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Customer relationship management (CRM) is a process in which a business or other organization administers its interactions with customers, typically using data analysis to study large amounts of information.
CRM systems compile data from a range of different communication channels, including a company's website, telephone, email, live chat, marketing materials and more recently, social media.They allow to businesses learn more about their target audiences and how to best cater for their needs, thus retaining customers and driving sales growth. CRM may be used with past, present or potential customers.
The concept of customer relationship management started in the early 1970s, when customer satisfaction was evaluated using annual surveys or by front-line asking. [ citation needed ] By 1986, Pat Sullivan and Mike Muhney released a customer evaluation system called ACT! based on the principle of digital Rolodex, which offered a contact management service for the first time.At that time, businesses had to rely on standalone mainframe systems to automate sales, but the extent of technology allowed them to categorize customers in spreadsheets and lists. In 1982, Kate and Robert D. Kestenbaum introduced the concept of Database marketing, namely applying statistical methods to analyze and gather customer data.
The trend was followed by numerous companies and independent developers trying to maximize leads' potential, including Tom Siebel, who designed the first CRM product Siebel Systems in 1993.In order to compete with these new and quickly growing stand-alone CRM solutions the established enterprise resource planning (ERP) software companies like Oracle, SAP, Peoplesoft and Navision started extending their sales, distribution and customer service capabilities with embedded CRM modules. This included embedding sales force automation or extended customer service (e.g. inquiry, activity management) as CRM features in their ERP.
Customer relationship management was popularized in 1997, due to the work of Siebel, Gartner, and IBM. Between 1997 and 2000, leading CRM products were enriched with shipping and marketing capabilities.Siebel introduced the first mobile CRM app called Siebel Sales Handheld in 1999. The idea of a stand-alone, cloud-hosted and moveable customer bases was soon adopted by other leading providers at the time, including PeopleSoft, Oracle, SAP and Salesforce.com.
The first open-source CRM system was developed by SugarCRM in 2004. During this period, CRM was rapidly migrating to the cloud, as a result of which it became accessible to sole entrepreneurs and small teams. This increase in accessibility generated a huge wave of price reduction.Around 2009, developers began considering the options to profit from social media's momentum and designed tools to help companies become accessible on all users' favourite networks. Many startups at the time benefited from this trend to provide exclusively social CRM solutions, including Base and Nutshell. The same year, Gartner organized and held the first Customer Relationship Management Summit, and summarized the features systems should offer to be classified as CRM solutions. In 2013 and 2014, most of the popular CRM products were linked to business intelligence systems and communication software to improve corporate communication and end-users' experience. The leading trend is to replace standardized CRM solutions with industry-specific ones, or to make them customizable enough to meet the needs of every business. In November 2016, Forrester released a report where it "identified the nine most significant CRM suites from eight prominent vendors".
Strategic CRM is concentrated upon the development of a customer-centric business culture.
The focus of a business on being customer-centric (in design and implementation of their CRM strategy) will translate into an improved CLV.
The primary goal of customer relationship management systems is to integrate and automate sales, marketing, and customer support. Therefore, these systems typically have a dashboard that gives an overall view of the three functions on a single customer view, a single page for each customer that a company may have. The dashboard may provide client information, past sales, previous marketing efforts, and more, summarizing all of the relationships between the customer and the firm. Operational CRM is made up of 3 main components: sales force automation, marketing automation, and service automation.
The role of analytical CRM systems is to analyze customer data collected through multiple sources and present it so that business managers can make more informed decisions.Analytical CRM systems use techniques such as data mining, correlation, and pattern recognition to analyze the customer data. These analytics help improve customer service by finding small problems which can be solved, perhaps by marketing to different parts of a consumer audience differently. For example, through the analysis of a customer base's buying behaviour, a company might see that this customer base has not been buying a lot of products recently. After scanning through this data, the company might think to market to this subset of consumers differently, to best communicate how this company's products might benefit this group specifically.
The third primary aim of CRM systems is to incorporate external stakeholders such as suppliers, vendors, and distributors, and share customer information across groups/departments and organisations. For example, feedback can be collected from technical support calls, which could help provide direction for marketing products and services to that particular customer in the future.
A customer data platform (CDP) is a computer system used by marketing departments that assembles data about individual people from various sources into one database, with which other software systems can interact. million.As of February 2017 there were about twenty companies selling such systems and revenue for them was around US$300
The main components of CRM are building and managing customer relationships through marketing, observing relationships as they mature through distinct phases, managing these relationships at each stage and recognizing that the distribution of the value of a relationship to the firm is not homogeneous. When building and managing customer relationships through marketing, firms might benefit from using a variety of tools to help organizational design, incentive schemes, customer structures, and more to optimize the reach of its marketing campaigns. Through the acknowledgement of the distinct phases of CRM, businesses will be able to benefit from seeing the interaction of multiple relationships as connected transactions. The final factor of CRM highlights the importance of CRM through accounting for the profitability of customer relationships. Through studying the particular spending habits of customers, a firm may be able to dedicate different resources and amounts of attention to different types of consumers.
Relational Intelligence, or awareness of the variety of relationships a customer can have with a firm, is an important component to the main phases of CRM. Companies may be good at capturing demographic data, such as gender, age, income, and education, and connecting them with purchasing information to categorize customers into profitability tiers, but this is only a firm's mechanical view of customer relationships.This therefore is a sign that firms believe that customers are still resources that can be used for up-sell or cross-sell opportunities, rather than humans looking for interesting and personalized interactions.
CRM systems include:
Customer satisfaction has important implications for the economic performance of firms because it has the ability to increase customer loyalty and usage behaviour and reduce customer complaints and the likelihood of customer defection.The implementation of a CRM approach is likely to affect customer satisfaction and customer knowledge for a variety of different reasons.
Firstly, firms can customize their offerings for each customer.By accumulating information across customer interactions and processing this information to discover hidden patterns, CRM applications help firms customize their offerings to suit the individual tastes of their customers. This customization enhances the perceived quality of products and services from a customer's viewpoint, and because the perceived quality is a determinant of customer satisfaction, it follows that CRM applications indirectly affect customer satisfaction. CRM applications also enable firms to provide timely, accurate processing of customer orders and requests and the ongoing management of customer accounts. For example, Piccoli and Applegate discuss how Wyndham uses IT tools to deliver a consistent service experience across its various properties to a customer. Both an improved ability to customize and reduced variability of the consumption experience enhance perceived quality, which in turn positively affects customer satisfaction. Furthermore, CRM applications also help firms manage customer relationships more effectively across the stages of relationship initiation, maintenance, and termination.
With Customer relationship management systems, customers are served better on the day to day process. With more reliable information, their demand for self-service from companies will decrease. If there is less need to interact with the company for different problems, customer satisfaction level increases.These central benefits of CRM will be connected hypothetically to the three kinds of equity that are relationship, value, and brand, and in the end to customer equity. Eight benefits were recognized to provide value drivers.
In 2012, after reviewing the previous studies, someone selected some of those benefits which are more significant in customer's satisfaction and summarized them into the following cases:
Research has found a 5% increase in customer retention boosts lifetime customer profits by 50% on average across multiple industries, as well as a boost of up to 90% within specific industries such as insurance.Companies that have mastered customer relationship strategies have the most successful CRM programs. For example, MBNA Europe has had a 75% annual profit growth since 1995. The firm heavily invests in screening potential cardholders. Once proper clients are identified, the firm retains 97% of its profitable customers. They implement CRM by marketing the right products to the right customers. The firm's customers' card usage is 52% above the industry norm, and the average expenditure is 30% more per transaction. Also 10% of their account holders ask for more information on cross-sale products.
Amazon has also seen great success through its customer proposition. The firm implemented personal greetings, collaborative filtering, and more for the customer. They also used CRM training for the employees to see up to 80% of customers repeat.
Customer or consumer profiles are the essence of the data that is collected alongside core data (name, address, company) and processed through customer analytics methods, essentially a type of profiling. A customer is abstracted to information that sums up consumption habits so far and projects them into the future so that they can be grouped for marketing and advertising purposes.
Consultants argue that it is important for companies establishing strong CRM systems to improve their relational intelligence.According to this argument, a company must recognize that people have many different types of relationships with different brands. One research study analyzed relationships between consumers in China, Germany, Spain, and the United States, with over 200 brands in 11 industries including airlines, cars and media. This information is valuable as it provides demographic, behavioural, and value-based customer segmentation. These types of relationships can be both positive and negative. Some customers view themselves as friends of the brands, while others as enemies, and some are mixed with a love-hate relationship with the brand. Some relationships are distant, intimate or anything in between.
Managers must understand the different reasons for the types of relationships, and provide the customer with what they are looking for. Companies can collect this information by using surveys, interviews, and more, with current customers. For example, Frito-Lay conducted many ethnographic interviews with customers to try and understand the relationships they wanted with the companies and the brands. They found that most customers were adults who used the product to feel more playful. They may have enjoyed the company's bright orange colour, messiness, and shape.
Companies must also improve the relational intelligence of their CRM systems. These days, companies store and receive huge amounts of data through emails, online chat sessions, phone calls, and more.Many companies do not properly make use of this great amount of data, however. All of these are signs of what types of relationships the customer wants with the firm, and therefore companies may consider investing more time and effort in building out their relational intelligence. Companies can use data mining technologies and web searches to understand relational signals. Social media such as social networking sites, blogs, and forums can also be used to collect and analyze information. Understanding the customer and capturing this data allows companies to convert customer's signals into information and knowledge that the firm can use to understand a potential customer's desired relations with a brand.
Many firms have also implemented training programs to teach employees how to recognize and effectively create strong customer-brand relationships. For example, Harley Davidson sent its employees on the road with customers, who were motorcycle enthusiasts, to help solidify relationships. Other employees have also been trained in social psychology and the social sciences to help bolster strong customer relationships. Customer service representatives must be educated to value customer relationships and trained to understand existing customer profiles. Even the finance and legal departments should understand how to manage and build relationships with customers.
Applying new technologies while using CRM systems requires changes in the infrastructure of the organization as well as the deployment of new technologies such as business rules, databases and information technology.
Contact centre CRM providers are popular for small and mid-market businesses. These systems codify the interactions between company and customers by using analytics and key performance indicators to give the users information on where to focus their marketing and customer service. This allows agents to have access to a caller's history to provide personalized customer communication. The intention is to maximize average revenue per user, decrease churn rate and decrease idle and unproductive contact with the customers.
Growing in popularity is the idea of gamifying, or using game design elements and game principles in a non-game environment such as customer service environments. The gamification of customer service environments includes providing elements found in games like rewards and bonus points to customer service representatives as a method of feedback for a job well done.Gamification tools can motivate agents by tapping into their desire for rewards, recognition, achievements, and competition.
Contact-center automation, the practice of having an integrated system that coordinates contacts between an organization and the public, is designed to reduce the repetitive and tedious parts of a contact centre agent's job. Automation prevents this by having pre-recorded audio messages that help customers solve their problems. For example, an automated contact centre may be able to re-route a customer through a series of commands asking him or her to select a certain number to speak with a particular contact centre agent who specializes in the field in which the customer has a question.Software tools can also integrate with the agent's desktop tools to handle customer questions and requests. This also saves time on behalf of the employees.
Social CRM involves the use of social media and technology to engage and learn from consumers.Because the public, especially young people, are increasingly using social networking sites, companies use these sites to draw attention to their products, services and brands, with the aim of building up customer relationships to increase demand.
Some CRM systems integrate social media sites like Twitter, LinkedIn, and Facebook to track and communicate with customers. These customers also share their own opinions and experiences with a company's products and services, giving these firms more insight. Therefore, these firms can both share their own opinions and also track the opinions of their customers.
Enterprise feedback management software platforms combine internal survey data with trends identified through social media to allow businesses to make more accurate decisions on which products to supply.
CRM systems can also include technologies that create geographic marketing campaigns. The systems take in information based on a customer's physical location and sometimes integrates it with popular location-based GPS applications. It can be used for networking or contact management as well to help increase sales based on location.
Despite the general notion that CRM systems were created for customer-centric businesses, they can also be applied to B2B environments to streamline and improve customer management conditions. For the best level of CRM operation in a B2B environment, the software must be personalized and delivered at individual levels.
The main differences between business-to-consumer (B2C) and business-to-business CRM systems concern aspects like sizing of contact databases and length of relationships.
The overall CRM market grew by 12.3 percent in 2015.In 2018 it grew by 15.6% and reached $48.2 billion. The following table lists the top vendors in 2012-2018 (figures in millions of US dollars) published in Gartner studies.
|Vendor||2018 Revenue ($M)||2018 Share (%)||2017 Revenue ($M)||2017 Share (%)||2015 Revenue ($M)||2015 Share (%)||2014 Revenue ($M)||2014 Share (%)||2013 Revenue ($M)||2013 Share (%)||2012 Revenue ($M)||2012 Share (%)|
|Microsoft Dynamics CRM||1,302||2.7||1,132||2.7||1,142||4.3||1,432||6.2||1,392||6.8||1,135||6.3|
The four largest vendors of stand-alone or embedded CRM system offerings are Salesforce, SAP, Oracle, and Microsoft, which represented 42 percent of the market in 2015. [ citation needed ]SAP, Oracle and Microsoft offer CRM also as an integral part of a bigger ERP solution whereas Salesforces offers stand-alone CRM only. Other providers also are popular for small and mid-market businesses. Splitting CRM providers into nine different categories (Enterprise CRM Suite, Midmarket CRM Suite, Small-Business CRM Suite, sales force automation, incentive management, marketing solutions, business intelligence, data quality, consultancies), each category has a different market leader. Additionally, applications often focus on professional fields such as healthcare, manufacturing, and other areas with branch-specific requirements.
In the Gartner CRM Summit 2010 challenges like "system tries to capture data from social networking traffic like Twitter, handles Facebook page addresses or other online social networking sites" were discussed and solutions were provided that would help in bringing more clientele.Many CRM vendors offer subscription-based web tools (cloud computing) and SaaS. Some CRM systems are equipped with mobile capabilities, making information accessible to remote sales staff. Salesforce.com was the first company to provide enterprise applications through a web browser, and has maintained its leadership position.
Traditional providers have recently moved into the cloud-based market via acquisitions of smaller providers: Oracle purchased RightNow in October 2011and SAP acquired SuccessFactors in December 2011.
The era of the "social customer" refers to the use of social media by customers.
Sales forces also play an important role in CRM, as maximizing sales effectiveness and increasing sales productivity is a driving force behind the adoption of CRM. Empowering sales managers was listed as one of the top 5 CRM trends in 2013.
Another related development is vendor relationship management (VRM), which provide tools and services that allow customers to manage their individual relationship with vendors. VRM development has grown out of efforts by ProjectVRM at Harvard's Berkman Center for Internet & Society and Identity Commons' Internet Identity Workshops, as well as by a growing number of startups and established companies. VRM was the subject of a cover story in the May 2010 issue of CRM Magazine.
Pharmaceutical companies were some of the first investors in sales force automation (SFA) and some are on their third- or fourth-generation implementations. However, until recently, the deployments did not extend beyond SFA—limiting their scope and interest to Gartner analysts.
Another trend worth noting is the rise of Customer Success as a discipline within companies. More and more companies establish Customer Success teams as separate from the traditional Sales team and task them with managing existing customer relations. This trend fuels demand additional capabilities for a more holistic understanding of customer health, which is a limitation for many existing vendors in the space.As a result, a growing number of new entrants enter the market while existing vendors add capabilities in this area to their suites. In 2017, artificial intelligence and predictive analytics were identified as the newest trends in CRM. Today, Artificial Intelligence is a major technological foundation for CRM.
Companies face large challenges when trying to implement CRM systems. Consumer companies frequently manage their customer relationships haphazardly and unprofitably.They may not effectively or adequately use their connections with their customers, due to misunderstandings or misinterpretations of a CRM system's analysis. Clients who want to be treated more like a friend may be treated like just an exchange party, rather than a unique individual, due to, occasionally, a lack of a bridge between the CRM data and the CRM analysis output. Many studies show that customers are frequently frustrated by a company's inability to meet their relationship expectations, and on the other side, companies do not always know how to translate the data they have gained from CRM software into a feasible action plan. In 2003, a Gartner report estimated that more than $2 billion had been spent on software that was not being used. According to CSO Insights, less than 40 per cent of 1,275 participating companies had end-user adoption rates above 90 per cent. Many corporations only use CRM systems on a partial or fragmented basis. In a 2007 survey from the UK, four-fifths of senior executives reported that their biggest challenge is getting their staff to use the systems they had installed. Forty-three per cent of respondents said they use less than half the functionality of their existing systems. However, market research regarding consumers' preferences may increase the adoption of CRM among the developing countries' consumers.
Collection of customer data such as personally identifiable information must strictly obey customer privacy laws, which often requires extra expenditures on legal support.
Part of the paradox with CRM stems from the challenge of determining exactly what CRM is and what it can do for a company.The CRM paradox, also referred to as the "dark side of CRM", may entail favoritism and differential treatment of some customers.
CRM technologies can easily become ineffective if there is no proper management, and they are not implemented correctly. The data sets must also be connected, distributed, and organized properly so that the users can access the information that they need quickly and easily. Research studies also show that customers are increasingly becoming dissatisfied with contact centre experiences due to lags and wait times. They also request and demand multiple channels of communications with a company, and these channels must transfer information seamlessly. Therefore, it is increasingly important for companies to deliver a cross-channel customer experience that can be both consistent as well as reliable.
To model the ineffectiveness of CRM, the notion of Distributed Incompetence is introduced. Distributed Incompetence is opposite to Distributed knowledge and occurs in various organizations such as customer support. In a Distributed Incompetence organization a team of employees is managed in a way that, being rational, impresses a customer or an external observer with total irrationality and incompetence, an inability to get things done.
Personalized marketing, also known as one-to-one marketing or individual marketing, is a marketing strategy by which companies leverage data analysis and digital technology to deliver individualized messages and product offerings to current or prospective customers. Advancements in data collection methods, analytics, digital electronics, and digital economics, have enabled marketers to deploy more effective real-time and prolonged customer experience personalization tactics.
Salesforce management systems are information systems used in customer relationship management (CRM) marketing and management that help automate some sales and sales force management functions. They are often combined with a marketing information system, in which case they are often called CRM systems.
Database marketing is a form of direct marketing using databases of customers or potential customers to generate personalized communications in order to promote a product or service for marketing purposes. The method of communication can be any addressable medium, as in direct marketing.
Enterprise software, also known as enterprise application software (EAS), is computer software used to satisfy the needs of an organization rather than individual users. Such organizations include businesses, schools, interest-based user groups, clubs, charities, and governments. Enterprise software is an integral part of a (computer-based) information system; a collection of such software is called an enterprise system. These systems handle a chunk of operations in an organization with the aim of enhancing the business and management reporting tasks. The systems must process the information at a relatively high speed and can be deployed across a variety of networks.
Salesforce.com, Inc. is an American cloud-based software company headquartered in San Francisco, California. It provides customer relationship management (CRM) service and also provides a complementary suite of enterprise applications focused on customer service, marketing automation, analytics, and application development.
The eCRM or electronic customer relationship management coined by Oscar Gomes encompasses all standard CRM functions with the use of the net environment i.e., intranet, extranet and internet. Electronic CRM concerns all forms of managing relationships with customers through the use of information technology (IT).
Enterprise feedback management (EFM) is a system of processes and software that enables organizations to centrally manage deployment of surveys while dispersing authoring and analysis throughout an organization. EFM systems typically provide different roles and permission levels for different types of users, such as novice survey authors, professional survey authors, survey reporters and translators. EFM can help an organization establish a dialogue with employees, partners, and customers regarding key issues and concerns and potentially make customer-specific real time interventions. EFM consists of data collection, analysis and reporting.
Customer intelligence (CI) is the process of gathering and analyzing information regarding customers, and their details and activities, to build deeper and more effective customer relationships and improve decision-making by vendors.
InsideView is a software as a service (SaaS) company that gleans insights and relationships from more than 40,000 sources of business information, contact data, online news, and social media and customer CRM data. Founded in 2005, InsideView is mainly used by marketing, sales, and operations teams in identifying and gathering information on customers.
A contact manager is a software program that enables users to easily store and find contact information, such as names, addresses, and telephone numbers. They are contact-centric databases that provide a fully integrated approach to tracking all information and communication activities linked to contacts. Simple ones for personal use are included in most smartphones. The main reference standard for contact data and metadata, semantic and interchange, is the vCard.
Salesforce Marketing Cloud is a provider of digital marketing automation and analytics software and services. It was founded in 2000 under the name ExactTarget. The company filed for an IPO in 2007, but withdrew its filing two years later and raised $145 million in funding. It acquired CoTweet, Pardot, iGoDigital and Keymail Marketing. In 2012, it raised $161.5 million in an initial public offering, before being acquired by Salesforce for $2.5 billion in 2013. ExactTarget was renamed to Salesforce Marketing Cloud in 2014 after the acquisition by Salesforce.
Partner relationship management (PRM), used especially in IT industries, is a system of methodologies, strategies, software, and web-based capabilities which help a vendor to manage partner relationships. The general purpose of PRM is to enable vendors to better manage their partners through the introduction of reliable systems, processes and procedures for interacting with them. Web-based PRM systems typically include a content Management System, a partner and customer contact database, and the notion of a partner portal which allows partners to log in and interact with a vendor's sales opportunity database and obtain product, pricing, and training information. This helps vendors to streamline processes, as well as to collect and assess data about various stages of the partner sales funnel. There are a number of solution providers who offer PRM software to companies who rely heavily on a PRM solution to stay relevant in their respective industries.
The fields of marketing and artificial intelligence converge in systems which assist in areas such as market forecasting, and automation of processes and decision making, along with increased efficiency of tasks which would usually be performed by humans. The science behind these systems can be explained through neural networks and expert systems, computer programs that process input and provide valuable output for marketers.
Marketo, Inc. is an American software company, headquartered in San Mateo, California. Marketo develops and sells marketing automation software for account-based marketing and other marketing services and products including SEO and content creation. Marketo supports large enterprises to fast-growing small businesses across a variety of industries from technology to higher education.
Act-On Software is a software-as-a-service product for marketing automation developed by Act-On, a company headquartered in Portland, Oregon. The company was founded in 2008, retailing its software exclusively through Cisco, which provided $2 million in funding. It is used mostly by medium-sized businesses. It developed an internal sales department to market the software directly to users with $74 million in funding raised. Act-On has received positive reviews for use by small to medium-sized businesses due to its ease-of-use, simplicity and cost.
Healthcare CRM, also known as Healthcare Relationship Management, is a broadly used term for a Customer relationship management system, or CRM, used in healthcare.
Marketing automation refers to software platforms and technologies designed for marketing departments and organizations to more effectively market on multiple channels online and automate repetitive tasks.
Bullhorn is a cloud computing company headquartered in Boston, Massachusetts. The company provides customer relationship management (CRM), applicant tracking system (ATS) and operations software for the staffing industry. As of 2019, the company reported more than 11,000 customers in more than 150 countries. Besides its Boston headquarters, the company has operations in St. Louis, London, Brighton, Sydney, and Rotterdam.
Khoros, formerly Spredfast + Lithium, is a global customer engagement software company that provides online community management, social media marketing, social media analytics, digital care, and content management software and services to enterprise brands and agencies. Khoros owns over a dozen patents for social media marketing, online community, and care technologies.
Creatio is a Software as a service (SaaS) low-code solution for process management and CRM. As of 2020, the Creatio solution stack consisted of Studio Creatio, Sales Creatio, Marketing Creatio and Service Creatio.