organize and store customer information more effectively than they could without. The larger implications were quickly realized by a variety of industries, and after many additions in the 90’s that added features like sales automation and marketing capabilities to boost the contact management features of the software, the modern CRM system was born.
CRM in 2020
Today, technology giants such as IBM, Oracle, Salesforce, Microsoft and Adobe are major players in the global CRM software market. Market Research Future reports that the explosive growth of the global CRM software market can be attributed to the:
- Increasing use of web-based interfaces and social computing;
- increasing deployment of CRM software in the banking and financial services sector;
- growing demand for hosted services from small and medium business units;
- increasing popularity of social CRM and mobile CRM.
CRM is now the biggest software market in the world and the growth isn’t slowing down. In fact, CRM is now expected to reach more than $80 billion in revenues by 2025.
When CRM Goes Wrong
If functioning properly, CRM allows companies to gather customer data quickly, identify key customers over time and increase customer loyalty through the provision of customized products and services. CRM also minimizes the overall costs of serving these customers and makes it easier to acquire similar customers down the road.
But not every CRM system is a story of success — in fact, a large portion are case studies of the exact opposite. In 2017, CIO magazine reported that around one-third of all CRM projects fail. It’s not uncommon for there to be a disconnect between the overall strategic purpose of a CRM system, and where they actually fall flat in mobilizing employees to increase profits and brand loyalty.
Here are three ways to address this disconnect and ensure your CRM is successful from the start:
Tip #1: Get executive-level staff on board from the start.
Although numerous factors are involved when CRM goes wrong, research suggests one major reason CRM underperforms is that most executives simply don’t understand what they are implementing. Here’s a quick exercise: try asking a few of your managers to define CRM. The best answers should sound vaguely like this: “CRM aligns business processes with customer strategies to build customer loyalty and increase profits over time.” If the responses are simply, “It’s a sales tool,” you’ve got a problem.
Your CRM should have the support of high-level executives to ensure the system is being used by teams appropriately and consistently enough to provide actual value. One executive who refuses to embrace the tool — out of distaste for change, or maybe a lack of understanding of how to use the software — can have disastrous impacts on the overall CRM use in your organization. A perspective that CRM is strictly used by and for the sales team will damage your CRM’s reach and result in missed opportunities to streamline customer data across organizational silos.
Tip #2: Understand the cost.
Do you have a thorough understanding of what it costs to implement and maintain CRM?
Not every CRM will run costs that are extremely high, but it’s important to be aware of the pricing model offered by the company. The most common models you’ll encounter are fixed monthly pricing schemes, quote-based pricing and single-payment pricing. Examine the size and scope of your business and make an educated choice of CRM that complements the amount of money you’re willing to invest and the results you expect to get.
Tip #3: Managers should use CRM to coach — not punish — their team.
Numerous studies have identified manual data entry as one of the biggest reasons some CRM systems miss the mark. For example, a report by Insidesales found that it took employees 7.5 minutes on average to enter data after finishing a call. When employees might be making upwards of fifty calls in a single day, this time-consuming chore quickly adds up. If your CRM has a clunky interface that’s difficult to navigate, the problem is worsened. Eventually, participation in the CRM begins to decline and this creates only a partial record of data.
Furthermore, studies have shown that employees tend to believe an emphasis on high-achieving CRM metrics might disproportionately focus on areas where they fall short instead of areas where they excel. If managers are creating the impression that CRM is predominantly used to survey employee performance, instead of empowering them to increase profits, there’s an issue. Bottom line? CRM should be used as a powerful mechanism to support coaching for individual sales calls and provide valuable, and constructive feedback.
Despite the daunting upfront costs often associated with CRM, the industry is without a doubt here to stay, especially thanks to advancements in cloud technology and the digitization of business-to-consumer communication channels. Before your organization decides to implement one CRM, make sure your executive-level staff is on board and willing to support the system, you’ve allocated resources appropriately to ensure a smooth take-off and your managers know to use the metrics as coaching opportunities.
Curious about the advantages of linking your CRM, telephony system, marketing automation platform and other solutions? Take a look at the CDC Solution and contact us today to learn more.