CRM Overview and Discussion

Customer relationship management (CRM) is a technology driven practice that works to integrate customer information in an attempt to improve service quality and influence behavioral outcomes such as customer loyalty and repeat sales as well as increased customer satisfaction in general. CRM technologies can be implemented in virtually any industry and with virtually any size business -- now including small businesses. CRM software modules can also be integrated with other business processes to provide a more complete and accurate customer profile that can be used for an array of different purposes. Similar to many other uses of technology in business, the effectiveness of CRM solutions can vary significantly depending on a range of factors. This analysis will introduce CRM technologies in general, provide information about some of the main technology provides, and discuss some of the best practices that associated with its use in the modern business environment.

CRM Overview

CRM can be defined as the process of achieving and maintaining a heightened relationship with a range of different customers through different touch points and the intelligent use of data (Bohling, Bowman, LaValle, & Vikas, 2006). It can be used as an alternative to a marketing program as well as a supplement to marketing efforts and is based on using customer data to maximize the value of the relationship between the firm and its customers. The relationship that is established can add value to both business and consumer interests if used appropriately.

Some researchers have noted that there seems to be a general consensus on the importance of CRM as a strategic tool to remain competitive in the modern business world (Bohling, Bowman, LaValle, & Vikas, 2006). Many consumers now expect new levels of convenience and efficiency with any of their service requests and even that many of these process are fully automated so that a customer can service themselves to many tasks that previously would have required a service representative to complete (Parida & Baksi, 2013). For example, in the banking industry, it is virtually impossible to be competitive without offering many automated CRM operations online or on a mobile app. Conventional service quality concept has also metamorphosed with operational efficiency, security and confidentiality of information stored, reliability, accuracy and speed of transactions, virtual interfaces, IVR etc. being considered as major quality dimensions (Parida & Baksi, 2013).

However, despite all the advantages, potential problems can also emerge such as CRM implementations can act to de-personalize the sales process (Darajeh & Shraz, 2010). This can create the potential for marketing efforts to lose out on information that can manifest through interpersonal communication through the more traditional sales process. For example, with one point of contact, relationships can build over the years and sensitive information can be gathered through these relationships. However, in some instances with a CRM system, although there is more customer data, it can be difficult to put this data in context and make it valuable to the company and/or the consumer. For example, although the sales team has access to more information that is accessible on the database, they can miss out on some of the nuances that develop through strong relationships and a dedicated sales representative.

Within a CRM system, customers have access to an entire sales team rather than be dependent on single salespeople which can have a range of positive and negative benefits depending on the industry and the characteristics of the application. For example, CRM data can be available to the extended organization that includes members such as marketing and sales, product engineering specialist, and customer service representatives. Data sharing among these groups would not have been possible without the support of a CRM system to organize and share data about the clients so that any member of the organization can access this data to try to create value.

CRM Platforms

There are many options to integrate a CRM platform in business operations in today's market. The CRM software industry is growing rapidly -- at an estimated rate of over thirteen percent and there are ten CRM vendors combined generated 60% of worldwide revenues in 2014 or $14B (Columbus, 2015). Salesforce dominates the worldwide CRM market with 18.6% market share, and 28.2% revenue growth from 2013 to 2014 and SAP has the second-largest market share with 12.1%, attaining 7.2% growth; Oracle ORCL -2.25% has 9.2% market share and just 2.6% growth (Columbus, 2015).

Each of these providers focus on different market niches within the industry. For example, Salesforce can be used as a standalone system that can be scaled down to suite many small business needs. Companies like Oracle and SAP offer CRM modules that can be integrated into a broader enterprise resource management (ERP) system that is popular in many of the larger businesses today. A CRM system can be hosted internally on company servers as well as be hosted on the web via a cloud service.

Figure 1 - Vendor Spending (Columbus, 2015)

CRM Best Practices

In the early stages of CRM development it was reported that as many as 70-75% of CRM initiatives failed (CRM Trends, N.d.). However, with continued refinement of technologies and implementations, the success rate for CRM usage has increased significantly. The current systems have benefited from many of the failure that the early adopters struggled with and new options have been added. There have also been advances in technology in related industries that have also fueled the development such as faster hardware capabilities and networks, as well as the development of cloud computing.

There have also been improvements on the ways in which the data that is generated can be used by marketing and other efforts. For example, many of the depersonalization problems that defined some of the early systems are now being overcome with better processes.