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Advantages and Benefits of Customer Relationship Management CRM

Advantages and Benefits of CRM – Introduction

Customer relationship management (CRM) is one of the most important concepts in business today. However, it is not a new concept, since it has been used by organisations for quite some time (Kaufmann, 2013). Over the years, CRM has developed to become one of the most influential organizational concepts and customer relationship theories in the last fifty years, to provide organizations with a way to manage their customer associations for mutual benefit (Agariya and Singh, 2013). CRM also provides a way for organizations to understand their customers, what their needs are, and how best they can meet those needs. This paper aims to provide a comprehensive outlook of the evolution of CRM to become what it has become today, and discuss relevant literature pertaining to this topic.

Customer Relationship Management CRM Literature Review

Studies show that CRM was developed because consumer differed in their spending habits and preferences. If all consumers were alike, there would be less need for CRM. Consequently, understanding customer profitability and drivers can enable customers to better customize their offerings to optimize the general value of their client portfolio (Kaufmann, 2013). The attention that organizations are currently giving CRM is because today’s marketing environment is highly concentrated and more competitive. CRM is an enterprise-oriented concept covering all sections of a business (Baran and Galka, 2013). In addition, besides customer service, CRM would also encompass manufacturing, assembling, purchasing, product testing, sales and engineering, human resource, and marketing. CRM is a complex concept that mines customer information, which has been retrieved from all customer touch points, which then creates and supports the organisations to have comprehensive perspective of the customer (Kaufmann, 2013).

Advantages and Benefits of Customer Relationship Management CRM

The result is that organisations can identify and determine the right category of customers and forecast the trend of their future purchases. CRM is also an all-embracing concept that smoothly incorporates field support operations, customer service, sales, and other processes that concern customers (Josiassen, Assaf, and Cvelbar, 2014). Moreover, CRM is a concept touching on how companies can retain their most profitable clients and simultaneously lower costs and increase values of engagement that then increases profitability (Baran and Galka, 2013). Contemporary CRM was defined and influenced by the theories of TQM (total quality management) and new technological concepts. In spite of this, there is a perceived lack of explicitness in the definition of CRM, although all official definitions are sharing roughly the same fundamental concepts: marketing strategy, personalization, customer management, customer relationships, and customer retention.

However, while scholars discuss the subtitles of different meanings, professionals have conducted a variety of studies assessing the definitive opportunities and challenges of adopting the systems. Some organisations consider CRM as a technology remedy, including sales force automation instruments, single databases, and sales and marketing processes in order to enhance targeting efforts. Organisations perceive CRM as an instrument, which has been uniquely developed for face-to-face customer communications, which is the role of sales, marketing departments, and call centres (Baran and Galka, 2013). CRM emphasizes two-way communication from the client to the supplier to build the client over time. The two-way communication has been improved significantly by developments in technology, especially the internet. Regarding information technology, CRM represents an enterprise-wide incorporation technologies functioning together such as websites, phone support systems, sales, accounting, production, data warehouse, intranet/extranet, and marketing (Josiassen, Assaf, and Cvelbar, 2014).

CRM employs IT to collect data, which can then be used to aggregate information acquired to develop more personal engagement with the client. In the long-term, it creates a method of continuous evaluation and strengthening in order to improve client’s value with organisations. CRM systems support companies to assess loyalty and profitability and loyalty based on the amount spent, longevity, and repeat purchases (Crnkovic, 2013). CRM makes it feasible for organisations to identify unprofitable clients that other firms have ignored. CRM also helps an organisation to fully comprehend which clients deserve to acquire, which to retain, and which have unutilized potential, which are vital, which are strategic, which are profitable, and which should be discarded (Josiassen, Assaf, and Cvelbar, 2014).

The Evolution of CRM

  • History of CRM

The foundation of what is today known as CRM was laid in the 1960s. Scholars discovered that the 4Ps of marketing were not very useful for service or industrial-centric organisations where dynamic relationships were vital. By the 1980s, researchers used the term relationship marketing to define this new shift to understanding consumer segments, providing continuous quality service and attaining high client satisfaction (Heyn, 2012). During this time, relationship marketing involved putting clients at the centre of the business circle. As part of this pioneering relationship marketing movement, organisations that adopted this approach faced many difficulties because they lacked the necessary technology to support their objectives. It took until the mid-1990s until that the right technology was developed. In the 1990s, organisations used computer systems to compliment sales and service functions (Josiassen, Assaf, and Cvelbar, 2014). Sales Force Automation frameworks quickly grew from basic contact managers. On the other hand, Customer Service and Support Systems evolved into the cornerstone of automated call centres.

By the early 1990s, CRM had grown to become a common term as it became pertinent that sales and service systems must share data. In recent times, EMA (enterprise marketing automation) applications, including customer evaluation and marketing campaign organization, became part of the CRM School (Jamieson, 2014). By the late 90s, the actual action transcended the corporate boundary. Rapid growth in internet usage created numerous e-business systems to manage online partner and customer associations, often referred to as partner relationship management and e-CRM accordingly. Currently, there are multi-channel CRM frameworks to theoretically, enable direct, partner and online channels while allowing patrons to use their preferred choice of communication (Josiassen, Assaf, and Cvelbar, 2014).

  • Modern CRM

Successful CRM in the contemporary context derives from past internal operational effectiveness and projects the power of remedies to better serve customers via their end-to-end interaction journey to gain their long-term loyalty and contentment – an outside-in approach. Modern CRM approaches facilitate good client experiences (Josiassen, Assaf, and Cvelbar, 2014). They facilitate customer engagement with one another over many social, mobile and digital platforms. How does this happen? Through leveraging the numerous engagement and transaction information to provide contextual interactions that add value to the clients and uphold the value of the firm’s brand (Josiassen, Assaf, and Cvelbar, 2014). Modern CRM involves aligning the CRM strategy with the client experience approach. The customer experience is a journey that is streamlined to create the least friction possible. For instance, when customers register for an online service, their payment data is accepted through a rapid scan of their credit cards. When they request car service, the car and driver information are shown, and progress can be monitored via GPS (Kaufmann, 2013).

Transactions are simple and convenient because money does not change hands. And when clients need service, it is not only efficient and effective but also personalized. Contemporary CRM results are focused on revenue growth, not operational flaws (O’Reilly and Paper, 2014). Modern organisations do not focus on complex cost-based rationales for CRM; they focus on business results which justify the benefits of driving higher revenue levels and business profitability via acquiring, serving, and retaining clients and supporting employees to be more productive and knowledgeable about customer strategies (Kaufmann, 2013). Modern organisations leverage CRM to enable end-to-end client journey. Consumers are increasingly stubborn as they relate to organisations. They want to use numerous communication mediums and touch points during single engagements, and do not have to go through their situation each time they change channels.

For instance, they want to initiate a return process on the web, and leave the merchandise at a store. Or they want to buy goods online and pick them up at a store. Companies must remove points of conflict in their customer journeys (O’Reilly and Paper, 2014). Contemporary CRM seriously personalizes interactions. Client experiences must be seriously personalized, borrowing from implicit and explicit response on client needs and preferences, and must be communicated immediately, taking into account a customer’s current location (Kim, 2012). Many organisations do this well by monitoring the online and offline behavior of customers so that they can customize plans that can transform their experiences and meet their needs. Currently, organisations broaden CRM through leveraging inclusions, which they call the internet of things. With contemporary services and uniform APIs, using milder CRM remedies is quite simple (Kaufmann, 2013). It is also easy to use best internally-designed applications, enabling organisations to buy only what they need and incorporate it into a bigger technology environment, instead of trying to buy a big application that includes every possibility.

A good example of this can be seen at New England Biolabs, a company that supplies unique reagents and enzymes for DNA research (Kaufmann, 2013). The company links freezers in researchers’ labs to the internet to monitor stock and product usage. They use the resulting information to develop better personalize formulas to researchers’ specific needs. Contemporary CRM engages users effectively but simply (Metz, 2012). The truth is that most people do not like using CRM because data entry and retrieval is a challenging process. Success in CRM requires role-based, basic user interfaces. User interactions are not only task-oriented but also mapped to common functions, which proactively show relevant data like the products owned by the clients, the services they register for, and what customer class they are in (O’Reilly and Paper, 2014).

Future of CRM

In just a few years, CRM has emerged as an innovative and powerful business practice. However, the best still lies ahead. Amidst all the expected developments and changes in CRM practice and application, most experts acknowledge that CRM will be around for a long time, but will change with time (Kaufmann, 2013). CRM is one of the most influential, important developments in the history of business. It is expected that the communication of the customer-focused business philosophy will intensify with time (Mullins and Walker, 2013). In addition, organisations will be required to respond not only faster, but also effectively to the fact that consumers are now the catalysts of economies. Most reviews of the state of CRM show that organisations will have to sell in the same manner they expect consumer to buy (O’Reilly and Paper, 2014). In the 1980s, it took organisations a long time to react to CRM because they basically did not want to operate according to the wishes of customers, but customers finally compelled them to.

Currently, CRM is seen as the ultimate approach to customer service because it has no substitute and organisations must adhere to it. This situation is likely to remain as it is in the foreseeable future. CRM experts are blunt about the significance of client touch points, and they predict that organisations that do not incorporate touch points will perform abjectly in their customer service initiatives (Kaufmann, 2013). Some companies are also likely to develop campaigns that invite customers to respond in any way they like, whether it is through company websites branch offices, call centres, or whatever channel they choose (O’Reilly and Paper, 2014). Nevertheless, information will be shared with other mediums. Organisations do not want clients accessing information that their account managers have no access to. Vertical solutions are likely to be another popular trend. Organisations will stop using the one-size-fits-all CRM approach, and enter an era of specialization and verticalization.

There are different categories of customers, different types of business models, and in future there will be different CRM applications (software) to compliment these different business models. What we have now is firms developing tool sets and selling it to organisations to customize them for their industries (Safeer and Malik, 2014). However, in future there will be vendors who will focus on providing 110 percent solutions for unique vertical. Within the next five years, there might be no generic or horizontal customer relationships management (Safeer and Malik, 2014). Most organisations think that in future there will be more functionality in CRM suites, even as processes associated with CRM are emerging elsewhere. This can be classified as an effective versus effective concern: a lot of CRM projects organisations have implemented have focused on efficiency, such as allowing sales reps more time to make normal sales calls.

Organisations will realize that the issue is actually effectiveness. For example, they need their normal reps and normal service persons to make good calls. CRM customers will also demand increasingly high knowledge management functionality (Kaufmann, 2013). Essentially, in the business environment, organisations must deliver client organizational knowledge when needed, anytime, anywhere. There is also likely to be a push towards a lot more functionality in CRM instruments themselves (Abdul-Muhmin, 2012). Although lead monitoring systems are good, what organisations will really want to know is sales coaching systems, knowledge management systems, and service intelligent systems to support growth. In summary, the future of CRM is very promising. It will become firmly established as a business strategy for most organisations. Technology will change while organizational and technical obstacles and challenges are surmounted (Agariya and Singh, 2013). A lot will change in the coming years, but one thing is guaranteed: CRM is a process, not a product, and customers are in control of the process and the road map. The rest is up to organisations; they must be ready.

  • Abdul-Muhmin, A. (2012). CRM technology use and implementation benefits in an emerging market. Journal of Database Marketing; Customer Strategy Management, 19(7), 82-97.
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  • Baran, R., & Galka, R. (2013). CRM: The foundation of contemporary marketing strategy. New York, NY: Routledge.
  • Crnkovic, J. (2013). Invited Article: The Future of CRM is UX. Business Systems Research, 4(1), 4-13.
  • Heyn, J. (2012). CRM – How it can help medium size companies and are there any downsides to its implementation. München: GRIN Verlag GmbH.
  • Jamieson, C. (2014). Small Business’ Guide to Social CRM. Packt Publishing.
  • Josiassen, A., Assaf, A., & Cvelbar, L. (2014). CRM and the bottom line: Do all CRM dimensions affect firm performance? International Journal of Hospitality Management, 36(7), 130-136.
  • Kaufmann, H. (2013). Customer-centric marketing strategies tools for building organizational performance. Hershey, Pa.: IGI Global.
  • Kim, H. (2012). How CRM strategy impacts organizational performance: Perspective of customer equity drivers. Journal of Database Marketing & Customer Strategy Management, 19(6), 233-244.
  • Metz, A. (2012). The social customer: How brands can use social CRM to acquire, monetize, and retain fans, friends, and followers. New York: McGraw-Hill.
  • Mullins, J., & Walker, O. (2013). Marketing management: A strategic decision-making approach (8th Ed.). New York: McGraw-Hill.
  • O’Reilly, K., & Paper, D. (2014). Customer Relationship Management (CRM): An Approach for Transforming the ’Myth’ of CRM Success into Dual-Creation of Value. Journal of Information Technology Case and Application Research, 11(3), 1-8.
  • Safeer, M., & Malik, A. (2014). A Step towards Real-Time Customer Relationship Management (CRM). International Journal of Future Computer and Communication, 2(6), 581-584.

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1 comment

Tarni Fairfield October 25, 2020 - 11:07 am

Hello, I’d like to know the name of the author of this article please :)


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