Do You Need CRM?

Among the many new buzz words to spring into the business lexicon over the past few years is CRM, which stands for Customer Relationship Management.

CRM can be described as a business philosophy, a software product, or as both.

As a business philosophy, CRM is the process of learning more about customers with each interaction, and using that knowledge to ensure they are satisfied and will continue to do business with you.

As a software product, CRM is essentially a database which gathers information about customers and shares it throughout a company.

If we take the view that all businesses – regardless of size or type – need to understand their customers and ensure their satisfaction, then all businesses need to practice CRM as a philosophy.

Whether or not your business needs dedicated CRM software is another question again.

If you’re a sole trader with, say, half a dozen regular customers whose needs, likes and dislikes are well known to you, and you’re having no trouble keeping up with your various interactions with them, then you probably don’t need CRM software.

If, on the other hand, you have many potential new customers walking through the door every day – literally in your reception area or through your sales people on the road – then you probably do need CRM software to keep abreast of the various customer interactions.

CRM software creates links between sales, marketing, and customer service departments to provide a single view of each customer to all departments.

Each time anyone in your company deals with a customer, they enter the details of that interaction into the CRM system. Those details can then be accessed by anyone else in the company at any time so the “right hand” always knows what the “left hand” is doing.

Here is one example of a situation where CRM software is definitely needed. The marketing manager of a video store sends a price list to local video production companies offering various brands of tape stock at reduced prices.

A customer calls the store to purchase stock at the reduced prices and finds out that the people in front office know nothing about the offer – they are actually skeptical that such an offer has been made and ask the customer for proof of the offer. This, of course, does not go down well with the customer, who subsequently decides never to do business with the company again.

Had the marketing manager entered the names of the companies to whom he had sent the special price lists into a CRM system, the people in front office could have checked this information on their screens, and the customer would have received prompt and courteous service instead of skepticism. The result would have been a happy customer instead of a lost one.

Even if the above misunderstanding had still taken place, timely utilization of a CRM database might have limited the damage. An entry into a CRM system at the store could have alerted all employees that front office had just had an unhappy encounter with a customer, so “follow up with special offers” and “handle with care” are recommended.

CRM software can also help improve sales by contrasting new opportunities against deals already done so you can determine which prospects have higher potential. Managers can check the details of each customer interaction to see what sales representatives did in certain situations, and suggest improvements for future dealings.

Which CRM system is best for your company? Unfortunately there are no easy answers. Pat Nestiuk of US-based Saratoga Systems says the best way to choose a CRM system is to ask yourself exactly what you want from it.

“Are you looking to increase sales? Have more effective support resolutions? Obtain higher customer satisfaction – or all of the above?” he asks. “Decide what you want to achieve then look for the system which will best help you achieve it.”

IT experts from Gartner, the Meta Group, and Emerging Market Technologies (EMT) suggest hiring a consultant to match your existing company processes with the correct software. All agree that once you’ve chosen a CRM system, it’s important to allow sufficient time for training your team members and to make sure everyone understands the benefits of using the system.

Nestiuk says one of the main reasons why many CRM projects fail is because participants don’t fully understand the company-wide benefits that can result from them.

“Successful CRM is founded on excelling in two areas – understanding your customers and focusing your operations to serve them through all points of contact,” he says.

Useful Web resources include:

Customer Think

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Copyright 2002, RAN ONE Inc. All rights reserved. Reprinted with permission from www.ranone.com