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Why do businesses invest in CRM solutions?

by guest.blogger @ 16. May 2009 14:03

Is CRM always relevant? CRM is about managing relationships with customers and other parties with a view to ensuring these relationships are as mutually beneficial as possible. This can have a huge impact on sales, customer loyalty, operational costs, business reputation and, of course, profitability.

My view therefore is “yes”, CRM is always relevant. So why do people invest in CRM?

Single person business

Usually, someone starting a single person business has an increasing need to collect and maintain details of contacts relevant to the business. In the early days, the numbers are small and there is a personal relationship with each customer.

Over time the number of contacts grows, and it becomes difficult to remember to get back to someone and what you last talked about or what you did for them. There is perhaps a growing realisation that you are losing out on opportunities because it’s difficult to work out who needs to be approached and about what.

There is often a growing feeling of wasting time and being a bit disorganised.

Small business

As a business grows and the first employees arrive, there is an unprecedented need to share information. People can’t operate effectively because important information is in the head of the founder. The founder soon feels frustrated that everything is still dependent upon their being around and that no one else seems to be self-sufficient.

Sometimes there are issues around communication between employees. In some cases the business owners are worried that their customers and prospects may see them as disorganised and inefficient, perhaps presenting the impression that their custom is not valued.

More established

Often, once a small business is more established, the business leaders start to feel pleased that the business is doing OK but there is a growing concern that they don’t feel entirely in control of everything.

Another common issue is that the business leaders become frustrated that, although the business is doing well and is growing, they know it is being held back because everyone can’t get at the information they need in the right way and at the appropriate time to drive the business forward.

In many established businesses there is information all over the place in spreadsheets, databases, systems, etc and they don’t really have a joined up information strategy. They feel they really ought to have a 360 degree view of their business, their customers and what they do for them.

Larger organisation

At this stage the issues become higher level.

Typically, it starts to bother the directors that they may be losing customers to the competition just as fast as they are finding new customers. They start to focus much harder on operating costs and efficiencies and have a desire to “work smarter”.

There is nearly always a realisation that there are huge opportunities in the existing customer base in terms of up-selling or cross-selling and being really effective at not letting leads go cold.

It is common to see marketing directors and managers needing to gain control and understand what is working and what is not, what the costs per lead are from various sources, what sorts of conversion ratios are they getting and so on.

In summary, CRM is relevant for any organisation and although the return on investment in most businesses is very easy to demonstrate this is not often the reason for looking at CRM. By and large, businesses invest in CRM solutions to remove or avoid issues that are holding them back or not providing the control required.