What is a Customer Relationship System?

A customer-centric philosophy used in business to reduce costs and increase profitability, a good, well-implemented CRM system is key to the success of a company.

Many people consider a CRM, or Customer Relationship Management system, to be a type of software application, but in actual fact it's more of a business strategy, the purpose of which is to help more effectively manage a company's interactions with its customers, clients and prospects, and oftentimes also in managing the workflow of its staff. Of course, software technology is integral to a CRM, and so it's understandable that folk should think of it primarily as a software tool.

Many companies that sell CRM solutions offer Web-based tools (cloud computing) and software as a service (SaaS). Unlike regular computer programs, SaaS applications are installed on a desktop computer, these are accessed via a secure Internet connection and run via a Web browser. These applications are often sold on a subscription basis, negating any investment in purchasing or maintaining IT hardware (save for a computer with an internet connection) for the customer. Further savings are made because subscription fees are also often a fraction of the cost of purchasing software system outright.

A CRM system will use software to help the company organise, automate and synchronise its business processes, the desired result being to both reduce costs and increase profitability. Such a system can achieve this for a company by bringing together data from different departments (from sales and marketing, through to customer service and technical support), and even from outside the company, and present a single, holistic view of each customer in real-time. This enables customer-facing departments, such as sales and marketing, to make quicker and better informed decisions on many business aspects, from cross- or up-selling opportunities, through to target marketing strategies.

“CRMs involve using technology to organise, automate, and synchronize all-manner of business processes, from sales and marketing activities, through to customer service...”

The idea is that, if all kinds of information about a customer, including his or her purchasing habits, expectations, feedback and brand awareness, as well as the value of said customer to the business, are available to all within an organisation (from the CEO to sales, and everyone in between), then the company might be better able to develop a stronger relationship with that customer. By analysing and collating all of this data about a customer's behaviour, then a business may be able to better serve his or her exact needs in future transactions.

Customer-centricity is the key phrase. Putting the customer at the centre of all business decisions and strategies. In doing so, there is potential for improved service, increased efficiency, added cross- and up-selling opportunities, plus the possibility of streamlining sales and marketing processes with ameliorated customer profiling and targeting. All of this can result in reduced costs, and increased share of customer and overall profitability, which is the ultimate aim of any decent business model.

Of course, CRM systems can also be used to find, attract and win new business as well as nurture and retain existing custom. In conclusion, the three phases in which a CRM support the relationship between a business and its customers are:

Jargon buster

Cloud computing

A term used to describe computer systems and software that share resources and information across the internet. A typical example of this is a web-based application that users can access and use through a web browser as if it were a program installed locally on their own computer. On-demand CRM systems often adopt this method of software delivery.

Top Five Considerations
When Choosing a CRM

Considering purchasing or implementing a CRM system for your business? Here are a few key pointers to bear in mind when choosing a particular software system

1

CRM is a
Business Strategy

Try to think of a CRM not as a single software application, but rather as an all-encompassing business strategy; one that is implemented across all departments and designed to build coherent customer-centric strategies, reduce costs, and increase profitability.

2

ROI and
Total System Costs

Short for "Return on Investment", this measurement evaluates the efficiency of an investment (such as the purchase of a CRM system). The ROI is calculated by dividing the cost of the initial investment by the returns made as a direct result of the investment. It is worth bearing in mind that the total system costs, which impact upon the ROI, are often more than the purchase or lease price of any CRM software; they must also account for other factors such as staff training costs.

3

User adoption
and integration

The best way to get staff to quickly adapt to a new CRM is to find one that is easy to use, familiar in terms of existing methodologies, and one that actually simplifies processes. A system that takes too long to for staff to adopt, or one that effectively makes jobs and tasks more difficult, will have a negative effect both on your ROI, and upon staff morale. Along with this comes the consideration for migration and scalability. Will the system be easy to adopt, and will it expand with your business?

4

CRM Delivery
method

In terms of the software used to power the CRM system, will it be an on-demand, web-based application, or a program installed locally on your office network? Whilst the latter affords you the greatest control, it does generally require the greater up-front cost and development time of the two options. On-demand systems or online systems are generally paid for on a subscription basis, and also require less dedicated hardware systems, since they can generally be accessed using any standard web browser over a secure connection.

5

Security
and privacy

One primary function of a CRM is to collect information about clients. Therefore it is imperative that the storage of and access to such information is secure and complies with the guidelines stipulated by the Data Protection Act. Ensure you choose a CRM where you can feel confident that such data is private and secure.