CRM stands for Customer Relationship Management. It is a
strategy used to learn more about customers' needs and behaviors
in order to develop stronger relationships with them. Good
customer relationships are at the heart of business success.
There are many technological components to CRM, but thinking
about CRM in primarily technological terms is a mistake. The
more useful way to think about CRM is as a strategic process
that will help you better understand your customers’ needs and
how you can meet those needs and enhance your bottom line at the
same time. This strategy depends on bringing together lots of
pieces of information about customers and market trends so you
can sell and market your products and services more effectively.
What is the goal of CRM?
The idea of CRM is that it helps businesses use technology and
human resources to gain insight into the behavior of customers
and the value of those customers. With an effective CRM
strategy, 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
• retaining existing customers and discovering new ones
That sounds rosy. How does it happen?
It doesn't happen by simply buying software and installing it.
For CRM to be truly effective, an organization must first
understand who its customers are and what their value is over a
lifetime. The company must then determine what the needs of its
customers are and how best to meet those needs. For example,
many financial institutions keep track of customers' life stages
in order to market appropriate banking products like mortgages
or IRAs to them at the right time to fit their needs.
Next, the organization must look into all of the different ways
information about customers comes into a business, where and how
this data is stored and how it is currently used. One company,
for instance, may interact with customers in a myriad of
different ways including mail campaigns, Web sites,
brick-and-mortar stores, call centers, mobile sales force staff
and marketing and advertising efforts. CRM systems link up each
of these points. This collected data flows between operational
systems (like sales and inventory systems) and analytical
systems that can help sort through these records for patterns.
Company analysts can then comb through the data to obtain a
holistic view of each customer and pinpoint areas where better
services are needed. For example, if someone has a mortgage, a
business loan, an IRA and a large commercial checking account
with one bank, it behooves the bank to treat this person well
each time it has any contact with him or her.
Are there any indications of the need for a CRM project?
You need CRM when it is clear you don’t have an accurate view of
who your customers are and what their needs or desires are or
will be at any given stage in their lives. If you are losing
customers to a competitor, that’s a clear indication that you
should improve your understanding of your customers.
How long will it take to get CRM in place?
It depends. If you decide to go with a hosted CRM solution from
an application service provider and you are planning to use the
software for a specific department like sales, the deployment
should be relatively quick – perhaps 30-90 days. However, if you
are deploying either a hosted application or an on-premise
package (involving the purchase of software licenses upfront) on
an enterprise-wide basis (that involves different departments
like sales, marketing and operations), you should expect the
implementation and training to take months, if not years. The
time it takes to put together a well-conceived CRM project
depends on the complexity of the project and its components and
how well you manage the project.
How much does CRM cost?
Again it depends. A hosted sales automation application can cost
between $65 and $150 a month for a basic sales automation
package. If you want more sophisticated functionality and a
greater level of support, you pay a lot more. An enterprise
on-premise CRM package can cost anywhere between several
thousand to several millions of dollars, depending again on how
many functions you purchase and how many computers or “seats”
have access to the software. For instance, one company or
department might purchase an email marketing management
application or a salesforce automation application, while a
larger firm might want to purchase an integrated package that
includes a database as well as applications for marketing, sales
and customer service and support (via call centers and online).
Obviously, the integrated software package is much more
expensive.
What are advantages of hosted or on-demand CRM vs. on-premise
and vice versa?
In the last few years, the market for on-demand CRM has soared
particularly among small and mid-sized companies, largely
because of fears about the expense and complexity of large-scale
on-premise CRM implementations. And indeed, on-demand CRM is
often a good choice for companies that want to implement
standard CRM processes, are able to use out-of-the-box data
structures, with little or no internal IT support, and don’t
require complex or real-time integration with back office
systems.
However, on-demand CRM software is not always as simple as the
vendors would have you believe. For instance, customization can
be problematic and hosted CRM vendors’ API tools cannot provide
the degree of integration that is possible with on-site
applications. Getting a hosted CRM system working shouldn’t take
as long as a traditional software package, but larger and more
complex rollouts can still take a year or more. And while the
hosted option reduces the need for in-house technical support,
upgrades can still sometimes be technically tricky. In addition,
some companies with particularly sensitive customer data, such
as those in financial services and health care, may not want to
relinquish control of their data to a hosted third party for
security reasons. As a result, AMR Research predicts that even
by 2009, hosted CRM applications will account for only 12
percent of the total U.S. CRM market.
What are the keys to successful CRM implentation?
• Develop your customer-focused strategy first before
considering what kind of technology you need.
• Break your CRM project down into manageable pieces by setting
up pilot programs and short-term milestones. Start with a pilot
project that incorporates all the necessary departments but is
small enough and flexible enough to allow tinkering along the
way.
• Make sure your CRM plans include a scalable architecture
framework. Think carefully about what is best for your
enterprise: a solution that ties together “best of breed”
software from several vendors via Web Services or an integrated
package of software from one vendor.
• Don't underestimate how much data you might collect (there
will be LOTS) and make sure that if you need to expand systems
you'll be able to.
• Be thoughtful about what data is collected and stored. The
impulse will be to grab and then store EVERY piece of data you
can, but there is often no reason to store data. Storing useless
data wastes time and money.
Which division should run the CRM project?
The biggest returns come from aligning business, CRM and IT
strategies across all departments and not just leaving it for
one group to run. In fact, it’s best for the business
departments who actually use the software to take ownership of
the project, with IT and the CIO playing an important advisory
role.
What causes CRM projects to fail?
Many things. From the beginning, lack of a communication between
everyone in the customer relationship chain can lead to an
incomplete picture of the customer. Poor communication can lead
to technology being implemented without proper support or buy-in
from users. For example, if the sales force isn't completely
sold on the system's benefits, they may not input the kind of
demographic data that is essential to the program's success. One
Fortune 500 company is on its fourth try at a CRM
implementation, because it did not do a good job at getting
buy-in from its sale force beforehand and then training sales
staff once the software was available.
What industries are leading the way in CRM implementations?
As in most leading-edge technology implementations, the
financial services and telecommunications industries set the
pace in CRM. Other industries are on the CRM bandwagon include
consumer goods makers and retailers and high tech firms.
Which industry is behind the curve?
Heavy manufacturing. As a rule, the further an industry is away
from the end customer, the less important CRM is.
Source: Thomas Wailgum, CXO Media
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