What the hell is crm?

Customer relationship management

From Wikipedia, the free encyclopedia

This article is written like a personal reflection or essay and may require cleanup. Please help improve it by rewriting it in anencyclopedic style. (September 2009)

Customer relationship management is a broadly recognized, widely-implemented strategy for managing and nurturing a company’s interactions with customers and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales related activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new customers, nurture and retain those the company already has, entice former customers back into the fold, and reduce the costs of marketing and customer service. ^[1]

According to Forrester Research, spending on customer relationship management is expected to top $11 billion annually by 2010, as enterprises seek to grow top-line revenues, improve the customer experience, and boost the productivity of customer-facing staff.^[2]

Contents [hide] 1 Overview 1.1 History 1.2 Benefits 1.3 Challenges 1.4 Tools and Trends 2 Types/variations 2.1 Sales Force Automation 2.2 Marketing 2.3 Customer Service and Support 2.4 Analytics 2.5 Integrated/Collaborative 2.6 Small Business 2.7 Social Media 2.8 Non-profit and Membership-based 3 Strategy 4 Implementation 4.1 Implementation Issues 4.2 Adoption Issues 5 Privacy and data security system 6 Market structures 7 See also 8 Notes and references

[edit]Overview

Once simply a label for a category of software tools, customer relationship management has matured and broadened as a concept over the years; today, it generally denotes a company-wide business strategy embracing all customer-facing departments and even beyond. When an implementation is effective, people, processes, and technology work in synergy to develop and strengthen relationships, increase profitability, and reduce operational costs.^[3]

[edit]History

Norm Francis, founder of Pivotal Software (1994), and a co-founder of Basis Software Group (BSG) the company that developed ACCPAC, an accounting software package (purchased from Norm by Computer Associates in 1985), invented the concept of 360-degree customer relationship management, a concept that continues to be used today to describe the unification of activities across the organization by employees who play a role in the customer relationship.^{[citation needed]}

[edit]Benefits

Customer relationship management tools have been shown to help companies attain these objectives:^[3]

• Streamlined sales and marketing processes
• Higher sales productivity
• Added cross-selling and up-selling opportunities
• Improved customer service, loyalty, and retention
• Increased call center efficiency
• Higher close rates
• Better customer profiling and targeting
• Reduced expenses
• Increased market share
• Higher overall profitability

[edit]Challenges

Tools and workflows can be complex to implement, especially for large enterprises. While some companies report great success, initiatives have also been known to fail—mainly owing to poor planning, a mismatch between software tools and company needs, roadblocks to collaboration between departments, and a lack of workforce buy-in and adoption.^{[citation needed]}

[edit]Tools and Trends

Previously these tools were generally limited to contact management: monitoring and recording interactions and communications with customers. Software solutions then expanded to embrace deal tracking and the management of accounts, territories, opportunities, and—at the managerial level—the sales pipeline itself. Next came the advent of tools for other customer-facing business functions, as described below.

Customer relationship management technology has been, and still is, offered as on-premises software that companies purchase and run on their own IT infrastructure. Vendors include:Oracle Corporation, SAP AG, and Amdocs. Perhaps the most notable trend has been the growth of tools delivered via the Web, also known as cloud computing and software as a service(SaaS). In contrast with conventional on-premises software, cloud-computing applications are sold by subscription, accessed via a secure Internet connection, and displayed on a Web browser. Companies don’t incur the initial capital expense of purchasing software; neither must they buy and maintain IT hardware to run it on. In 2009, SaaS represented approximately 20% of all customer relationship management spending, and continues its trajectory of outselling on-premises software by a ratio of 3-to-1.^[1] Vendors include: Salesforce.com, RightNow, and SugarCRM.

[edit]Types/variations

[edit]Sales Force Automation

As its name implies, a sales force automation (SFA) system provides an array of capabilities to streamline all phases of the sales process, minimizing the time that reps need to spend on manual data entry and administration. This allows them to successfully pursue more customers in a shorter amount of time than would otherwise be possible. At the heart of SFA is acontact management system for tracking and recording every stage in the sales process for each prospective customer, from initial contact to final disposition. Many SFA applications also include features for opportunity management, territory management, sales forecasting and pipeline, workflow automation, quote generation, and product knowledge. Newly-emerged priorities are modules for Web 2.0 e-commerce and pricing management.^[1]

[edit]Marketing

Systems for marketing (also known as marketing automation) help the enterprise identify and target its best customers and generate qualified leads for the sales team.^[4] A key marketing capability is managing and measuring multichannel campaigns, including email, search, social media, and direct mail. Metrics monitored include clicks, responses, leads, deals, and revenue. Marketing automation also encompasses capabilities for managing customer loyalty, lists, collateral, and internal marketing resources.

As marketing departments are increasingly obliged to demonstrate revenue impact, today’s systems typically include performance management features for measuring the ROI of campaigns.^[1]

[edit]Customer Service and Support

Recognizing that customer service is an important differentiator, organizations are increasingly turning to technology platforms to help them improve their customers’ experience while increasing efficiency and keeping a lid on costs.^[5] Even so, a 2009 study revealed that only 39% of corporate executives believe their employees have the right tools and authority to solve customer problems.“.^[6]

The core for customer service has been and still is comprehensive call center management, including such features as intelligent call routing, computer telephone integration (CTI), and escalation capabilities. More recently, e-service capabilities—Web self-service, knowledge management, email response management, Web chat, collaborative browsing and virtual assistants—are gaining in importance.^[1] In fact, today’s profusion of customer service channels has prompted many companies to deploy integrated support applications that deliver knowledge-enabled solutions across all of them.

Another key trend is the increasing popularity of SaaS platforms for customer service, owing to their rapid deployment, low initial cost, and now-established efficacy for large and complex contact centers.^[1]

[edit]Analytics

Relevant analytics capabilities are often interwoven into applications for sales, marketing, and customer service. These features can be complemented and augmented with links to separate, purpose-built applications for analytics and business intelligence.

Sales analytics let companies monitor and understand customer actions and preferences, through sales forecasting, data quality management, and dashboards that graphically display key performance indicators (KPIs).

Marketing applications generally come with predictive analytics to improve customer segmentation and targeting, and features for measuring the effectiveness of online, offline, and search marketing campaign^[1] Web analytics have evolved significantly from their starting point of merely tracking mouse clicks on Web sites. By evaluating customer “buy signals,” marketers can see which prospects are most likely to transact and also identify those who are bogged down in a sales process and need assistance.^[5] Marketing and finance personnel also use analytics to assess the value of multi-faceted programs as a whole.

Customer service analytics are increasing in popularity as companies demand greater visibility into the performance of call centers and other support channels,^[5] in order to correct problems before they affect customer satisfaction levels. Support-focused applications typically include dashboards similar to those for sales, plus capabilities to measure and analyze response times, service quality, agent performance, and the frequency of various customer issues.

[edit]Integrated/Collaborative

Departments within enterprises—especially large enterprises—tend to function in their own little worlds.^[7] Traditionally, inter-departmental interaction and collaboration have been infrequent and rivalries not uncommon.

More recently, the development and adoption of the tools and services has fostered greater fluidity and cooperation among sales, customer service, and marketing. This finds expression in the concept of collaborative customer relationship management, which uses technology to build bridges between departments. The objective is sharing and harnessing information from all quarters to improve the quality of customer service, and increase customer satisfaction and loyalty^[7] as a result.

For example, feedback from a technical support center can enlighten marketers about specific services and product features customers are asking for. Similarly, demand generationstrategies need to marry marketing programs with structured sales processes^{[citation needed]} —that is, campaign-engendered leads must be quickly and efficiently funneled to sales. Reps, in their turn, want to be able to pursue these opportunities without the time-wasting burden of re-entering records and contact data into a separate SFA system. Conversely, lack of integration can have negative consequences: If a sales force automation or customer relationship management system isn’t adopted and integrated among all departments, several sources might contact the same customers for an identical purpose.^{[citation needed]}

Owing to these and related factors, many of the top-rated and most popular products come as integrated suites.

Despite all this, many companies are still not fully leveraging these tools and services to align marketing, sales, and service to best serve the enterprise and its customers.^[8] Often, implementations are fragmented; isolated initiatives by individual departments to address their own needs. Systems that start disunited usually stay that way: Siloed thinking and decision processes frequently lead to separate and incompatible systems, an incomplete customer view, and dysfunctional processes.

[edit]Small Business

Basic customer management can be accomplished by a contact management system, an integrated solution that lets organizations and individuals efficiently track and record customer and supplier interactions, including emails, documents, jobs, faxes, scheduling, and more.

This kind of solution is gaining traction with even very small businesses, thanks to the ease and time savings of handling customer contact through a centralized application rather than several different pieces of software, each with its own data collection system.^{[citation needed]}

In contrast with contact managers, bona fide customer relationship management tools usually focus on accounts rather than individual contacts. They also generally include opportunity management for tracking sales pipelines plus added functionality for marketing and customer service.

As with larger enterprises, small businesses are finding value in online management solutions, especially for mobile and telecommuting workers.

[edit]Social Media

Social media sites like Twitter and Facebook are greatly amplifying the customer voice in the marketplace, and are predicted to have profound and far-reaching effects on the ways companies manage their customer relationships.^[9] This is because customers are using these social media sites to share opinions and experiences on companies, products, and services. As social media isn’t moderated or censored, individuals can say anything they want about a company or brand, whether pro or con.

Increasingly, companies are looking to gain access to these conversations and take part in the dialogue. More than a few systems are now integrating to social networking sites. Social media promoters cite a number of business advantages, such as using online communities as a source of high-quality leads and a vehicle for crowd sourcing solutions to customer-support problems. Companies can also leverage customers’ stated habits and preferences to personalize and even “hyper-target” their sales and marketing communications.^[9]

Some analysts take the view that business-to-business marketers should proceed cautiously when weaving social media into their business processes. These observers recommend careful market research to determine if and where the phenomenon can provide measurable benefits for customer interactions, sales, and support.^[10]

[edit]Non-profit and Membership-based

Systems for non-profit and membership-based organizations help track constituents and their involvement in the organization. Capabilities typically include tracking the following: fund-raising, household relationships, demographics, membership levels, membership directories, volunteering and communications with individuals.

Many include tools for identifying potential donors based on previous donations and participation. In light of the growth of social networking tools, there may be some overlap between social/community driven tools and non-profit/membership tools.

[edit]Strategy

Choosing and implementing a system is a major undertaking. For enterprises of any appreciable size, a complete and detailed plan is required to obtain the funding, resources, and company-wide support that can make the initiative successful.^[11] Benefits must be defined, risks assessed, and cost quantified in three general areas:

• Processes: Though customer relationship management has many technological components, business processes lie at its core. It can be seen as a more customer-centric way of doing business,^[12] enabled by technology that consolidates and intelligently distributes pertinent information about customers, sales, marketing effectiveness, responsiveness, and market trends. Therefore, before choosing a technology platform, a company needs to analyze its business workflows and processes; some will likely need re-engineering to better serve the overall goal of winning, managing, and satisfying customers. Moreover, planners need to determine the types of customer information that are most relevant, and how best to employ them.^[3]

• People: For an initiative to be effective, an organization must convince its staff that change is good and that the new technology and workflows will benefit employees as well as customers. Senior executives need to be strong and visible advocates who can clearly state and support the case for change. Collaboration, teamwork, and two-way communication should be encouraged across hierarchical boundaries, especially with respect to process improvement.^[13]

• Technology: In evaluating technology, key factors include alignment with the company’s business process strategy and goals; the ability to deliver the right data to the right employees; and sufficient ease of use that users won’t balk. Platform selection is best managed by a carefully chosen group of executives who understand the business processes to be automated as well as the various software issues. Depending upon the size of the company and the breadth of data, choosing an application can take anywhere from a few weeks to a year or more.^[3]

[edit]Implementation

[edit]Implementation Issues

Many enterprises have derived great benefit from customer relationship management: dramatic increases in revenue, higher rates of customer satisfaction, and significant savings in operating costs. For others, however, the benefits have been limited and disappointing.^[14] Under-performing deployments peaked in the early 2000’s, when a number of companies spent large sums on solutions only to have it fail to deliver the hoped-for results.^[12]

Proponents emphasize that technology should be implemented only in the context of careful strategic and operational planning.^[15] Implementations almost invariably fall short when one or more facets of this prescription are ignored:

• Poor planning: Initiatives can easily fail when efforts are limited to choosing and deploying software, without an accompanying rationale, context, and support for the workforce.^[16] In other instances, enterprises simply automate flawed customer-facing processes rather than redesign them according to best practices.^[8]

• Poor adoption: In an early-2000’s survey of more than 600 enterprises, Gartner reported that 42% of all purchased licenses had become “shelf-ware”—software paid for but never installed. This often stems from a poor technology fit: A company compromises on capabilities or else tries to achieve too much in a single stroke, ending up with an overly complex and costly deployment that yields scant ROI.^[14]

• Poor integration: For many companies, customer relationship management manifests in the form of piecemeal initiatives that address a glaring need: improving a particular customer-facing process or two (via simple contact management or sales planning), or automating a favored sales or customer support channel.^[8] Such “point solutions” offer little or no integration or alignment with a company’s overall strategy.^[14] They offer a less than complete customer view and often lead to unsatisfactory user experiences.^[8]

• Toward a solution: overcoming siloed thinking. Experts advise organizations to recognize the immense value of integrating their customer-facing operations. In this view, internally-focused, department-centric views should be discarded in favor of reorienting processes toward information-sharing across marketing, sales, and service.^[8] For example, sales representatives need to know about current service issues and relevant marketing promotions before attempting to cross-sell to a specific customer. Marketing managers should be able to leverage customer information from sales and service to better target campaigns and offers. And support agents require quick and complete access to a customer’s sales and service history.^[8]

[edit]Adoption Issues

Historically, the landscape is littered with instances of low adoption rates. In 2003, a Gartner report estimated that more than $1 billion had been spent on software that wasn’t being used. A contemporaneous AMR Research study found that of 80 large customers surveyed, 47% had difficulty with end-user adoption, leading to abandoned projects or unused software modules.

More recent research indicates that the problem, while perhaps less severe, is a long way from being solved. According to a CSO Insights less than 40 percent of 1,275 participating companies had end-user adoption rates above 90 percent.^[17]

In a 2007 survey from the U.K., four-fifths of senior executives reported that their biggest challenge is getting their staff to use the customer relationship management systems they’d installed. Further, 43 percent of respondents said they use less than half the functionality of their existing system; 72 percent indicated they’d trade functionality for ease of use; 51 percent cited data synchronization as a major issue; and 67 percent said that finding time to evaluate systems was a major problem. ^[18] With expenditures expected to exceed $11 billion in 2010,^[18] enterprises need to address and overcome persistent adoption challenges. Specialists offer these recommendations^[17]for boosting adoptions rates and coaxing users to blend these tools into their daily workflow:

• Choose a system that’s easy to use: All customer relationship management solutions are not created equal. Some vendors offer more user-friendly applications than others, and simplicity should be as important a decision factor as functionality.

• Choose the right capabilities: Employees need to know that time invested in learning and usage will yield personal advantages. If not, they will work around or ignore the system.

• Provide training: Changing the way people work is no small task, and help is usually a requirement. Even with today’s more usable customer relationship management systems, many staffers still need assistance with learning and adoption.

Provide consistent support. Prompt, expert, always-accessible technical support goes a long way to facilitate use and confidence with a new system.

[edit]Privacy and data security system

As one of the primary functions of customer relationship management software is to collect information about customers, a company must consider the desire for customer privacy anddata security, as well as the legislative and cultural norms. Some customers prefer assurances that their data will not be shared with third parties without their prior consent and that safeguards are in place to prevent illegal access by third parties.