What is CRM and why do you need it?

I have used CRM software tools for more than ten years. Some of these were single user apps, some were client/server-based and included workgroup collaboration. Others were integrated with corporate-wide ERP systems and linked all departments together. Among the well-known solutions I have used are ACT!, Salesforce.com, SugarCRM and Microsoft Outlook Business Contact Manager.

Each of these has its strengths and weaknesses. Many functions and features are common to them all such as contact management, sales pipeline management, sales forecasting, etc. Each also has unique and distinguishing capabilities. Among the most important technical features of a CRM for me have been:

• browser access
• mobile app access
• staff and management user levels
• customizable dashboards
• email client/server synchronization
• APIs for ERP integration
• automated email and text notifications for both staff and customers
• custom and automatic report generation

The purpose of this article is to review the evolution and importance of customer relationship management as a business discipline and then explain some key lessons I have learned in my experience with CRM tools over the past decade.

Although it did not always have an acronym or business theory behind it, CRM has been practiced since the dawn of commerce. In short, customer relationship management is the methods that a business uses when interacting with customers. Although CRM is often associated with marketing, new business development and sales functions, it actually encompasses the end-to-end experience that customers have with an organization.

Therefore, customer relationship management is an important part of every business; how you manage your client relationships—from initial contact to account acquisition and development through delivery of products and services … and beyond—is vital to your future. It stands to reason that companies that are very good at customer relationship management are often among the most successful businesses.

Around the time that computers were used in business—especially the PC in the 1980s and the World Wide Web in the 1990s—the phrase customer relationship management and its acronym CRM began to acquire a specific meaning. By the late 1990s, entire schools of business thought were developed around strategies for the collection and handling of information and data about customer relations. CRM-specific technology platforms that place the customer at the center of business activity grew up around these theories.

In the first decade of the new century, the warehousing of customer information as well as the availability of demographic data about the population as a whole made it possible for CRM tools to be used for integrated and targeted marketing campaigns for new customer acquisition. Later, the growth of Big Data and cloud computing services moved CRM data out of the IT closet and made it available with software as a service (SaaS) solutions that are very flexible and can be deployed at any time and anywhere.

Most recently, social media has added another layer of information to CRM whereby companies can monitor or “listen” to dialogue between their organization and customers in real time.

Business software industry experts are reporting that investment in CRM tools has been exploding and shows little sign of slowdown. According to an enterprise software market forecast by Gartner Research in 2013, total spending on CRM systems would pass that of ERP spending in 2016 and reach a total of $36 billion by 2017.

The Gartner Research study also showed that by 2014 cloud-based CRM systems would represent 87% of the market, up from 12% in 2008. Meanwhile, in their Cloud Attitudes Survey, Really Simple Systems showed that cloud-based adoption by CRM users is more than double that of all other business functions including accounting, payroll, HR and manufacturing.

Along with the growth of Cloud-based CRM solutions—and also driving it—is mobile technology. According to Gartner Research, mobile CRM adoption experienced the following in 2014:

• 500% growth rate in the number of apps rising from 200 to 1,200 on mobile app stores
• 30% increase in the use of tablets by the sales people
• 35% of businesses have been moving toward mobile CRM apps

While these trends show that expectations are very high that increased CRM resources and investment will produce improved business results, there are countervailing trends that the path forward is far from a straight line. A survey by DiscoverOrg showed that nearly one quarter of all businesses do not have any CRM system. Additionally, one industry study shows that many organizations face setbacks during implementation and some (25-60%) fail to meet ROI targets.

Finally, other research shows that companies that have invested in CRM tools do not take advantage of some 80% of their potential benefits, especially integration and extension throughout the entire organization. All of the above statistics correspond with my own experience. While decision makers and business leaders have expectations that a CRM solution will significantly impact their bottom line, the challenges of implementation can be daunting and bog down the effort quickly.

Therefore, it is critical to have a CRM implementation plan:

• Develop an integrated CRM strategy that places the customer at the center of all company departments and functions.
• Map your IT infrastructure and identify all centers of customer data.
• Evaluate, select and test a technology solution that is appropriate for your organization.
• Utilize IT resources to build an architecture that will bring all or most of your customer data together within one system.
• Identify champions in each department and build support and buy-in for the CRM throughout the company.
• Work on your data quality and make sure that the information that is going into the system at startup does not compromise the project.
• Provide training and share success stories to encourage everyone to use the system throughout the day.

In our intensely competitive environment, it is clear that CRM tools can enable an organization to effectively respond to multiple, simultaneous and complex customer needs. Every department—marketing, sales, customer service, production, shipping and accounting—has a critical role to play in building the customer database and using the CRM.

The following conclusions are derived from my experience:

1. Few companies have implemented CRM technologies and even when CRM tools are available, few people embrace and use them.
2. Those with effective CRM implementations are significantly outperforming the competition on the service and communication side of their business.
3. The best and most successful companies connect their CRM infrastructure with business strategy and make its use part of their corporate culture.