Customer Relationship Management (CRM) is a methodology or software that helps an organization in managing its customer relationships in an organized way. It is a strategy to understand the needs and behavior of the customers and clients of the organization, in order to nurture and manage organisation’s interaction with its customers to build strong relationships with them.
It can be in the form of a database indicating details about the customers and the transactions undertaken by them with the organization which can be accessed by the employees of the concerned department as well as by the customers. It allows the formation of individualized relationships with clients and customers with the basic aim of improving satisfaction, reducing costs and profit maximization.
Past few years have witnesses a spurge in the implementation of CRM. Customer Relationship Management tools help enterprises to achieve many objectives, some of which are as follows:
Reduced Cost: Use of CRM in an organization enables potential savings through more efficient use of resources for e.g. more productive time on customer facing activities and more productive staff time. The increase in productive time results from reduced errors and rework due to consistent information and data capture, increased speed of access of information and more effective ‘one and- done’.
Customer Satisfaction: CRM manages to drive customer interaction forward and strengthen the organisations’s relationship. Customer Relationship Management enables the customers to be a part of the organization as they can access information on their past transactions, new products, value added services etc. Implementation of CRM by businesses provides for better allegiance with customers and ensures a rewarding relationship that provides for opportunities to the business, to deliver customer service with better efficiency. It provides the consumer, incentive to remain loyal and increase his purchases over his lifetime.
Effective processes: CRM implementation assists the organization to improve telesales, account, and sales management by optimizing information shared by multiple employees, and streamlining existing processes. It makes possible automated sales processes. It shortens the sales cycle and improves leads opportunity management and also enables the organization to identify new trends, existing problems, and possible opportunities.
Improved customer service: For the organizations which use CRM, all data concerning interactions with customers is centralized. CRM helps the organisation's workforce in knowing how to deal with each individual customer depending upon the customer's archives available through CRM. The information can be accessed instantly from anywhere within the company. This data helps customer service departments of the organizations to better treat their customers, as they already have the data they need to know the past transactions and specifications of the needs and behavior of the customers.
Improved Revenue: Through increased customer base, improved customer satisfaction and reduction in costs, CRM helps to spur the business growth. Using CRM data, marketing campaigns can be coordinated more effectively by ensuring that promotions do not target customers who have already purchased that particular product. Its implementation connects all aspects of the business and channelizes them to drive the revenue for the organization.
Identify new customers: CRM helps the business in identifying potential clients & customers. By keeping a track of the profiles of their existing clientele, the business can build a strategy to determine the kind of people they should target such that it returns them maximum clientage.
Small businesses generally lack in managing their customers and they face a number of challenges in maintaining and expanding relationships with them. A number of Small and Medium Enterprises do not have a single view of customers across the organization.
Despite measuring the revenue per customer, SME's fail to measure the profit and satisfaction per customer. It is known that it takes up to five times more money to acquire a new customer than to get an existing customer to make a new purchase. Small enterprises mostly have insufficient resources to invest to become e – businesses as they have limited advertisement and IT budgets.
Therefore, customer retention is in particular important to SME’s because of their limited resources. Close customer understanding given by CRM allows SMEs to tailor their offerings in response to customer needs and new competitors.
But in particular SME’s need Customer Relationship Management software that easily adapts to the needs of the small business’s customers and available on low cost specially customized for SMEs. CRM helps SMEs to turn into customer-focused organizations that conduct business processes centered on customers.
Customer Relationship Management software and applications aimed specifically at small businesses often fail to measure up to the organisation's complex operations. Lack of proper integration of CRM with the rest of the business' IT infrastructure can impact the performance of the SME and its CRM system. If this situation is faced by the SME, the owner needs to consider the most effective way for a CRM system to be incorporated into its IT infrastructure. CRM is best implemented as a strategy and not as a technology.
CRM as a strategy has slowly found its way into the small and medium industry sector. Despite the fact that there are several advantages, CRM also have few disadvantages that prove to be constraints for SMEs’ in its adoption. The first obstacle is the huge cost component involved in CRM implementation. It has been seen that return on investment after implementation has been insufficient to cover costs.
Most of the SME's perceive CRM software packages as being expensive and overpriced and of not much value to them. This is one of the problems of CRM software that prevents small businesses from implementing it.
Time restraints are another obstacle for SME's to adopt and implement CRM. Customer Relationship Management projects from its inception to results extends over a period of years during which considerable time and effort is involved. Most SME's refrain from adopting CRM as they feel they will not be able to spend that amount of time, effort and cost. Another constrain is the fact that most SME's themselves are unaware of what they require.
They are not sure of what they need and are unable to find a solution that does not fulfill their needs. Another distinct disadvantage that most small and medium sized businesses face is that very few CRM systems and products have been specifically developed for them considering their needs and business constrains (Microsoft CRM packages for instance tend to assume that SME's do possess the required technology).
Small businesses can yield their potential growth by implementing CRM system. A number of CRM systems are available in the market for every type of business. CRM software should be bought in line with the customer needs and requirements of the business.
Every business needs customized CRM on the basis on the size of the business, customer span, complexity of operations etc. An SME should select the appropriate and efficient CRM that will not only cater to their business needs but will fit with their unique requirements. For a CRM to fit the SMEs needs to ensure the following: