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Customer Relationship Management

Learn how a customer relationship management system can enhance a business.

A good customer relationship management system can keep track of customers across multiple points of access. [©Jupiter Images, 2009]
©Jupiter Images, 2009
A good customer relationship management system can keep track of customers across multiple points of access.

When properly implemented, customer relationship management (CRM) tools give businesses a comprehensive look at the behavior and needs of their customer bases. A good CRM system can keep track of customers across multiple points of access. Whether a client visits a store location, makes a payment online or calls customer support, the CRM system can track it.

Though powerful, many companies have found that implementing CRM software is a Herculean task that requires a clear plan of integration across company departments and buy-in from sales, marketing and IT departments. For this reason, most companies use a CRM system only if they have many customers and need to keep detailed information on transaction histories through time. Software and financial companies, for instance, have been the earliest adopters of CRM. Heavy manufacturers have come to it slowly.

Basic CRM Tools

CRM systems vary greatly in their complexity, but even the simplest programs help marketing and sales agents coordinate campaigns so the right customers find out about the right offers. CRM is also used to generate sales leads by helping the front office find people who are likely to be interested in a product. Beyond that, most software should help keep customers and sales reps on the same page over the product's life cycle. Is it time for a product update or security patch? Is the client ready for expanded services?

Ideally, a CRM program would keep a record of the customer's purchase and payment history, along with any other information that might be useful. An insurance company, for instance, might track a customer's phase of life so as to better recommend policies. Up-selling and cross-selling are common CRM tools, as many programs automatically know that if a customer purchased product A, there is a good chance he or she would be interested in product B. That option would be moved to the top of the call center representative's screen.

Advanced CRM Technology

The latest wave of CRM technology goes even further to give companies a very close look at customer behavior, which can then be used to reward good customers and highlight the ones who fail to pay their bill on time. Some CRM programs analyze customer's files in totality, including whether they subscribe to high-end services, how often they call, and whether they are behind on a payment.

This information can be compiled into a numeric score that determines the level of service a customer receives. Great customers may get to cut in line and speak to customer service reps while middling customers wait. If historically good customers are late on payments, the company could make a decision to delay sending the account to collections. Customers with problematic histories could be cut off from speaking to representatives, or even dropped from a company's client list.

CRM software can monitor a company's success at meeting certain customer service targets. For instance, Phone+Magazine reports that a CRM system could potentially track the success of an online bill pay program: if 90 percent of customers can pay their bills in under three minutes, that might be considered a success. If the system is becoming overburdened, the CRM software would alert IT before a serious backslide occurred.

On-Demand CRM vs. Custom Software

On-demand CRM is the name for web-based applications that host client data. Because the software is already designed and supported by a third party, many small and midsize businesses are turning to these services in hopes of implementing a fast, easy CRM solution. According to an article in CIO, however, the reality is much stickier. In fact, due to some of on-demand CRM's issues, only 12 percent of American businesses are expected to implement it in 2009.

Companies with sensitive data, for instance, may be reluctant to trust it with an outside server. And though an out-of-the-box solution may only need slight tweaking for some companies, others must work with an on-demand service to make customizations. The process is no cakewalk: Between working out the technical kinks and training employees, customized on-demand programs can take a year or more to roll out.

The alternative is licensing in-house software and running it on company servers with the support of the company's IT department. This solution has many more upfront costs than on-demand CRM and takes longer to implement. But if all goes according to plan, the company gets a secure system customized in its operations, and may even integrate the front of the house with the back. On-demand CRM is not quite there yet. Though users can sometimes export data to the back room, the process is clumsy and the information does not travel in real time.

Setting CRM Goals

Before a company begins to think about the hurdles involved in implementing a CRM system, it should make an in-depth analysis of what it needs in order to grow and maintain good customer relations. According to InsideCRM, this starts when a company thoroughly evaluates its weak spots, and understands how improving can affect their bottom line. In fact, many CRM efforts fail because managers do not undergo the tedious process of crunching the numbers, pulling up sample sales transactions and letting the hard data speak for itself.

Once a company's weaknesses are isolated, CRM goals can be set to target areas for improvement. Growth can take many forms; a company may decide it needs to increase its client base, or start selling more to its best customers. For each of those goals, the solution will look very different, which is why it is so important that companies know what they want from the outset.

Finally, managers should put serious thought into choosing the right CRM metrics numbers that will determine the success or failure of a CRM solution. If too many are chosen, management will be deluged with data, and unable to construct a clear picture of how the program is faring. Too few metrics, and they find themselves with an incomplete picture. The best measures are those that support a company's goals. If the plan is to increase clients, then it would be wise to track the number of phone calls made by sales reps. If the goal is to sell more to existing customers, customer satisfaction should be the yardstick.

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