Customer relationship management (CRM) is the combination of practices, strategies, and technologies that companies use to manage and analyze customer interactions and data throughout the customer lifecycle, with the goal of improving customer service relationships and assisting in customer retention and driving sales growth. While a software application cannot completely replace the significance of effective face to face customer service practices, the importance of customer relationship management (CRM) technology is widely accepted in the modern business world. CRM systems compile customer data across different channels, or points of contact between the customer and the company, which could include the company’s website, telephone, live chat, direct mail, marketing materials, and social media. CRM software is designed to allow companies to facilitate effective marketing, sales and data management efforts.
The basic building block of a CRM technology application is a customer database. CRM databases allow companies to store key information about their customers. CRM software consolidates customer information and documents into a single CRM database so business users can more easily access and manage it. This is how the CRM system looks like after implementation:
- Data is collected
- Data is segmented and stored
- The data is available to access by authorized people
- The data helps analyze customer behavior
- The system offers solutions for efficient Digital Marketing according to the trends as understood from the data
- The system offers suggestions to enhance the customer experience to let the business go that extra mile
Over time, many additional functions have been added to CRM systems to make them more useful. Some of these functions include recording various customer interactions over email, phone, social media or other channels; depending on system capabilities, automating various workflow automation processes, such as tasks, calendars and alerts; and giving managers the ability to track performance and productivity based on information logged within the system. CRM systems can be set up to track as much – or as little – information about a company’s client base and prospect lists as desired, presuming the desired information is available. The typical components of CRM are as follows:
- Email address
- Telephone number
- Date of birth
- Inquiry history
- Contact history
- Invoice history
- Payment history
- Items purchased
- Purchase date
- Marketing messages sent
- Additional data required by a particular company
Types of CRM Technology
On-premises CRM: This type of CRM gives the responsibility of administration, control, security and maintenance of the database and information on the company using the CRM software. The companies can purchase licenses upfront instead of buying a yearly subscription. The licenses are owned by the companies and reside on their own servers and hence if they bear all the cost of upgrades. It also usually requires a prolonged installation process to fully integrate a company’s data. Companies with complex CRM needs might benefit from an on-premises deployment.
Cloud-based CRM: Also known as SaaS (software as a service) or on-demand CRM, data is stored on an external, remote network that employees can access anytime, anywhere there is an internet connection, sometimes with a third-party service provider overseeing installation and maintenance. The Cloud’s quick, relatively easy deployment capabilities appeal to companies with limited technological expertise or resources.
Open source CRM: As the name suggests, it is a CRM system that makes source code available to the public, enabling companies to make alterations at no cost to the company employing the system.
Benefits of CRM
- Comprehensive Customer History: Whole history of customer trends and habits
- Service-Ready: CRM system provides customers according to price, product, and location preferences.
- Optimize Conversion Probability: Since all information is available, companies can provide tailored offers or products to specific customers and hence, increase conversion probability
- Time Efficient: It is a single software providing various details about customers which saves time.
- Reduce Cost: Through information available, companies can reduce their cost based on the customers’ preferences.