In today’s competitive and cutthroat market, Customer Relationship Management (CRM) is inarguably crucial to advancing a business. Brands are in a constant race to outperform their competitors and bring forth unique and highly sought-after products and services. However, there is only so much innovation and creativity one can bring to their products. What happens when there is little difference in what certain competitors are offering? This is where the idea of customer relationship management becomes even more critical, and, eventually, there is the need to understand what a CRM system is.
Nearly 78% of consumers will do business with a company after a mistake if its service is excellent. Around 93% of customers are likely to purchase again from a brand that offered them quality customer service. But what exactly do these statistics mean for a business? A study by Bain and Company revealed that a mere 5% of customer retention can lead to an increase of 25% in profits.
What these numbers and percentages are essentially saying is that managing and improving the relationship with a customer - from ensuring they have a smooth, hassle-free experience to paying them dedicated attention - is always in the best interest of a commercial entity. And this is why understanding and properly utilizing relevant tools has become a $47.6 billion industry in 2021.
Understanding the Basics: What Is CRM?
CRM stands for Customer Relationship Management and is a set of practices, specialized tools, and technologies that businesses use to optimize their relationships with their customers, which, in turn, furthers their business.
The activities involved in CRM include service tracking, account inquiries, prioritization, customer segmentation, lead management, campaign execution, up-selling, etc. These activities are possible due to vast amounts of customer-related data and dynamic, intelligent analyses that are conducted.
What distinguishes CRM from other frameworks is its utmost importance to every kind of business. Whether it is a home-based small-scale business, a large corporation, or a multinational company, every business needs to prioritize its relationships with its customers. Many tools and techniques are only employed once a business crosses a certain threshold of profits, sales, or growth, among other metrics, but CRM processes are necessary from the very beginning.
The Need for a CRM Solution
It can be argued that businesses have maintained and successfully managed relationships with their clientele for far longer than the concept of CRM has existed. This raises the question: is a CRM tool a necessity for businesses in the 21st century, or does this industry simply profit off of excellent marketing?
While it is true that customer relationships have been studied, managed, and optimized for a major part of history, it is equally undeniable that the times have changed. Globalization and digitization have accelerated the growth of businesses, and old-school ways of understanding and managing customers just don't cut it anymore.
This is where a CRM solution comes in to aid in the following ways:
- Functionality is one of the main reasons one should invest in CRM software. The combination of contact management, sales forecasting, marketing automation, and campaign management features - to name a few - in one tool leads to more optimization. Furthermore, because different software for different functions is not required, it results in reduced costs;
- A dedicated CRM solution at hand ensures that information is centralized; otherwise, there would be multiple sources of information stored at multiple locations. This speeds up and streamlines various processes, making the entire pipeline far more efficient;
- CRM solutions can also integrate very well with other software, allowing users to combine data from multiple platforms;
- Efficient analytics can be obtained from such tools that are intelligent enough to report the most relevant and vital statistics and figures, enhancing a company’s decision-making process;
- With the introduction of customization in these software solutions, the appeal of CRM has increased to a great extent, with businesses wanting solutions tailored to work well with their specific requirements, preferences, and goals.
While CRM is often heavily used by the sales and marketing departments, businesses can achieve an altogether different level of success if they integrate CRM into other areas of their business, such as finance and supply chain management. In fact, such a practice would actually explain the extent of what a CRM is in business.
Defining Features of CRM
It is an established fact now that the dedicated and knowledgeable use of CRM can lead to greater profitability, enhanced customer service, seamless team interaction, increased transparency, and improved analytics. However, before delving into the benefits of CRM, the system's core features should be examined.
- Contact Management
With contact management, which refers to the data collection of contacts in real-time, there is no need to manually maintain and sort through contact records, leading to a central repository of contacts.
- Lead Management
Lead management processes, qualifies, and analyzes incoming leads to better outreach to potential customers. The leads are managed mainly to convert them into new business deals.
- Interaction Tracking
Interaction tracking is one of the most vital features when discussing what a CRM is. This refers to tracking each engagement the customer has made. It includes call logs, emails, social media messages, etc.
- Sales Forecasting
With access to abundant data about customers, it is possible to obtain predictive analytics regarding sales forecasting. This, in turn, can help make more reasonable sales decisions.
While these features help give an idea of the CRM meaning, there is a wide array of features beyond these.
CRM Market Leaders
Currently the largest software market in the world, the CRM industry is estimated to have a market worth of $80 billion by the year 2025. This indicates the strong presence of key players today who have transformed CRM into an indispensable and highly profitable requirement for businesses worldwide.
Mentioned below are the vendors that are currently dominating the CRM market with their cutting-edge products.
With 19.8% of the total revenue share of this industry in 2021, Salesforce undisputedly leads the CRM market with its nearly one-fifth share. Founded in 1999, Salesforce offers solutions that extensively cover what CRM is. Its vast categories of CRM products and services range from marketing analytics to IoT (Internet of Things). Salesforce allows you to track each and every sales activity; this can lead to essential insights and marketing data.
One of the main highlights of Salesforce is its cloud-based software. This allows users to access its complete functionality without having to spend technical and monetary resources on hardware or software requirements. Furthermore, it is mobile and very scalable. This is evident from the fact that all sizes of businesses - small, medium, and large - have successfully employed Salesforce CRM.
The 4.8% (https://weareuv.com/salesforce-set-to-pass-sap-as-largest-enterprise-app-company/) of the total market revenue that SAP held in 2020 is due to its extensive suite of CRM tools. These include e-commerce solutions, customer data solutions, sales solutions, service solutions, and marketing solutions.
In 2020, Oracle was able to achieve 4.8% of the total market revenue for CRM, according to Statista. The company offers several products.
Oracle Sales was developed to create lasting customer relationships. Driven by artificial intelligence, it underscores the importance of sales automation and productivity. One of its essential features is quick access to critical records so that sales representatives can focus most of their resources on generating sales rather than making CRM updates.
Oracle’s latest “On Demand” stands out because of its extensibility and usability. It also allows seamless migration from/to Oracle’s very popular Customer Experience (CX), which is another one of its CRM products.
With a market share of 4% in terms of revenue, based on the data published by Statista, Microsoft is a trusted brand when it comes to reliable and state-of-the-art CRM products. Its popular Dynamics 365 is a customizable and flexible solution that can be used both by small businesses looking to grow and industry leaders looking for large-scale solutions. Dynamics 365 comes with a focus on marketing, sales, customer service, field service, and project service automation. Microsoft offers the option to either buy standalone products for specific business needs or integrate different CRM applications in tandem.
While many other vendors also boast highly advanced tools for CRM, the above-mentioned companies offer some of the best CRM software currently available and used extensively worldwide.
Pros and Cons of Using an Out-of-the-Box CRM
When exploring what a CRM system is, there are two categories: custom and out-of-the-box.
- Out-of-the-box CRM refers to the solution where all features are already provided and will work immediately without the need for any coding.
- Custom CRM, on the other hand, makes use of customization so that features not already provided can be added and utilized.
The out-of-the-box methodology has been on the rise lately, which is why many businesses are quick to select this type of CRM. However, it is essential to fully comprehend its advantages and disadvantages, especially with respect to one’s business.
The benefits of CRM using out-of-the-box techniques are as follows.
- Such solutions do not require any configurations or customizations; thus, they can immediately be deployed and easily used.
- Technical expertise is not required for such systems. One might need some technical assistance to maintain the system, but nothing more is needed.
- A CRM of this type is usually very cost-effective and is widely available across most vendors.
Despite these benefits, however, out-of-the-box CRM is simply not enough at times.
- Because such a CRM system does not automatically learn the sales process, it cannot prioritize information very well. This means that while it can help categorize and maintain sales data, such a system would be of little help to the sales team if it is not intelligently filtering information that is important.
- With out-of-the-box solutions, it is difficult to obtain truly meaningful and critical metrics. Sure, many vendors offer detailed dashboards with charts, graphs, and tables. However, an out-of-the-box CRM cannot determine what metric is important or relevant for a certain business. After all, with different goals, visions, and operations, not all businesses focus on the same metrics.
Custom CRM Development
To work around out-of-the-box limitations and have a CRM tool well-tailored to the requirements and preferences of a certain business, custom CRM development is a very effective solution. With this solution, your CRM will be built entirely around your business and, thus, has optimum functionality, comes with reduced costs, and provides higher operational efficiency.
We have established that a CRM system is not just highly useful but a downright necessity in today’s market landscape. However, with the kind of limitless options available, it is daunting to identify a solution that will suit your business requirements closely while staying within budget. CRM applications or suites are pricey, and shifting from one to another can be quite challenging.
This is why it is recommended to consider consulting services before making your decision. A consultancy session can help you determine your exact requirements, understand the options available to you, and know what the market standards are - all of which can help you choose the right CRM for you.