Customer relationship management (CRM) is a broadly recognized, widely-implemented

strategy for managing and nurturing a company’s interactions with customers and sales
prospects. It involves using technology to organize, automate, and synchronize business
processes—principally sales related activities, but also those for marketing, customer service,
and technical support. The overall goals are to find, attract, and win new customers, nurture
and retain those the company already has, entice former customers back into the fold, and
reduce the costs of marketing and customer service. [1]

According to Forrester Research, spending on customer relationship management is

expected to top $11 billion annually by 2010, as enterprises seek to grow top-line revenues,
improve the customer experience, and boost the productivity of customer-facing staff.[

Overview
Once simply a label for a category of software tools, CRM has matured and broadened as a
concept over the years. Today, customer relationship management generally denotes a
company-wide business strategy embracing all customer-facing departments and even
beyond. When an implementation is effective, people, processes, and technology work in
synergy to develop and strengthen relationships, increase profitability, and reduce operational
costs.[3]

[edit]Benefits

Customer relationship management tools have been shown to help companies attain these
objectives:[3]

 Streamlined sales and marketing processes

 Higher sales productivity
 Added cross-selling and up-selling opportunities
 Improved customer service
 Increased call center efficiency
 Higher close rates
 Better customer profiling and targeting
 Reduced expenses
 Increased market share
 Higher overall profitability

[edit]Challenges

Tools and workflows can be complex to implement, especially for large enterprises. While
some companies report great success, initiatives have also been known to fail—mainly owing
to poor planning, a mismatch between software tools and company needs, roadblocks to
collaboration between departments, and a lack of workforce buy-in and adoption.[citation needed]

[edit]Tools and Trends

Previously these tools were generally limited to contact management: monitoring and
recording interactions and communications with customers. Software solutions then
expanded to embrace deal tracking and the management of accounts, territories,
opportunities, and—at the managerial level—the sales pipeline itself. Next came the advent of
tools for other customer-facing business functions, as described below.

Perhaps the most notable recent trend has been the growth of tools delivered via the Web,
also known as cloud computing and software as a service (SaaS). In contrast with
conventional on-premises software, cloud-computing applications are sold by subscription,
accessed via a secure Internet connection, and displayed on a Web browser. Companies
don’t incur the initial capital expense of purchasing software; neither must they buy and
maintain IT hardware to run it on. For these and other reasons, the SaaS option has proven
very attractive, and SaaS applications have garnered a large share of the market. They are
currently its fastest-growing segment.[citation needed]

CRM technology has been, and still is, offered as on-premises software that companies
purchase and run on their own IT infrastructure. Prominent on-premises vendors
include Oracle Corporation, SAP AG, and Amdocs.

In 2009, SaaS represented approximately 20% of all customer relationship management

spending, and continued its trajectory of outselling on-premises software by a ratio of 3-to-1.[1]

[edit]Types/variations

[edit]Sales Force Automation

As its name implies, a sales force automation (SFA) system provides an array of capabilities
to streamline all phases of the sales process, minimizing the time that reps need to spend on
manual data entry and administration. This allows them to successfully pursue more
customers in a shorter amount of time than would otherwise be possible. At the heart of SFA
is a contact management system for tracking and recording every stage in the sales process
for each prospective customer, from initial contact to final disposition. Many SFA applications
also include features for opportunity management, territory management, sales forecasting
and pipeline, workflow automation, quote generation, and product knowledge. Newly-
emerged priorities are modules for Web 2.0 e-commerce and pricing management.[1]

[edit]Marketing

Systems for marketing (also known as marketing automation) help the enterprise identify and
target its best customers and generate qualified leads for the sales team.[4]A key marketing
capability is managing and measuring multichannel campaigns, including email, search,
social media, and direct mail. Metrics monitored include clicks, responses, leads, deals, and
revenue. Marketing automation also encompasses capabilities for managing customer loyalty,
lists, collateral, and internal marketing resources.

As marketing departments are increasingly obliged to demonstrate revenue impact, today’s

systems typically include performance management features for measuring the ROI of
campaigns.[1]

[edit]Customer Service and Support

Recognizing that customer service is an important differentiator, organizations are
increasingly turning to technology platforms to help them improve their customers’ experience
while increasing efficiency and keeping a lid on costs.[5] Even so, a 2009 study revealed that
only 39% of corporate executives believe their employees have the right tools and authority to
solve customer problems.“.[6]

The core for customer service has been and still is comprehensive call center management,
including such features as intelligent call routing, computer telephone integration (CTI), and
escalation capabilities. More recently, e-service capabilities—Web self-service, knowledge
management, email response management, Web chat, collaborative browsing and virtual
assistants—are gaining in importance.[1] In fact, today’s profusion of customer service
channels has prompted many companies to deploy integrated support applications that
deliver knowledge-enabled solutions across all of them.

Another key trend is the increasing popularity of SaaS platforms for customer service, owing
to their rapid deployment, low initial cost, and now-established efficacy for large and complex
contact centers.[1]

[edit]Analytics

Relevant analytics capabilities are often interwoven into applications for sales, marketing, and
customer service. These features can be complemented and augmented with links to
separate, purpose-built applications for analytics and business intelligence.

Sales analytics let companies monitor and understand customer actions and preferences,
through sales forecasting, data quality management, and dashboards that graphically
display key performance indicators (KPIs).

Marketing applications generally come with predictive analytics to improve customer

segmentation and targeting, and features for measuring the effectiveness of online, offline,
and search marketing campaign[1] Web analytics have evolved significantly from their starting
point of merely tracking mouse clicks on Web sites. By evaluating customer “buy signals,”
marketers can see which prospects are most likely to transact and also identify those who are
bogged down in a sales process and need assistance.[5] Marketing and finance personnel
also use analytics to assess the value of multi-faceted programs as a whole.
Customer service analytics are increasing in popularity as companies demand greater
visibility into the performance of call centers and other support channels,[5] in order to correct
problems before they affect customer satisfaction levels. Support-focused applications
typically include dashboards similar to those for sales, plus capabilities to measure and
analyze response times, service quality, agent performance, and the frequency of various
customer issues.

[edit]Integrated/Collaborative

Departments within enterprises—especially large enterprises—tend to function in their own

little worlds.[7] Traditionally, inter-departmental interaction and collaboration have been
infrequent and rivalries not uncommon.

More recently, the development and adoption of the tools and services has fostered greater
fluidity and cooperation among sales, customer service, and marketing. This finds expression
in the concept of collaborative customer relationship management, which uses technology to
build bridges between departments. The objective is sharing and harnessing information from
all quarters to improve the quality of customer service, and increase customer satisfaction
and loyalty[7] as a result.

For example, feedback from a technical support center can enlighten marketers about specific
services and product features customers are asking for. Similarly, demand
generation strategies need to marry marketing programs with structured sales processes[citation
needed]
—that is, campaign-engendered leads must be quickly and efficiently funneled to sales.
Reps, in their turn, want to be able to pursue these opportunities without the time-wasting
burden of re-entering records and contact data into a separate SFA system. Conversely, lack
of integration can have negative consequences: If a sales force automation or customer
relationship management system isn’t adopted and integrated among all departments, several
sources might contact the same customers for an identical purpose.[citation needed]

Owing to these and related factors, many of the top-rated and most popular products come as
integrated suites.

Despite all this, many companies are still not fully leveraging these tools and services to align
marketing, sales, and service to best serve the enterprise and its customers.[8] Often,
implementations are fragmented; isolated initiatives by individual departments to address their
own needs. Systems that start disunited usually stay that way: Siloed thinking and decision
processes frequently lead to separate and incompatible systems, an incomplete customer
view, and dysfunctional processes.

[edit]Small Business
Basic customer management can be accomplished by a contact management system, an
integrated solution that lets organizations and individuals efficiently track and record customer
and supplier interactions, including emails, documents, jobs, faxes, scheduling, and more.

This kind of solution is gaining traction with even very small businesses, thanks to the ease
and time savings of handling customer contact through a centralized application rather than
several different pieces of software, each with its own data collection system.[citation needed]

In contrast with contact managers, bona fide customer relationship management tools usually
focus on accounts rather than individual contacts. They also generally include opportunity
management for tracking sales pipelines plus added functionality for marketing and customer
service.

As with larger enterprises, small businesses are finding value in online management
solutions, especially for mobile and telecommuting workers.

[edit]Social Media
Social media sites like Twitter and Facebook are greatly amplifying the customer voice in the
marketplace, and are predicted to have profound and far-reaching effects on the ways
companies manage their customer relationships.[9] This is because customers are using these
social media sites to share opinions and experiences on companies, products, and services.
As social media isn’t moderated or censored, individuals can say anything they want about a
company or brand, whether pro or con.

Increasingly, companies are looking to gain access to these conversations and take part in
the dialogue. More than a few systems are now integrating to social networking sites. Social
media promoters cite a number of business advantages, such as using online communities as
a source of high-quality leads and a vehicle for crowd sourcing solutions to customer-support
problems. Companies can also leverage customers’ stated habits and preferences to
personalize and even “hyper-target” their sales and marketing communications.[9]

Some analysts take the view that business-to-business marketers should proceed cautiously
when weaving social media into their business processes. These observers recommend
careful market research to determine if and where the phenomenon can provide measurable
benefits for customer interactions, sales, and support.[10]

[edit]Strategy

Several CRM software packages are available, and they vary in their approach to CRM.
However, as mentioned above, CRM is not just a technology but rather a comprehensive,
customer-centric approach to an organization's philosophy of dealing with its customers. This
includes policies and processes, front-of-house customer service, employee training,
marketing, systems and information management. Hence, it is important that any CRM
implementation considerations stretch beyond technology toward the broader organizational
requirements.

The objectives of a CRM strategy must consider a company’s specific situation and its
customers' needs and expectations. Information gained through CRM initiatives can support
the development of marketing strategy by developing the organization's knowledge in areas
such as identifying customer segments, improving customer retention, improving product
offerings (by better understanding customer needs), and by identifying the organization's
most profitable customers.[11]

CRM strategies can vary in size, complexity, and scope. Some companies consider a CRM
strategy only to focus on the management of a team of salespeople. However, other CRM
strategies can cover customer interaction across the entire organization. Many commercial
CRM software packages provide features that serve the sales, marketing, event
management, project management, and finance industries.

From this perspective, CRM has for some time been seen to play an important role in
many sales process engineering efforts.[12]

[edit]Implementation

[edit]Implementation Issues
Many CRM project "failures" are also related to data quality and availability. Data cleaning is a
major issue. If a company's CRM strategy is to track life-cycle revenues, costs, margins, and
interactions between individual customers, this must be reflected in all business processes.
Data must be extracted from multiple sources (e.g., departmental/divisional databases such
as sales, manufacturing, supply chain, logistics, finance, service etc.), which requires an
integrated, comprehensive system in place with well-defined structures and high data quality.
Data from other systems can be transferred to CRM systems using appropriate interfaces.

Because of the company-wide size and scope of many CRM implementations, significant pre-
planning is essential for smooth roll-out. This pre-planning involves a technical evaluation of
the data available and the technology employed in existing systems. This evaluation is critical
to determine the level of effort needed to integrate this data.

Equally critical is the human aspect of the implementation. A successful implementation

requires an understanding of the expectations and needs of the stakeholders involved. An
executive sponsor should also be obtained to provide high-level management representation
of the CRM project.

An effective tool for identifying technical and human factors before beginning a CRM project is
a pre-implementation checklist.[13] A checklist can help ensure any potential problems are
identified early in the process.
[edit]Privacy and data security system
One of the primary functions of CRM software is to collect information about customers.
When gathering data as part of a CRM solution, a company must consider the desire
for customer privacy anddata security, as well as the legislative and cultural norms. Some
customers prefer assurances that their data will not be shared with third parties without their
prior consent and that safeguards are in place to prevent illegal access by third parties.