As an entrepreneur or business owner, your primary aim is to make profit from solving problems, or meeting the needs of people. These are your present and future customers. What is a business without its customers? Therefore, it is important for any business establishment and its owner(s) is to invest in customer relationship management.
Customers are the source of the coveted revenue of every business. Besides company workers, they are the other critical driving force of any business. It would be a huge risk to ignore or underserve potential and existing customers of any business enterprise.
Customer Relationship Management (CRM): The Definition
Marshal Hargrave (an Investopedia website writer) defines customer relationship management as:
“… the principles, practices and guidelines that an organization follows when interacting with its customers”.
Furthermore, he stated that:
“From the organization’s point of view, this entire relationship encompasses direct interactions with customers, such as sales and service-related processes, forecasting, and the analysis of customer trends and behaviors. Ultimately, CRM serves to enhance the customer’s overall experience”.
Customer relationship management also encompasses the
“technology for managing all your company’s relationships and interactions with existing customers and potential customers” (Salesforce website).
In addition, Marshall Hargrave further emphasized that CRM is often used to specifically identify technology systems used for managing external relations with customers.
CRM systems are so advanced today that the powers of artificial intelligence and cloud computing are now incorporated into the software. Your company’s website, social media handles, phone services, and email communication also participate heavily in CRM.
Customer Relationship Management: Current Statistics
CRM systems were estimated to have grown from a global value of 142.72 billion US Dollars in 2023 to 163.36 billion US Dollars in 2024. Additionally, it grew at a compound annual growth rate (CAGR) of 14.5% within that period. Furthermore, projected estimates of purchased CRM technology would likely reach 114.4 billion US Dollars by the year 2027 (if not more). An average annual growth of 13.3% in purchases is also expected through 2030.
Of all the known enterprise software systems, it is widely acclaimed that CRM technology has the fastest growth rate. Global cloud computing firms such as SAP, Salesforce, Oracle, Microsoft, and Adobe Systems have established themselves as the biggest vendors of CRM technology worldwide.
CRM technology is now widely used in several departments/sections of business enterprises. From marketing and sales, to customer service, supply chain management, finance, product development, human resources and content management. CRM systems have proven to be versatile and indispensable to modern business enterprises (whether small or big).
Also Read- How to Generate Leads and Convert Them into Sales
Questions Your Company CRM Needs to Answer
From the foregoing, the need to improve customer satisfaction is clear. It is not enough to merely offer a product or service in a bid to solve a perceived consumer problem. The quality of service matters – that is, to what degree your product or brand actually solves that problem.
For a business enterprise to experience continuous growth and generate revenue, building an enduring, positive relationship with customers is everything. Every single customer is important. And the testimony of just one customer can go far to either condemn or validate your business. Thus, the business owner or manager(s) needs to ask the following questions:
- What extra value does my company or brand offer customers, that sets it apart? What competitive edge does my business have over and above others in the same industry?
- Will the customers be confident to seek our services or patronize us again and again?
- How dependable are my staff when it comes to ethical resolution of conflicts, or issues arising in the course of doing business?
- Does our brand value its customers? And do we demonstrate it clearly to them?
- Can I measure the degree of satisfaction my business offers its customers?
- What factors guide consumer choices and behavior in relation to our brand?
- Can I predict possible future needs and be solution-ready?
Benefits of Using Customer Relationship Management (CRM) System
- CRM systems offer a centralized information pool for all customers. Thus it is easier and faster to manage and access customer data.
- CRM systems provide effective data analysis tools. These can be used to track sales, study consumer behavior, and ascertain the success of campaigns or projects. They can also highlight trends, identify sales opportunities, and do accurate forecasting (amongst other power features).
- The best CRM systems can be used to target and retain customers, in addition to improving marketing and sales efforts. They help to gain valuable insights into your customers’ habits, and to identify the truly profitable customers. These ultimately contribute to the overall growth and profit generation by the business.
- CRM systems are well equipped to keep the history of both existing and potential customers’ interactions with the company. This includes previous complaints and challenges (whether resolved or not), so that the issue can be followed up without frustrating the customer. Or making the customer repeatedly demand for attention. This ultimately leads to higher customer satisfaction.
- CRM systems can conveniently integrate essential business tools (e.g. accounting, billing, surveys, document creation/manipulation) and connect with other business apps. In essence, every tool needed to service and interact with each customer, supplier, staff, and stakeholder in your business are put together in your CRM. This simplifies and quickens everyday operations.
- They can be used to automate typical administrative tasks, and thus free up time to concentrate on bigger needs of the business. Tasks such as data entry, routing queries, or even predicting customer choices and behavior (with the help of artificial intelligence) can be automated. As such, you can plan ahead to handle customer needs before the issue arrives.
- CRM systems improve internal communication, by connecting the different departments of an organization together to give timely information. This will eliminate the necessity for lengthy and time-consuming meetings.
Types of Customer Relationship Management (CRM) Systems
There are four main types of CRM systems:
Operational CRM systems: Operational CRMs focus majorly on managing all interactions with customers. They help to automate marketing, sales, and customer service activities. The overall effect is to increase customer acquisition and retention.
Collaborative CRM systems: These are used to improve communication between different departments of the organization, and it ultimately enhances customer experience. This is particularly useful in large enterprises (with many customers), where a single customer account may be serviced by more than one staff. The staff members from different departments may need to collaborate to handle or resolve a customer issue.
Analytical CRM systems: They are used to collect and analyze customer data, in order to gain insights into how customers interact with your business. It further checks the effectiveness of sales and marketing campaigns. Thus, the results will be used to develop better strategies that will draw more customers.
Strategic CRM systems: These types of CRM work closely with collaborative CRMs. Both of them perform similar functions in most cases. However, while collaborative CRMs service immediate customer needs, strategic CRMs focus on long-term customer engagement and support. Thus working to maintain customers and keep them satisfied. The goal is to nurture customer retention and loyalty.
Examples of CRM Systems
Well-known modern-day CRM systems include:
- HubSpot
- ClickUp
- Scoro
- Zendesk
- Accelo
- Bitrix24
- Salesflare
- Pipedrive
- EngageBay,
- Zoho
- Freshworks
- Microsoft Dynamics
- ActiveCampaign
- BIG Contacts
- Insightly
- Sugar CRM
- Creatio
- Apptivo
amongst others.
