Why You Need CRM Software

CRM definition

CRM is the abbreviation of the English Customer Relationship Management. By aligning internal business processes and using special software (CRM systems), the acquisition of new customers and the maintenance of existing customers are to be driven forward. It is therefore a matter of systematically building up customer relationships and maintaining them in the long term.

What is CRM?

  • CRM describes the entrepreneurial approach of not leaving the relationship with customers to chance, but actively shaping it.
  • Or as the Wikipedia CRM definition says: „the consistent orientation of a company towards its customers and the systematic design of customer relationship processes“.
  • The aim is to ensure individual and personal communication and good service, even with high customer numbers.
  • CRM does not just mean the CRM software, but the entire philosophy. Specifically, this applies above all to sales, marketing and support. The basis for successful CRM is always a CRM system
  • Live Chat Software also plays an important part in CRM, get an overview: http://websitetooltest.com/live-chat-software/

What is a CRM system?

A CRM system is the software used to manage customer relationships. This includes purely administrative activities such as the storage of addresses or contact data, but, depending on the software, goes far beyond that. Typical functions of a CRM system are, for example:

  • Maintenance of master data (names, addresses, contact data)
  • Storage of contact history (e-mails, telephone notes)
  • Customer selection (filtering according to criteria such as turnover, region, industry)
  • document management
  • Task management and project management
  • Calendar and appointment management

By using a CRM system, customers are to be looked after as specifically and comprehensively as possible in order to create long-term and profitable business relationships.

The constant acquisition of new customers is considerably more expensive than persuading regular customers to buy again. A high level of customer loyalty, however, requires that a company be able to understand how it relates to individual customers even years later. Was it, for example, a one-off purchase or a regular customer, was it rather a question of small products or extensive projects? Who were the contact persons on the customer side? In order to understand what type of customer it is, what was agreed with him and who maintained the contact in the past, systematic documentation – a CRM system – is required.

Different CRM approaches

Within Customer Relationship Management, there are various focal points and philosophies that often result from the size of the company and its business model. On the one hand, they are reflected in the customer’s view, but above all in the design and conception of the CRM system:

Operational CRM

Operational CRM forms the basis for day-to-day communication with customers. This applies in particular to the areas of sales, marketing and support. In concrete terms, this means maintaining customer history, keeping address data up-to-date and addressing customers with the right topics at the right time. In particular, small companies and service providers in the B2B business should clearly focus on their operational work when choosing a CRM system, because this is where they often have the most deficits and at the same time the greatest leverage. Personal contact is the most important trump card in CRM for SMEs (small and medium-sized enterprises). This not only leads to higher customer satisfaction and a more stable customer relationship, but also to long-term customer loyalty and thus also has a direct influence on sales.

Collaborative CRM

Collaborative CRM describes the collaborative work of the CRM users among each other, because good CRM is teamwork. This should also be supported by the CRM system used. In practice, collaboration in the CRM system means, for example, that all users access the same data. Regardless of whether the sales employee is at the customer’s site or in the office, everyone can individually support the individual customer, even if the colleague has recently changed data. In addition, collaborative CRM enables users to work together on projects or data records, even if they are not at the same location. This also means that they are notified by the CRM system when colleagues add something or that entries can be commented on by other users. Communication within the CRM system not only increases transparency for all members of the team, it also prevents many unnecessary e-mails and meetings.

Analytical CRM

Analytical CRM is the attempt to use a CRM system to steer sales and marketing increasingly via key figures. The need for analytics in CRM increases with the size of the company and the number of customers. The more customers a company has, the more customers customers are listed and statistically evaluated as numbers rather than concrete persons. A corporate group will not look after each individual customer personally, but at most a few major customers (keyword key accounting). The same applies to suppliers of consumer goods or products in the lower price segment. No one can establish a personal relationship with thousands of customers who order a T-shirt from the web shop. Here only scaling counts, i.e. using KPIs (Key Performance Indicators) to optimize the conversion of unqualified addresses to prospective customers and then to paying customers. However, this very analytic thinking also brings with it some problems. On the one hand, analytical CRM systems leave the user very little room for manoeuvre when it comes to individual customer care. On the other hand, analytical CRM systems require a lot of data, because only where a lot of data is available can it be analyzed. This often leads to the fact that the users of a CRM system are busy most of the time with the collection and entry of various data, and thus the actual support of the customer suffers.

The right CRM system for SMEs

Before introducing a CRM system, you should carefully consider what your CRM focus should be. This decision depends not only on the corporate philosophy but also on the size of the company. For small and medium-sized enterprises (SMEs), for example, analytical CRM systems simply mean additional expenditure of time, since they will never use or want to use their functions. Small companies in particular should therefore first consider the operational advantages of their CRM solution instead of looking at the largest possible number of evaluations and reports. CRM in SMEs is primarily operational and collaborative, i.e. it should support sales employees in their daily work and promote communication within the team. Small companies usually have the greatest leverage here, which means that very effective results can already be achieved with small measures.

Technical background of CRM systems

Without going too deeply into technical details, CRM systems are essentially used in three different ways. Locally, i.e. only on your own PC, on your own server in the company or computer centre (on premise) or as a cloud solution (SaaS). In the latter case, the CRM provider operates the software on its own servers and the users have access to their data via the Internet. The type of CRM installation has different advantages and disadvantages, depending on the planned use.