What is customer relationship management and why is it so important?

For certain types of businesses, particularly but not exclusively those working in retail, customer relationship management (CRM) can prove hugely important. CRM uses software to help firms organise and process their customer interactions more efficiently, whether that’s in terms of collecting sales data or providing customer support. It can also greatly improve productivity levels by automating processes that may previously have taken up employee time.

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What does it do?

Customer relationship management software will vary depending on its developer and the company using it, but one common feature is the ability to identify individuals within a mass of consumers. CRM tools may use a database to aggregate important information regarding your existing customers, including their contact details and any previous interactions or purchases they may have carried out. This can be a great organisation tool for businesses considering the number of different communication methods used today. If a customer has contacted the business previously by telephone, email, an application or any other method, then CRM will collate this so employees can access it all from one single database. This makes responding to customer queries much more efficient, enabling a higher level of service to be delivered.

In terms of automation, CRM software is also a vital asset to businesses. Virtual agents are often used, which can help remedy customer issues without the need for direct employee involvement. Taking the form of artificial intelligence bots that are given a human appearance, virtual agents are becoming more and more nuanced in the way that they handle situations. They also undergo rigorous testing before being released and enable the customer to switch to a human agent if necessary.

Like many other types of modern day enterprise software, CRM is often provided by a third-party cloud vendor. This software-as-a-service (SaaS) approach also provides businesses with a number of benefits. It means that customer information can be accessed remotely, so employees can remain informed and productive wherever they are. This enables businesses to align their customer relationship management with mobile working and BYOD trends to give employees and customers the flexibility they demand.

In fact, according to Gartner, between 80 and 85 per cent of all CRM deployments will take the form of SaaS by 2025. Not only does this cloud-based approach offer greater flexibility, it can also be very cost-effective, particularly for businesses with smaller IT budgets. Software usually has few if any initial costs and is usually charged on a subscription basis dependent on the number of users. It is also easily scalable if businesses experience rapid growth and need to grant more employees access to their CRM tools.

Planning for the future

However, customer relationship management software can also have a predictive element that helps businesses plan for the future. Because CRM has information on the types of products and services that customers buy, when they last made a purchase and what products are not selling well, it can be effectively paired with analytics tools to give businesses a head-start on future trends. For salespeople this could simply be letting them know the most appropriate time to pitch a sale, but there are more nuanced ways of using this data. Ultimately, by combining analytics and CRM, businesses can help present day data shape their future success.

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Perhaps the biggest reason why customer relationship management is so important is that it enables businesses to see their customers as individual people, rather than a homogenous group. Each one has their own specific needs, purchasing patterns and customer history and by understanding this, businesses can deliver a better service than ever before.