Alphabet Soup: What is CRM?
If you’ve ever interacted with a call center to place or check an order, you’ve been on the receiving end of customer relationship management (CRM).
That’s because a software program was tracking your case history, your billing history, and in some cases even your birthday, favorite sports teams, and Web-browsing preferences.
Such software isn’t CRM, but rather a tool -- the primary one -- to let a company facilitate CRM. The idea is that a company offers a unified front to customers, so that sales rep A isn’t saying one thing to a prospect and sales rep B another. “It gives you a way to have a company mindset so that everyone is talking as one salesperson selling one way,” says Steven Jacobiowitz, CEO of Saga Solutions, a Shelton, Conn., CRM software provider. “It gives you the capability of going to a client record and seeing who has talked and what conversations have occurred.”
The difference between CRM and CRM software
The reason CRM is lumped in with CRM software is that the two emerged at the same time, the early 1990s. CRM came out of database marketing, the practice of retrieving data about customers, and added an interactive twist. Using information compiled from database marketing, some firms began to offer perks like frequent flyer programs and bonus points on credit cards to entice them to send in information about themselves.
The growth of call centers in the late 1980s and early 1990s led to mass adoption of CRM software, says Sharon Mertz, research director for CRM software markets worldwide for Gartner Inc., a Stamford, Conn. tech research firm. “With call routing and call handling, a lot more organizations started taking advantage of it,” she says, noting that credit card companies and stock brokerages were particularly enthusiastic early adopters.
The strong adoption curve for CRM software continued until 2000 or so when the economy went sour. After that, Mertz says, most companies focused on technologies that fostered cost-optimization. After 2004, though, CRM began to bounce back as the focus switched back to maximizing share of wallet. By this time, CRM had gotten much more sophisticated. Software could now use information from previous purchases, demographics, and Web-surfing histories to suggest an upsell.
How CRM is used by small and mid-size firms
In today’s world, CRM is considered anything that engages the target customer. Some small and mid-size firms have found that revenue increases when customers are paid more TLC.
Mark Daconto, vice president of Connecticut Basement Sysetms, a waterproofing contracting firm in Seymour, Conn., says CRM software contributed to a jump in sales over the last five years. Daconto bought a CRM software package in 1999 at $350 per user for a 25-employee site license. His firm pays about $100 per user in annual maintenance fees. The investment in CRM lets the company keep a history of each client and has prompted the company to send reminders every 11 months or so to customers to get the waterproofing inspected. “The business has just grown over the last few years and I would attribute some of that to the way we keep in touch with our customers,” Daconto says.
New fixtures on the Web like online social networking communities and video have opened up new CRM opportunities for small businesses. Many small businesses have started blogs as one way of keeping customers informed. Video how-tos on a website are also considered a way to better service customers.
But software has been key to giving businesses more information about the customer that they can use to track sales calls, complaints, and determine the success of programs. One of the biggest CRM trends over the past couple of years has been the explosion of “vertical CRM” software designed for industries like telecom and financial services and for “micro verticals” for industries that were previously considered too small to go after, like real estate.
That means small and mid-sized firms can now share in the benefits from CRM when dealing with their customers, so they know when customers have called in the past, who they’ve spoken to and what was discussed. Loyalty programs and frequent-buyer plans may not be far behind.
It seems the CRM software industry has learned from its clients and is offering much more personalized services these days.