Customer Relationship Management (CRM) – What is it, Why is it required, Advantages & Disadvantages of CRM

Like so many applications that run on the network, CRM (Customer Relationship Management) is also an application that can be implemented to improve the interaction with/ responses to, the customers. But, with a substantial number of CRM projects not delivering expected results, we ought to take a closer look at what are the objectives, functions, advantages and limitations of CRM solutions.

So, what is a CRM application and why do people implement a CRM?

CRM (or) Customer Relationship Management can be defined as the implementation of Information Technology to important customer facing activities of a company like Sales, Marketing, Customer Support in order to improve each activity so that the company can ensure customer satisfaction and make more profits by maintaining effective and efficient relationship with customers.

Its not that customers always call your sales people when they have a requirement – They may just discuss with the service personnel or help desk. Sometimes the customer only has a need – Perhaps you could tailor a solution/ service to satisfy their needs – but the request never comes to you. Sometimes there may be visible trends of customer purchases developing according to a geography/ season, but you are out of stock for that particular product in demand!

So, understanding a customer’s requirement might require information on customer interactions – both when they contact, and  when they are contacted. In addition to that, trends need to be identified either with data that is already available, or as new data is coming. On the top of that, customers have their preference for the mode of communications – Especially if the communications is a marketing campaign for the introduction of new products or services. So, the effectiveness of the marketing campaigns need to be measured and required changes, implemented immediately.

CRM – Customer Relationship Management software, helps you to do all that, and much more!

What do you need to implement a CRM application?

Before going in to the details of hardware and software requirements for CRM Solutions, there are two basic requirements – The culture of an organization needs to become customer-centric, and the technology (CRM) should align with the business strategy of the company. Of course, the CRM software should be easy to understand and easy to use, to ensure its effective implementation.

CRM application is like any other software, and needs to be installed in Computer Servers. These servers can either be located inside the LAN (or) be located in a centralized data center. Some of them require proprietary clients to be installed in all the systems accessing the CRM application while others are browser based and can be accessed from anywhere after proper authentication.

Every CRM uses a Database (Like Postgres SQL, etc) in the back-end to store all its entries, and a separate Database Server might be required. It is possible to cluster multiple physical servers to support a large number of users as well as to provide high availability for both the application as well as the database.

These days, its quite normal to see Cloud hosted CRM applications which do not need any hardware/ software investments from the client side, as the service providers invest in them (and share it with a number of customers). The customer pays monthly/ quarterly charges based on their usage period/ number of users, thereby avoiding huge upfront implementation expenditure.

What are the main functions of a CRM (Customer Relationship Management) Software?

The main functions of a customer relationship management software can be broadly classified in to : Sales functions, Marketing/ Analytics functions & Customer Support functions. Depending on the vendor, there may be additional / fewer functions supported by each CRM package.

Few Sales Functions:

  • Recording the various sales processes – Initial opportunities to final delivery.
  • Assigning sales leads to subordinates.
  • Transferring leads directly from a website to CRM system.
  • Exporting leads from CRM to spreadsheets, etc.
  • Reminders of appointments/ meetings & Calender functionalities.
  • Quote generation/ Attaching customer specific documents/ Invoice generation.
  • Sales Forecasts, etc.

Few Marketing/ Analytics Functions:

  • Creating and executing marketing campaigns.
  • Tracking marketing campaigns.
  • Tracking website activities.
  • Analyzing customer behavior data to identify pain points/ new opportunities.
  • Applying business intelligence to identify trends, purchase preferences, etc.

Few Customer Support Functions:

  • Incident logging of all customer complaints/ support requests.
  • Tracking the current status of support requests.
  • Reporting of longest pending customer support requests, number of service requests per day per customer, etc.
  • Effort Tracking – Average time taken for service resolutions, etc.
  • Service Billing.

Please note that only a few common functions have been indicated above, and hence they are by no means comprehensive. Also, the functionalities supported differ from vendor to vendor.

Advantages of CRM – Customer Relationship Management Application:

  • CRM helps companies get an insight in to their sales activities, marketing activities and customer support activities. CRM solutions are particularly very helpful in companies that have a high purchase frequency/ customer transactions.
  • Its possible to outsource certain support activities to the customers through the CRM Systems (Like Web Courier tracking through a website, instead of frequently calling the customer service executive, etc) to the benefit of both the vendor and customer.
  • CRM helps in identifying profitable/ unprofitable customers, regular vs one time customers, etc so that companies can spend more resources for important customers.
  • Its possible (and advisable) to integrate CRM systems with other applications in an organization like accounting application, logistics application, ERP (Enterprise Resource Planning) application, etc.
  • Its possible to integrate CRM with many third party applications/ web-based applications (Like Google Maps) through an Application Programming Interface (API).
  • Its possible to integrate CRM with IP Telephony System (IP PBX). For example, when a customer is calling, its possible for CRM system to fetch the most recent support requests/ transaction status, etc so that the customer service executive has that information about the calling customer, before picking up the call!
  • Some CRM solutions support Workflows – Passing processes from one stage/ person to another, automatically.
  • Some CRM solutions support multiple languages / multiple currencies for globally dispersed organizations.
  • Some of them integrate with Office productivity applications (Integration with word-processing application for enabling mail merge, for example).
  • User privileges/ Role-based access is possible with most CRM applications.
  • Audit trails/ Logs can be enabled to track the user/ administrator actions.
  • Some CRM vendors support accessing the CRM system through mobile phones/ Tablet computers.

Disadvantages of CRM – Customer Relationship Management Application:

  • CRM may result in duplication of tasks, if all the related enterprise applications are not integrated together.
  • If the CRM software is too complex and difficult to understand, all its functionalities may not be utilized.
  • ROI (Return On Investment) can be difficult to establish (and difficult to measure) with a CRM application, especially on the short run.
  • Educating the users about the proper CRM usage and getting them to actually use it, might be a challenge.
  • Easy to use interfaces and appropriate help functions/ customer trainings are crucial for successful CRM implementations.
  • Scalability, is either limited or too costly, thereby making companies to provide CRM for a fewer users.
  • Cost of the software and customization is generally considered high.
  • If the CRM solution is not customized to the business objectives of a particular company, the implementation might fail.

Open Source CRM Solutions:

There are some good open source based CRM solutions like OpenCRX, vTiger, SugarCRM, etc which you can download and use free of cost. If you have in-house software development capabilities, you can even customize these CRM packages according to your needs (or) purchase professional support/ customization services for these open source based CRM vendors.