Benefits & Business Challenges of CRM

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CRM is supported by technology, but clear goals and strategy are keys to success.
CRM is supported by technology, but clear goals and strategy are keys to success. (Image: technology image by Stanisa Martinovic from Fotolia.com)

Customer relationship management (CRM) is a popular business marketing system. Companies use database technology to collect, store, analyze and interpret data about customers for the development of more targeted and effective marketing campaigns. CRM is generally intended to strengthen relationships with key customers, while improving the total customer experience over time. It is not without its challenges, though.

Benefit 1: Improved Profitability

As with most business innovations, CRM is ultimately intended to drive revenue and increase profitability for companies that use it. According to TechTarget, increased profitability is the goal of using CRM to enable better targeting of top customers by sales and marketing departments. This is the revenue-generating aspect of CRM. CRM is also intended to reduce costs by cutting down on inefficient advertising to less desirable customers.

Benefit 2: Better Customer Relationships

An underlying premise of CRM is analyzing customer data to continue to improve the customers' experience with your organization. This should lead to stronger loyalty and better profits from core customers. Using CRM database, or software solutions, employees are equipped with stronger information about customers. This allows front-line sales and service employees to deliver on the service attributes that customers expect while also helping marketers to build campaigns that sell the desired value customers seek.

Challenge 1: Cross-Organizational Participation

One of the greatest challenges of CRM is that a company-wide CRM program inherently involves participation from members of departments across the entire organization. CRM programs are typically developed and implement by cross-organizational teams with representation from each functional department. This stimulates cooperation and communication, but putting this into practice is difficult. The website CRM Infoline stated in 2010 that "only one in every six companies that have installed CRM have been successful." A main reason for this lack of success is due to confusion within the company. This demonstrates the challenge in getting all departments and employees on board with CRM, which is necessary for long-term success.

Challenge 2: Technology Stigma

One of the most often cited challenges for companies implementing CRM is the common misconception that CRM is technology-driven, or worse, that it is simply a technology. CRM is supported by a technological infrastructure, including software solutions used to gather, analyze and interpret customer data. However, these technological capabilities alone do nothing to make companies successful. Bo Chipman, a senior director of account management, indicated in his May 2010 "Direct Marketing News" article that CRM requires a clear and thoughtful strategy with cross-organizational integration. It is grounded in goals, metrics and measurement of performance with customers.

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