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The benefits of CRM tools go beyond traditional customer engagement

By implementing customer relationship management tools, organizations have the potential to make significant improvements in marketing efficiency, sales and customer service.

Customer relationship management has become part of the modern enterprise foundation. It's evolving at a phenomenal rate, absorbing new technology, such as mobile and the cloud, and exploiting new strategies on social media.

Whether or not an organization needs CRM to remain competitive isn't just one question; it's one of a series of questions, each potentially of critical importance. One way to determine the benefits of CRM tools for your organization is to see how other organizations are using them.

Improving customer experiences

Like all of its competitors, a major hotel is challenged to maintain consistent levels of service to guests when the slow season transitions to the busy season. Guests value continuity of service -- it's the backbone of customer loyalty in the hotel industry. Negative experiences can easily result in defections.

The hotel implements a new practice: recording every negative guest event and disseminating the information to all floor personnel and relevant department heads. With this approach, the hotel puts employees on alert to go the extra mile, while capturing the event for later analysis. This could lead to process improvements and could draw more creative input into the mix.

Tracking the changing customer

A major retailer compiles individual customer purchase histories to detect buying patterns and anticipate repeat sales opportunities. Marketing innovations enable the company to offer incentives at just the right moment. This technique, however, seems to only work for a few years, customer to customer.

Realizing that customers, like products, go through lifecycles, the retailer mines the available purchase history data and notes trends in purchasing patterns as customers age. This new customer development lifecycle enables the retailer's marketing group to alter its strategy, changing its messaging to target individual customers to improve sales long term.

Editor's note

Using extensive research into the CRM market, TechTarget editors focused on the vendors that lead in market share, plus those that offer traditional and advanced functionality. Our research included data from TechTarget surveys, as well as reports from other respected research firms, including Gartner and Forrester.   

Service through social media

A major U.S. bank has tens of millions of customers and wants to keep up with their changing habits. Its leaders realize that many, if not most, consumers use more than one bank these days -- and many of those banks reside entirely on the web. That being the case, it's easier than ever before for customers to transfer to another bank's services.

The bank's leaders realize its competitive edge depends on its ability to be more responsive and available to customers than other banks. How can this be achieved? By being where the customers are – online and on social media platforms.

The bank employs a strategy of cultivating a strong social media presence, utilizing social media monitoring to track customer sentiments about its brand, and opening up convenient communication channels to the customer.

Filling cracks everywhere

The above scenarios all outline specific use cases for different flavors of CRM, which is both a technology and a methodology for finding and attracting customers, developing relationships with them and long-term retention.

The first example, recording and studying customer events for future improvement, is a standard practice. The second, studying long-term customer behaviors to establish a customer lifecycle, is a clever innovation. The third, opening up two-way communication with the customer, is where customer relationship management technology is today, and the direction in which it's moving in the future.

In deciding whether or not your organization should use customer relationship management tools (or use them differently than you currently do), there are many things to consider.

CRM plays an important role in three traditional branches of the enterprise: marketing, sales and customer service. In each of these areas, CRM tools offer the ability to use descriptive data to improve internal performance and external value to customers.

Marketing teams tap into data stored on CRM platforms to plan well-targeted campaigns, optimize their budgets and hand the best leads off to sales. Armed with CRM information, sales personnel are better positioned to close, and even expand, offerings of peripheral products and services. Finally, customer service is better able to retain brand loyalty by making its service individual and highly customer-centric, given the depth of available data on individual customers.

The benefits of CRM for partner organizations

The benefits of CRM tools aren't limited to the enterprise. If your company is part of a supply chain, whether it is a product maker, mover or seller, CRM can improve operations and relationships between partners. Useful across industries from financial to manufacturing to healthcare to transportation, CRM offers supply chain and B2B partner companies a common platform for shared analytics. Customer needs, behaviors, demographics and social media habits can all affect not only local operations, but also partner company operations.

Here's a powerful example. Technology breakthroughs can lead to possible improvements in hybrid vehicles. Vehicle manufacturers may be prompted by their retail partners to move quickly to develop a new hybrid model based on the advanced technology because marketers see great potential among their customer base. The manufacturer could float product ideas, plans and designs by customers tagged as brand evangelists to gauge enthusiasm for the new features, and then use the customer feedback to inform the actual design.

CRM sharpens your competitive edge

Beyond what CRM tools can do for you and your partners, there's also the question of what it's already doing for your competitors, and the degree of risk what they're doing carries for your organization.

The competitor's marketing and sales advantage. A competitor using CRM as the backbone of its marketing and sales efforts has several strengths. Its marketing teams generate leads that its sales teams are more likely to turn into customers, making both operations more efficient.

Its customer profile data is more likely to be optimized for individual customer loyalty retention through more successful customer service. And CRM provides a consistent stream of insight for continuous process improvement, meaning your competitor is getting better and better by using it.

The competitor's customer perspective advantage. Good marketing and sales people know their products -- that's an axiom of good business. But the very best marketing and sales people know their customers even better, and customer relationship management technology empowers them more in this area than ever before. Moreover, this empowerment is personalized by the individual level of customer profiling that's possible today. It provides institutional knowledge that can't be diminished by employee turnover in marketing and sales.

The CRM tools market is large, feature-laden and ever-changing.

The competitor's social communication advantage. Social CRM has opened up new conversations between your competitors and their customers. They're able to listen to online discussions, learn the pros and cons of their brand, and discover what customers like and dislike about their products and services. This results in continuous improvement.

Your competitors are able to engage customers in many new ways, and offer marketing messages, opportunities and relationship building information across many new channels, beyond traditional marketing and service.

A quick CRM survey

The following questions might help you determine the usefulness of CRM in your organization. Is there clear potential for significant improvements in marketing efficiency, sales or customer service? If so, then it's certainly worth weighing the benefits of CRM tools. These are the areas in which CRM has the most history and the best track record.

  • Are you part of a supply chain? If so, CRM may offer an opportunity for enhanced cooperation and service to your partner companies, which may already be using it to a significant degree, strengthening your B2B relationships.
  • What is the competition doing? If your competitors are already using customer relationship management tools in marketing, sales and customer service, not to mention logistics and product development, then they are probably performing better than you, in addition to making process improvements on a regular basis that may help them pull ahead.
  • Would better customer profiling improve your company's performance? The holistic perspective on customer behavior and growth made possible by CRM not only leads to greater customer retention, but it also improves your own perspective on what motivates your customer and what aspects of your products and services are truly distinct in the marketplace -- strong reasons to consider CRM.
  • Could social CRM work for you? Social CRM, the rapidly emerging subset of CRM that builds customer relationships by making them bidirectional, offers advantages that even traditional CRM can't: multichannel customer feedback, tracking of brand sentiment, tracking of competitor brand sentiment (the strategic value of which can't be overstated), the ability to cultivate brand evangelists in the customer community and even the ability to network brand loyalists together for mutual support. Does any of that sound useful?

If your organization is seriously considering customer relationship management tools, or possibly expanding its use of CRM, there are more questions to be answered. The CRM tools market is large, feature-laden and ever-changing. Sorting through the many options, understanding their impact and making a decision about what to buy are your next steps. 

Next Steps

How the internet of things automates the customer experience

Why customer-centric identify management needs to be part of your CRM strategy

Are vertical CRM apps right for all industries? 

This was last published in May 2017

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