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Customer relationship management (CRM) is a process in which a business or other organization administers its interactions with customers, typically using
data analysis Data analysis is a process of inspecting, cleansing, transforming, and modeling data with the goal of discovering useful information, informing conclusions, and supporting decision-making. Data analysis has multiple facets and approaches, enc ...
to study large amounts of information. CRM systems compile data from a range of different
communication channel A communication channel refers either to a physical transmission medium such as a wire, or to a logical connection over a multiplexed medium such as a radio channel in telecommunications and computer networking. A channel is used for informa ...
s, including a company's website, telephone, email, live chat, marketing materials and more recently,
social media Social media are interactive media technologies that facilitate the creation and sharing of information, ideas, interests, and other forms of expression through virtual communities and networks. While challenges to the definition of ''social me ...
. They allow businesses to learn more about their target audiences and how to best cater for their needs, thus retaining customers and driving
sales Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. The seller, or the provider of the goods or services, completes a sale in r ...
growth. CRM may be used with past, present or potential customers. The concepts, procedures, and rules that a corporation follows when communicating with its consumers are referred to as CRM. This complete connection covers direct contact with customers, such as sales and service-related operations, forecasting, and the analysis of consumer patterns and behaviors, from the perspective of the company. According to
Gartner Gartner, Inc is a technological research and consulting firm based in Stamford, Connecticut that conducts research on technology and shares this research both through private consulting as well as executive programs and conferences. Its client ...
, the global CRM market size is estimated at $69 billion in 2020.


History

The concept of customer relationship management started in the early 1970s, when customer satisfaction was evaluated using annual surveys or by front-line asking. At that time, businesses had to rely on standalone mainframe systems to automate sales, but the extent of technology allowed them to categorize customers in
spreadsheet A spreadsheet is a computer application for computation, organization, analysis and storage of data in tabular form. Spreadsheets were developed as computerized analogs of paper accounting worksheets. The program operates on data entered in ...
s and lists. One of the best-known precursors of the modern-day CRM is the Farley File. Developed by
Franklin Roosevelt Franklin Delano Roosevelt (; ; January 30, 1882April 12, 1945), often referred to by his initials FDR, was an American politician and attorney who served as the 32nd president of the United States from 1933 until his death in 1945. As the ...
’s campaign manager,
James Farley James Aloysius Farley (May 30, 1888 – June 9, 1976) was an American politician and Knight of Malta who simultaneously served as chairman of the New York State Democratic Committee, chairman of the Democratic National Committee, and Postmaste ...
, the Farley File was a comprehensive set of records detailing political and personal facts on people FDR and Farley met or were supposed to meet. Using it, people that FDR met were impressed by his "recall" of facts about their family and what they were doing professionally and politically. In 1982, Kate and Robert D. Kestenbaum introduced the concept of database marketing, namely applying statistical methods to analyze and gather customer data. By 1986, Pat Sullivan and Mike Muhney released a customer evaluation system called
ACT! Act! (previously known as Sage ACT! 2010–2013) is a customer relationship management (CRM) software and marketing automation software platform designed for, and used by, small and mid-sized businesses. It has a user base of over 800 thousand re ...
based on the principle of digital Rolodex, which offered a contact management service for the first time. The trend was followed by numerous companies and independent developers trying to maximize lead potential, including Tom Siebel of
Siebel Systems Siebel Systems, Inc. () was a software company principally engaged in the design, development, marketing, and support of customer relationship management (CRM) applications—notably Siebel CRM. The company was founded by Thomas Siebel and Pat ...
, who designed the first CRM product, Siebel Customer Relationship Management, in 1993. In order to compete with these new and quickly growing stand-alone CRM solutions, the established
enterprise resource planning Enterprise resource planning (ERP) is the integrated management of main business processes, often in real time and mediated by software and technology. ERP is usually referred to as a category of business management software—typically a sui ...
(ERP)
software companies The software industry includes businesses for development, maintenance and publication of software that are using different business models, mainly either "license/maintenance based" (on-premises) or "Cloud based" (such as SaaS, PaaS, IaaS, MBa ...
like
Oracle An oracle is a person or agency considered to provide wise and insightful counsel or prophetic predictions, most notably including precognition of the future, inspired by deities. As such, it is a form of divination. Description The word ...
, SAP,
Peoplesoft PeopleSoft, Inc. is a company that provides human resource management systems (HRMS), Financial Management Solutions (FMS), supply chain management (SCM), customer relationship management (CRM), and enterprise performance management (EPM) software ...
(an Oracle subsidiary as of 2005) and Navision started extending their sales, distribution and customer service capabilities with embedded CRM modules. This included embedding
sales force automation Salesforce management systems (also ''sales force automation systems'' (SFA)) are information systems used in customer relationship management (CRM) marketing and management that help automate some sales and sales force management functions. The ...
or extended customer service (e.g. inquiry, activity management) as CRM features in their ERP. Customer relationship management was popularized in 1997, due to the work of Siebel,
Gartner Gartner, Inc is a technological research and consulting firm based in Stamford, Connecticut that conducts research on technology and shares this research both through private consulting as well as executive programs and conferences. Its client ...
, and IBM. Between 1997 and 2000, leading CRM products were enriched with shipping and marketing capabilities. Siebel introduced the first mobile CRM app called Siebel Sales Handheld in 1999. The idea of a stand-alone, cloud-hosted customer base was soon adopted by other leading providers at the time, including
PeopleSoft PeopleSoft, Inc. is a company that provides human resource management systems (HRMS), Financial Management Solutions (FMS), supply chain management (SCM), customer relationship management (CRM), and enterprise performance management (EPM) software ...
(acquired by Oracle),
Oracle An oracle is a person or agency considered to provide wise and insightful counsel or prophetic predictions, most notably including precognition of the future, inspired by deities. As such, it is a form of divination. Description The word ...
, SAP and
Salesforce.com Salesforce, Inc. is an American cloud-based software company headquartered in San Francisco, California. It provides customer relationship management (CRM) software and applications focused on sales, customer service, marketing automation, a ...
. The first open-source CRM system was developed by
SugarCRM SugarCRM is a software company based in Silicon Valley. It produces the on-premises and cloud-based web application Sugar, a customer relationship management (CRM) system. SugarCRM's functionality includes sales-force automation, marketing cam ...
in 2004. During this period, CRM was rapidly migrating to the cloud, as a result of which it became accessible to sole entrepreneurs and small teams. This increase in accessibility generated a huge wave of price reduction. Around 2009, developers began considering the options to profit from social media's momentum and designed tools to help companies become accessible on all users' favourite networks. Many startups at the time benefited from this trend to provide exclusively
social CRM Social CRM (customer relationship management) is use of social media services, techniques and technology to enable organizations to engage with their customers. Applications Social CRM has applications in marketing, customer service and sales, inc ...
solutions, including Base and
Nutshell A nutshell is the outer shell of a nut. Most nutshells are inedible and are removed before eating the nut meat inside. It covers and protects the kernel which may be edible. Usage Most nutshells are useful to some extent, depending on the circum ...
. The same year, Gartner organized and held the first Customer Relationship Management Summit, and summarized the features systems should offer to be classified as CRM solutions. In 2013 and 2014, most of the popular CRM products were linked to business intelligence systems and communication software to improve corporate communication and end-users' experience. The leading trend is to replace standardized CRM solutions with industry-specific ones, or to make them customizable enough to meet the needs of every business. In November 2016, ''Forrester'' released a report where it "identified the nine most significant CRM suites from eight prominent vendors".


Types


Strategic

Strategic CRM concentrates upon the development of a customer-centric business culture. The focus of a business on being customer-centric (in design and implementation of their CRM strategy) will translate into an improved CLV.


Operational

The primary goal of CRM systems is integration and
automation Automation describes a wide range of technologies that reduce human intervention in processes, namely by predetermining decision criteria, subprocess relationships, and related actions, as well as embodying those predeterminations in machines ...
of sales, marketing, and customer support. Therefore, these systems typically have a dashboard that gives an overall view of the three functions on a
single customer view A single customer view is an aggregated, consistent and holistic representation of the data held by an organisation about its customers that can be viewed in one place, such as a single page. The advantage to an organisation of attaining this unif ...
, a single page for each customer that a company may have. The dashboard may provide client information, past sales, previous marketing efforts, and more, summarizing all of the relationships between the customer and the firm. Operational CRM is made up of 3 main components: sales force automation, marketing automation, and service automation. *
Sales force automation Salesforce management systems (also ''sales force automation systems'' (SFA)) are information systems used in customer relationship management (CRM) marketing and management that help automate some sales and sales force management functions. The ...
works with all stages in the sales cycle, from initially entering contact information to converting a prospective client into an actual client. It implements
sales promotion Sales promotion is one of the elements of the promotional mix. The primary elements in the promotional mix are advertising, personal selling, direct marketing and publicity/public relations. Sales promotion uses both media and non-media marketin ...
analysis, automates the tracking of a client's account history for repeated sales or future sales and coordinates sales, marketing, call centers, and retail outlets. It prevents duplicate efforts between a salesperson and a customer and also automatically tracks all contacts and follow-ups between both parties. * Marketing automation focuses on easing the overall marketing process to make it more effective and efficient. CRM tools with marketing automation capabilities can automate repeated tasks, for example, sending out automated marketing emails at certain times to customers, or posting marketing information on social media. The goal with marketing automation is to turn a sales lead into a full customer. CRM systems today also work on
customer engagement Customer engagement is an interaction between an external consumer/customer (either B2C or B2B) and an organization (company or brand) through various online or offline channels. According to Hollebeek, Srivastava and Chen's (2019, p. 166) S-D l ...
through social media. * Service automation is the part of the CRM system that focuses on direct customer service technology. Through service automation, customers are supported through multiple channels such as phone, email,
knowledge base A knowledge base (KB) is a technology used to store complex structured and unstructured information used by a computer system. The initial use of the term was in connection with expert systems, which were the first knowledge-based systems. ...
s, ticketing portals, FAQs, and more.


Analytical

The role of analytical CRM systems is to analyze customer data collected through multiple sources and present it so that business managers can make more informed decisions. Analytical CRM systems use techniques such as data mining, correlation, and
pattern recognition Pattern recognition is the automated recognition of patterns and regularities in data. It has applications in statistical data analysis, signal processing, image analysis, information retrieval, bioinformatics, data compression, computer graphics ...
to analyze the customer data. These analytics help improve customer service by finding small problems which can be solved, perhaps by marketing to different parts of a consumer audience differently. For example, through the analysis of a customer base's buying behavior, a company might see that this customer base has not been buying a lot of products recently. After scanning through this data, the company might think to market to this subset of consumers differently, to best communicate how this company's products might benefit this group specifically.


Collaborative

The third primary aim of CRM systems is to incorporate external stakeholders such as suppliers, vendors, and distributors, and share customer information across groups/departments and organizations. For example, feedback can be collected from technical support calls, which could help provide direction for marketing products and services to that particular customer in the future.


Customer data platform

A
customer data platform A customer data platform (CDP) is a collection of software which creates a persistent, unified customer database that is accessible to other systems. Data is pulled from multiple sources, cleaned and combined to create a single customer profile. ...
(CDP) is a computer system used by marketing departments that assembles data about individual people from various sources into one database, with which other software systems can interact. As of February 2017 there were about twenty companies selling such systems and revenue for them was around US$300 million.


Components

The main components of CRM are building and managing customer relationships through marketing, observing relationships as they mature through distinct phases, managing these relationships at each stage and recognizing that the distribution of the value of a relationship to the firm is not homogeneous. When building and managing customer relationships through marketing, firms might benefit from using a variety of tools to help organizational design, incentive schemes, customer structures, and more to optimize the reach of their marketing campaigns. Through the acknowledgment of the distinct phases of CRM, businesses will be able to benefit from seeing the interaction of multiple relationships as connected transactions. The final factor of CRM highlights the importance of CRM through accounting for the profitability of customer relationships. Through studying the particular spending habits of customers, a firm may be able to dedicate different resources and amounts of attention to different types of consumers. Relational Intelligence, which is the awareness of the variety of relationships a customer can have with a firm and the ability of the firm to reinforce or change those connections, is an important component to the main phases of CRM. Companies may be good at capturing
demographic data Demography () is the statistical study of populations, especially human beings. Demographic analysis examines and measures the dimensions and dynamics of populations; it can cover whole societies or groups defined by criteria such as ...
, such as gender, age, income, and education, and connecting them with purchasing information to categorize customers into
profitability In economics, profit is the difference between the revenue that an economic entity has received from its outputs and the total cost of its inputs. It is equal to total revenue minus total cost, including both explicit and implicit costs. It i ...
tiers, but this is only a firm's industrial view of customer relationships. A lack in relational intelligence is a sign that firms still see customers as resources that can be used for up-sell or cross-sell opportunities, rather than people looking for interesting and personalized interactions. CRM systems include: *
Data warehouse In computing, a data warehouse (DW or DWH), also known as an enterprise data warehouse (EDW), is a system used for reporting and data analysis and is considered a core component of business intelligence. DWs are central repositories of integra ...
technology, used to aggregate transaction information, to merge the information with CRM products, and to provide key performance indicators. * Opportunity management which helps the company to manage unpredictable growth and demand, and implement a good forecasting model to integrate sales history with sales projections. * CRM systems that track and measure marketing campaigns over multiple networks, tracking customer analysis by customer clicks and sales. * Some CRM software is available as a
software as a service Software as a service (SaaS ) is a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. SaaS is also known as "on-demand software" and Web-based/Web-hosted software. SaaS is co ...
(SaaS), delivered via the internet and accessed via a web browser instead of being installed on a local computer. Businesses using the software do not purchase it, but typically pay a recurring subscription fee to the software vendor. * For small businesses a CRM system may consist of a contact management system that integrates emails, documents, jobs, faxes, and scheduling for individual accounts. CRM systems available for specific markets (legal, finance) frequently focus on event management and relationship tracking as opposed to financial
return on investment Return on investment (ROI) or return on costs (ROC) is a ratio between net income (over a period) and investment (costs resulting from an investment of some resources at a point in time). A high ROI means the investment's gains compare favourably ...
(ROI). * CRM systems for
eCommerce E-commerce (electronic commerce) is the activity of electronically buying or selling of products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain managemen ...
, focused on marketing automation tasks, like cart rescue, re-engage users with email, personalization. * Customer-centric relationship management (CCRM) is a nascent sub-discipline that focuses on customer preferences instead of customer leverage. CCRM aims to add value by engaging customers in individual, interactive relationships. * Systems for non-profit and membership-based organizations help track constituents, fundraising, sponsors' demographics, membership levels, membership directories, volunteering and communication with individuals. * CRM not only indicates to technology and strategy but also indicates to an integrated approach which includes employees knowledge, organizational culture to embrace the CRM philosophy.


Effect on customer satisfaction

Customer satisfaction Customer satisfaction (often abbreviated as CSAT) is a term frequently used in marketing. It is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of ...
has important implications for the economic performance of firms because it has the ability to increase customer loyalty and usage behavior and reduce customer complaints and the likelihood of customer defection. The implementation of a CRM approach is likely to affect customer satisfaction and customer knowledge for a variety of different reasons. Firstly, firms can customize their offerings for each customer. By accumulating information across customer interactions and processing this information to discover hidden patterns, CRM applications help firms customize their offerings to suit the individual tastes of their customers. This customization enhances the perceived quality of products and services from a customer's viewpoint, and because the perceived quality is a determinant of customer satisfaction, it follows that CRM applications indirectly affect customer satisfaction. CRM applications also enable firms to provide timely, accurate processing of customer orders and requests and the ongoing management of customer accounts. For example, Piccoli and Applegate discuss how Wyndham uses IT tools to deliver a consistent service
experience Experience refers to conscious events in general, more specifically to perceptions, or to the practical knowledge and familiarity that is produced by these conscious processes. Understood as a conscious event in the widest sense, experience involv ...
across its various properties to a customer. Both an improved ability to customize and reduced variability of the consumption experience enhance perceived quality, which in turn positively affects customer satisfaction. Furthermore, CRM applications also help firms manage customer relationships more effectively across the stages of relationship initiation, maintenance, and termination.


Customer benefits

With Customer relationship management systems, customers are served better on the day-to-day process. With more reliable information, their demand for
self-service Self-service is the practice of serving oneself, usually when making purchases. Aside from Automated Teller Machines, which are not limited to banks, and customer-operated supermarket check-out, labor-saving of which has been described as self- ...
from companies will decrease. If there is less need to interact with the company for different problems,
customer satisfaction Customer satisfaction (often abbreviated as CSAT) is a term frequently used in marketing. It is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of ...
level increases. These central benefits of CRM will be connected hypothetically to the three kinds of equity that are relationship, value, and brand, and in the end to
customer equity Customer equity is the total combined customer lifetime values of all of the company's customers.Fripp. G (2014Guide to Customer Lifetime Value/ref> It is calculated by multiplying the number of customers by the average value of each customer. Cust ...
. Eight benefits were recognized to provide value drivers. # Enhanced ability to
target Target may refer to: Physical items * Shooting target, used in marksmanship training and various shooting sports ** Bullseye (target), the goal one for which one aims in many of these sports ** Aiming point, in field artillery, fi ...
profitable customers. # Integrated assistance across channels. # Enhanced sales force efficiency and effectiveness. # Improved
pricing Pricing is the process whereby a business sets the price at which it will sell its products and services, and may be part of the business's marketing plan. In setting prices, the business will take into account the price at which it could acq ...
. # Customized products and services. # Improved customer service efficiency and effectiveness. # Individualized marketing messages are also called campaigns. # Connect customers and all channels on a single platform.  In 2012, after reviewing the previous studies, someone selected some of those benefits which are more significant in customer satisfaction and summarized them into the following cases: # Improve customer services: In general, customers would have some questions, concerns, or requests. CRM services provide the ability to a company for producing, allocating, and managing requests or something made by customers. For example,
call centre A call centre ( Commonwealth spelling) or call center (American spelling; see spelling differences) is a managed capability that can be centralised or remote that is used for receiving or transmitting a large volume of enquiries by telephone ...
software, which helps to connect a customer to the manager or person who can best assist them with their existing problem, is one of the CRM abilities that can be implemented to increase efficiency. # Increased personalized service or one-to-one service: Personalizing customer service or one-to-one service provides companies to improve understanding and gaining knowledge of the customers and also to have better knowledge about their customers' preferences, requirements and demands. # Responsive to customer's needs: Customers' situations and needs can be understood by the firms focusing on customer needs and requirements. # Customer segmentation: In CRM, segmentation is used to categorize customers, according to some similarity, such as industry, job or some other characteristics, into similar groups. Although these characteristics, can be one or more attributes. It can be defined as a subdividing the customers based on already known good discriminator. # Improve customization of marketing: Meaning of customization of marketing is that the firm or organization adapt and changes its services or products based on presenting a different and unique product or service for each customer. To ensure that customer needs and requirements are met Customization is used by the organization. Companies can put investment in information from customers and then customize their products or services to maintain customer interests. # Multichannel integration: Multichannel integration shows the point of co-creation of customer value in CRM. On the other hand, a company's skill to perform multichannel integration successfully is heavily dependent on the organization's ability to get together customer information from all channels and incorporate it with other related information. # Time saving: CRM will let companies interact with customers more frequently, by personalized message and communication way which can be produced rapidly and matched on a timely basis, and finally they can better understand their customers and therefore look forward to their needs. # Improve customer knowledge: Firms can make and improve products and services through the information from tracking (e.g. via website tracking)
customer behaviour Consumer behavior is the study of individuals, groups, or organizations and all the activities associated with the purchase, use and disposal of goods and services. Consumer behaviour consists of how the consumer's emotions, attitudes, and p ...
to customer tastes and needs. CRM could contribute to a competitive advantage in improving a firm's ability of customer information collecting to customize products and services according to customer needs.


Examples

Research has found a 5% increase in customer retention boosts lifetime customer profits by 50% on average across multiple industries, as well as a boost of up to 90% within specific industries such as insurance. Companies that have mastered customer relationship strategies have the most successful CRM programs. For example,
MBNA MBNA Corporation was a bank holding company and parent company of wholly owned subsidiary MBNA America Bank, N.A., headquartered in Wilmington, Delaware, prior to being acquired by Bank of America in 2006. History The former Maryland National ...
Europe has had a 75% annual profit growth since 1995. The firm heavily invests in screening potential cardholders. Once proper clients are identified, the firm retains 97% of its profitable customers. They implement CRM by marketing the right products to the right customers. The firm's customers' card usage is 52% above the industry norm, and the average expenditure is 30% more per transaction. Also 10% of their account holders ask for more information on cross-sale products.
Amazon Amazon most often refers to: * Amazons, a tribe of female warriors in Greek mythology * Amazon rainforest, a rainforest covering most of the Amazon basin * Amazon River, in South America * Amazon (company), an American multinational technolog ...
has also seen great success through its customer proposition. The firm implemented personal greetings,
collaborative filtering Collaborative filtering (CF) is a technique used by recommender systems.Francesco Ricci and Lior Rokach and Bracha ShapiraIntroduction to Recommender Systems Handbook Recommender Systems Handbook, Springer, 2011, pp. 1-35 Collaborative filtering ...
, and more for the customer. They also used CRM training for the employees to see up to 80% of customers repeat.


Customer profile

A customer profile is a detailed description of any particular classification of customer which is created to represent the typical users of a product or service. Customer profiling is a method to understand your customers in terms of demographics, behaviour and lifestyle. It is used to help make customer-focused decisions without confusing the scope of the project with personal opinion. Overall profiling is gathering information that sums up consumption habits so far and projects them into the future so that they can be grouped for marketing and
advertising Advertising is the practice and techniques employed to bring attention to a product or service. Advertising aims to put a product or service in the spotlight in hopes of drawing it attention from consumers. It is typically used to promote a ...
purposes. Customer or consumer profiles are the essences of the
data In the pursuit of knowledge, data (; ) is a collection of discrete values that convey information, describing quantity, quality, fact, statistics, other basic units of meaning, or simply sequences of symbols that may be further interpret ...
that is collected alongside core data (name, address, company) and processed through
customer analytics In sales, commerce, and economics, a customer (sometimes known as a client, buyer, or purchaser) is the recipient of a good, service, product or an idea - obtained from a seller, vendor, or supplier via a financial transaction or exchange for ...
methods, essentially a type of profiling. The three basic methods of customer profiling are the psychographic approach, the consumer typology approach, and the consumer characteristics approach. These customer profiling methods help you design your business around who your customers are and help you make better customer-centered decisions.


Improving CRM within a firm

Consultants argue that it is important for companies to establish strong CRM systems to improve their relational intelligence. According to this argument, a company must recognize that people have many different types of relationships with different brands. One research study analyzed relationships between consumers in China, Germany, Spain, and the United States, with over 200 brands in 11 industries including airlines, cars, and media. This information is valuable as it provides demographic, behavioral, and value-based customer segmentation. These types of relationships can be both positive and negative. Some customers view themselves as friends of the brands, while others as enemies, and some are mixed with a love-hate relationship with the brand. Some relationships are distant, intimate, or anything in between.


Analyzing the information

Managers must understand the different reasons for the types of relationships, and provide the customer with what they are looking for. Companies can
collect The collect ( ) is a short general prayer of a particular structure used in Christian liturgy. Collects appear in the liturgies of Catholic, Eastern Orthodox, Oriental Orthodox, Anglican, Methodist, Lutheran, and Presbyterian churches, among othe ...
this information by using surveys, interviews, and more, with current customers. Companies must also improve the relational intelligence of their CRM systems. These days, companies store and receive huge amounts of data through
email Electronic mail (email or e-mail) is a method of exchanging messages ("mail") between people using electronic devices. Email was thus conceived as the electronic ( digital) version of, or counterpart to, mail, at a time when "mail" mean ...
s,
online chat Online chat may refer to any kind of communication over the Internet that offers a real-time transmission of text messages from sender to receiver. Chat messages are generally short in order to enable other participants to respond quickly. Ther ...
sessions, phone calls, and more. Many companies do not properly make use of this great amount of data, however. All of these are signs of what types of relationships the customer wants with the firm, and therefore companies may consider investing more time and effort in building out their relational intelligence. Companies can use data mining technologies and web searches to understand relational signals.
Social media Social media are interactive media technologies that facilitate the creation and sharing of information, ideas, interests, and other forms of expression through virtual communities and networks. While challenges to the definition of ''social me ...
such as social networking sites,
blog A blog (a Clipping (morphology), truncation of "weblog") is a discussion or informational website published on the World Wide Web consisting of discrete, often informal diary-style text entries (posts). Posts are typically displayed in Reverse ...
s, and forums can also be used to collect and analyze information. Understanding the customer and capturing this data allows companies to convert customers' signals into information and knowledge that the firm can use to understand a potential customer's desired relations with a brand.Avery, Jill. (2014). "Unlock the Mysteries of Your Customer Relationships", Harvard Business Review. August 2014. https://hbr.org/2014/07/unlock-the-mysteries-of-your-customer-relationships Retrieved: 20 November 2015


Employee training

Many firms have also implemented training programs to teach employees how to recognize and effectively create strong customer-brand relationships. Other employees have also been trained in
social psychology Social psychology is the scientific study of how thoughts, feelings, and behaviors are influenced by the real or imagined presence of other people or by social norms. Social psychologists typically explain human behavior as a result of the ...
and the
social science Social science is one of the branches of science, devoted to the study of societies and the relationships among individuals within those societies. The term was formerly used to refer to the field of sociology, the original "science of s ...
s to help bolster strong customer relationships.
Customer service Customer service is the assistance and advice provided by a company to those people who buy or use its products or services. Each industry requires different levels of customer service, but in the end, the idea of a well-performed service is that ...
representatives must be educated to value customer relationships and trained to understand existing customer profiles. Even the finance and legal departments should understand how to manage and build relationships with customers.


In practice


Call centers

Contact centre CRM providers are popular for small and mid-market businesses. These systems codify the interactions between the company and customers by using analytics and
key performance indicator A performance indicator or key performance indicator (KPI) is a type of performance measurement. KPIs evaluate the success of an organization or of a particular activity (such as projects, programs, products and other initiatives) in which it eng ...
s to give the users information on where to focus their marketing and customer service. This allows agents to have access to a caller's history to provide personalized customer communication. The intention is to maximize average revenue per user, decrease
churn rate Churn rate (sometimes called attrition rate), in its broadest sense, is a measure of the number of individuals or items moving out of a collective group over a specific period. It is one of two primary factors that determine the steady-state level ...
and decrease idle and unproductive contact with the customers.SAP Insider (15 November 2007
Still Struggling to Reduce Call Center Costs Without Losing Customers?
Growing in popularity is the idea of gamifying, or using game design elements and game principles in a non-game environment such as customer service environments. The gamification of customer service environments includes providing elements found in games like rewards and bonus points to customer service representatives as a method of feedback for a job well done.
Gamification Gamification is the strategic attempt to enhance systems, services, organizations, and activities by creating similar experiences to those experienced when playing games in order to motivate and engage users. This is generally accomplished thro ...
tools can motivate agents by tapping into their desire for rewards, recognition, achievements, and competition.


Contact-center automation

Contact-center
automation Automation describes a wide range of technologies that reduce human intervention in processes, namely by predetermining decision criteria, subprocess relationships, and related actions, as well as embodying those predeterminations in machines ...
, CCA, the practice of having an integrated system that coordinates contacts between an organization and the public, is designed to reduce the repetitive and tedious parts of a contact center agent's job. Automation prevents this by having pre-recorded audio messages that help customers solve their problems. For example, an automated contact center may be able to re-route a customer through a series of commands asking him or her to select a certain number to speak with a particular contact center agent who specializes in the field in which the customer has a question. Software tools can also integrate with the agent's desktop tools to handle customer questions and requests. This also saves time on behalf of the employees.


Social media

Social CRM Social CRM (customer relationship management) is use of social media services, techniques and technology to enable organizations to engage with their customers. Applications Social CRM has applications in marketing, customer service and sales, inc ...
involves the use of social media and technology to engage and learn from consumers. Because the public, especially young people, are increasingly using social networking sites, companies use these sites to draw attention to their products, services and brands, with the aim of building up customer relationships to increase demand. With the increase in the use of social media platforms, integrating CRM with the help of social media can potentially be a quicker and more cost-friendly process. Some CRM systems integrate social media sites like Twitter, LinkedIn, and Facebook to track and communicate with customers. These customers also share their own opinions and experiences with a company's products and services, giving these firms more insight. Therefore, these firms can both share their own opinions and also track the opinions of their customers. Enterprise feedback management software platforms combine internal survey data with trends identified through social media to allow businesses to make more accurate decisions on which products to supply.


Location-based services

CRM systems can also include technologies that create geographic marketing campaigns. The systems take in information based on a customer's physical location and sometimes integrates it with popular location-based GPS applications. It can be used for networking or contact management as well to help increase sales based on location.


Business-to-business transactions

Despite the general notion that CRM systems were created for customer-centric businesses, they can also be applied to B2B environments to streamline and improve customer management conditions. For the best level of CRM operation in a B2B environment, the software must be personalized and delivered at individual levels.Rebekah Henderson, ''B2B Insights'' (2013
How to build a B2B-friendly CRM
The main differences between business-to-consumer (B2C) and
business-to-business Business-to-business (B2B or, in some countries, BtoB) is a situation where one business makes a commercial transaction with another. This typically occurs when: * A business is sourcing materials for their production process for output (e.g., a ...
CRM systems concern aspects like sizing of contact databases and length of relationships.


Market trends


Social networking

In the Gartner CRM Summit 2010 challenges like "system tries to capture data from social networking traffic like Twitter, handles Facebook page addresses or other online social networking sites" were discussed and solutions were provided that would help in bringing more clientele. The era of the "social customer" refers to the use of social media by customers.


Mobile

Some CRM systems are equipped with mobile capabilities, making information accessible to remote sales staff.


Cloud computing and SaaS

Many CRM vendors offer subscription-based web tools (
cloud computing Cloud computing is the on-demand availability of computer system resources, especially data storage ( cloud storage) and computing power, without direct active management by the user. Large clouds often have functions distributed over mu ...
) and
SaaS Software as a service (SaaS ) is a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. SaaS is also known as "on-demand software" and Web-based/Web-hosted software. SaaS is co ...
.
Salesforce.com Salesforce, Inc. is an American cloud-based software company headquartered in San Francisco, California. It provides customer relationship management (CRM) software and applications focused on sales, customer service, marketing automation, a ...
was the first company to provide enterprise applications through a web browser, and has maintained its leadership position. Traditional providers moved into the cloud-based market via acquisitions of smaller providers:
Oracle An oracle is a person or agency considered to provide wise and insightful counsel or prophetic predictions, most notably including precognition of the future, inspired by deities. As such, it is a form of divination. Description The word ...
purchased RightNow in October 2011, and Taleo and Eloqua in 2012; and SAP acquired SuccessFactors in December 2011.


Sales and sales force automation

Sales forces also play an important role in CRM, as maximizing sales effectiveness and increasing sales
productivity Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proces ...
is a driving force behind the adoption of CRM software. Some of the top CRM trends identified in 2021 include focusing on customer service automation such as chatbots, hyper-personalization based on customer data and insights, and the use of unified CRM systems. CRM vendors support sales productivity with different products, such as tools that measure the effectiveness of ads that appear in 3D video games. Pharmaceutical companies were some of the first investors in sales force automation (SFA) and some are on their third- or fourth-generation implementations. However, until recently, the deployments did not extend beyond SFA—limiting their scope and interest to Gartner analysts.


Vendor relationship management

Another related development is
vendor relationship management Vendor relationship management (VRM) is a category of business activity made possible by software tools that aim to provide customers with both independence from vendors and better means for engaging with vendors. These same tools can also apply to ...
(VRM), which provide tools and services that allow customers to manage their individual relationship with vendors. VRM development has grown out of efforts by ProjectVRM at Harvard's
Berkman Center for Internet & Society The Berkman Klein Center for Internet & Society is a research center at Harvard University that focuses on the study of cyberspace. Founded at Harvard Law School, the center traditionally focused on internet-related legal issues. On May 15, 2008, ...
and Identity Commons' Internet Identity Workshops, as well as by a growing number of startups and established companies. VRM was the subject of a cover story in the May 2010 issue of ''CRM'' Magazine.


Customer success

Another trend worth noting is the rise of Customer Success as a discipline within companies. More and more companies establish Customer Success teams as separate from the traditional Sales team and task them with managing existing customer relations. This trend fuels demand for additional capabilities for a more holistic understanding of customer health, which is a limitation for many existing vendors in the space. As a result, a growing number of new entrants enter the market while existing vendors add capabilities in this area to their suites.


AI and predictive analytics

In 2017,
artificial intelligence Artificial intelligence (AI) is intelligence—perceiving, synthesizing, and inferring information—demonstrated by machines, as opposed to intelligence displayed by animals and humans. Example tasks in which this is done include speech ...
and
predictive analytics Predictive analytics encompasses a variety of statistical techniques from data mining, predictive modeling, and machine learning that analyze current and historical facts to make predictions about future or otherwise unknown events. In busine ...
were identified as the newest trends in CRM.


Sales Enablement

Sales enablement is becoming mainstream in both large and small businesses and is becoming integrated in CRMs. CRM's built around sales enablement can track client sales journeys, enable sales team training, coaching, and methodologies, and follow other employees.


Criticism

Companies face large challenges when trying to implement CRM systems. Consumer companies frequently manage their customer relationships haphazardly and unprofitably. They may not effectively or adequately use their connections with their customers, due to misunderstandings or misinterpretations of a CRM system's analysis. Clients may be treated like an exchange party, rather than a unique individual, due to, occasionally, a lack of a bridge between the CRM data and the CRM analysis output. Many studies show that customers are frequently frustrated by a company's inability to meet their relationship expectations, and on the other side, companies do not always know how to translate the data they have gained from CRM software into a feasible action plan. In 2003, a
Gartner Gartner, Inc is a technological research and consulting firm based in Stamford, Connecticut that conducts research on technology and shares this research both through private consulting as well as executive programs and conferences. Its client ...
report estimated that more than $2 billion had been spent on software that was not being used. According to CSO Insights, less than 40 percent of 1,275 participating companies had end-user adoption rates above 90 percent. Many corporations only use CRM systems on a partial or fragmented basis. In a 2007 survey from the UK, four-fifths of senior executives reported that their biggest challenge is getting their staff to use the systems they had installed. Forty-three percent of respondents said they use less than half the functionality of their existing systems. However, market research regarding consumers' preferences may increase the adoption of CRM among developing countries' consumers. Collection of customer data such as
personally identifiable information Personal data, also known as personal information or personally identifiable information (PII), is any information related to an identifiable person. The abbreviation PII is widely accepted in the United States, but the phrase it abbreviates ha ...
must strictly obey
customer privacy Consumer privacy is information privacy as it relates to the consumers of products and services. A variety of social, legal and political issues arise from the interaction of the public's potential expectation of privacy and the collection and di ...
laws Law is a set of rules that are created and are enforceable by social or governmental institutions to regulate behavior,Robertson, ''Crimes against humanity'', 90. with its precise definition a matter of longstanding debate. It has been vari ...
, which often requires extra expenditures on legal support. Part of the paradox with CRM stems from the challenge of determining exactly what CRM is and what it can do for a company. The CRM paradox, also referred to as the "dark side of CRM", may entail favoritism and differential treatment of some customers. This can happen because a business prioritizes customers who are more profitable, more relationship-orientated or tend to have increased loyalty to the company. Although focusing on such customers by itself isn't a bad thing, it can leave other customers feeling left out and alienated potentially decreasing profits because of it.Nguyen, B, Lee-Wingate, SN & Simkin, L (2014), ''The customer relationship management paradox: Five steps to create a fairer organisation'' Social Business, vol. 4, no. 3, pp. 207-230. https://dx.doi.org/10.1362/204440814X14103454934177 CRM technologies can easily become ineffective if there is no proper management, and they are not implemented correctly. The data sets must also be connected, distributed, and organized properly so that the users can access the information that they need quickly and easily. Research studies also show that customers are increasingly becoming dissatisfied with contact center experiences due to lags and wait times. They also request and demand multiple channels of communication with a company, and these channels must transfer information seamlessly. Therefore, it is increasingly important for companies to deliver a cross-channel customer experience that can be both consistent as well as reliable.


See also

* Farley File *
Comparison of CRM systems This article is a comparison of notable Customer relationship management, CRM systems. Enterprise resource planning, ERP systems are considered a superset of CRM systems. General Only stable releases are mentioned. Features See als ...
*
Corporate social responsibility Corporate social responsibility (CSR) is a form of international private business self-regulation which aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in or supporting volunteering or ethicall ...
* Customer value model *
History of marketing History (derived ) is the systematic study and the documentation of the human activity. The time period of event before the invention of writing systems is considered prehistory. "History" is an umbrella term comprising past events as well ...
*
Relationship marketing Relationship marketing is a form of marketing developed from direct response marketing campaigns that emphasizes customer retention and satisfaction rather than sales transactions. It differentiates from other forms of marketing in that it r ...
* Socially responsible marketing * Sustainable market orientation *
Vendor relationship management Vendor relationship management (VRM) is a category of business activity made possible by software tools that aim to provide customers with both independence from vendors and better means for engaging with vendors. These same tools can also apply to ...
*
Intersubjectivity In philosophy, psychology, sociology, and anthropology, intersubjectivity is the relation or intersection between people's cognitive perspectives. Definition is a term coined by social scientists to refer to a variety of types of human interac ...
* ''''


References

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