View source for Customer relationship management

{{Short description|Process of managing interactions with customers}}
{{Use dmy dates|date=June 2017}}
{{Business administration}}
'''Customer relationship management''' ('''CRM''') is a process in which a business or another organization administers its interactions with customers, typically using [[data analysis]] to study [[big data|large amounts of information]].<ref>{{Cite journal |last1=Anshari |first1=Muhammad |last2=Almunawar |first2=Mohammad Nabil |last3=Lim |first3=Syamimi Ariff |last4=Al-Mudimigh |first4=Abdullah |date=2019-07-01 |title=Customer relationship management and big data enabled: Personalization & customization of services |journal=Applied Computing and Informatics |language=en |volume=15 |issue=2 |pages=94–101 |doi=10.1016/j.aci.2018.05.004 |s2cid=67296369 |issn=2210-8327|doi-access=free }}</ref>
CRM systems [[data collection|compile data]] from a range of different [[communication channel]]s, including a company's [[website]], telephone (which many software come with a [[softphone]]), [[email]], [[live chat]], marketing materials and more recently, [[social media]].<ref>{{Cite book|title = Computer-Aided Marketing & Selling|last = Shaw|first = Robert|publisher = Butterworth Heinemann|year = 1991|isbn = 978-0-7506-1707-9|url-access = registration|url = https://archive.org/details/computeraidedmar0000shaw}}</ref> They allow businesses to learn more about their target audiences and how to better cater to their needs, thus [[customer retention|retaining customers]] and driving [[sales]] growth.<ref>{{Cite web|title = Management Tools – Customer Relationship Management – Bain & Company|url = http://www.bain.com/publications/articles/management-tools-customer-relationship-management.aspx|website = www.bain.com|access-date = 23 November 2015}}</ref> CRM may be used with past, present or potential customers. The concepts, procedures, and rules that a corporation follows when communicating with its consumers are referred to as CRM. This complete connection covers direct contact with customers, such as sales and service-related operations, forecasting, and the analysis of consumer patterns and behaviours, from the perspective of the company.<ref>{{Cite web|first1=Marshall|last1=Hargrave|title=Customer Relationship Management – CRM goes beyond just software|url=https://www.investopedia.com/terms/c/customer_relation_management.asp|access-date=2021-06-05|website=Investopedia|language=en}}</ref> According to [[Gartner]], the global CRM market size is estimated at $69 [[billion]] in 2020.<ref>{{cite web | url=https://www.statista.com/statistics/294537/customer-relationship-management-crm-software-revenue-worldwid | title=CRM software revenue worldwide 2010-2020 }}</ref><ref>{{cite web | url=https://www.gartner.com/en/documents/4001096 | title=Market Share: Customer Experience and Relationship Management, Worldwide, 2020 }}</ref>
The global customer relationship management market size is projected to grow from $101.41 billion in 2024 to $262.74 billion by 2032, at a CAGR of 12.6% <ref>{{Cite web |title=Customer Relationship Management [CRM] Market Size, 2032 |url=https://www.fortunebusinessinsights.com/customer-relationship-management-crm-market-103418 |access-date=2024-06-25 |website=www.fortunebusinessinsights.com |language=en}}</ref>
==History==
The concept of customer relationship management started in the early 1970s, when customer satisfaction was evaluated using annual surveys or by front-line asking.<ref>{{Cite web |title=CRM History: The Evolution Of Better Customer Service |url=https://www.streetdirectory.com/travel_guide/124130/enterprise_information_systems/crm_history_the_evolution_of_better_customer_service.html |access-date=2020-05-24 |website=www.streetdirectory.com}}</ref> At that time, businesses had to rely on [[Mainframe computer|standalone mainframe systems]] to automate sales, but the extent of technology allowed them to categorize customers in [[spreadsheet]]s and lists. One of the best-known precursors of modern-day CRM is the [[Farley File]]. Developed by [[Franklin Roosevelt]]'s campaign manager, [[James Farley]], the Farley File was a comprehensive set of records detailing political and personal facts about people FDR and Farley met or were supposed to meet. Using it, people that FDR met were impressed by his "recall" of facts about their family and what they were doing professionally and politically.<ref>{{Cite web |date=27 May 2021 |title=Software survey: CRM systems in 2021 |url=https://www.accountingtoday.com/news/software-survey-crm-systems-in-2021 |access-date=2 June 2021 |website=Accounting Today}}</ref> In 1982, Kate and Robert D. Kestenbaum introduced the concept of [[database marketing]], namely applying statistical methods to analyze and gather customer data.{{citation needed|date=November 2018}} By 1986, [[Pat Sullivan (programmer)|Pat Sullivan]] and [[Mike Muhney]] had released a customer evaluation system called [[Act! CRM|ACT!]] based on the principle of a digital Rolodex, which offered a contact management service for the first time.
The trend was followed by numerous companies and independent developers trying to maximize lead potential, including [[Thomas Siebel|Tom Siebel]] of [[Siebel Systems]], who designed the first CRM product, [[Siebel Systems#Key dates|Siebel Customer Relationship Management]], in 1993.<ref>{{Cite web |last=Vitek |first=Chris |date=January 10, 2017 |title=How Context Sits at Intersection of CRM, ACD |url=http://www.nojitter.com/post/240172247/how-context-sits-at-intersection-of-crm-acd |access-date=8 June 2017 |website=No Jitter}}</ref> In order to compete with these new and quickly growing stand-alone CRM solutions, established [[enterprise resource planning]] (ERP) [[software companies]] like [[Oracle Corporation|Oracle]], [[Zoho Corporation]],<ref name="Mukherjee-2017">{{Cite web |last=Mukherjee |first=Sharmistha |date=2017-02-02 |title=How to build a global company from a small town: The Zoho story |url=https://techseen.com/2017/02/02/global-company-zoho-story/ |access-date=2022-05-17 |website=TECHSEEN |language=en-US}}</ref> [[SAP SE|SAP]],<ref>{{Cite web |title=SAP R/3 SD Wiki |url=https://wiki.scn.sap.com/wiki/display/ERPLO/ERP+SD |access-date=7 January 2019}}</ref> [[PeopleSoft|Peoplesoft]] (an Oracle subsidiary as of 2005)<ref name="McMillan-2005">{{Cite web |date=2005-01-10 |title=It's official: Oracle closes on PeopleSoft acquisition |url=https://www.computerworld.com/article/2568706/it-s-official--oracle-closes-on-peoplesoft-acquisition.html |access-date=2021-08-18 |website=Computerworld |language=en}}</ref> and [[Microsoft Dynamics NAV|Navision]]<ref>{{Cite web |title=Navision 3.0 |url=https://dynamicsuser.net/nav/w/history/131/navision-solutions-3-00 |url-status=dead |archive-url=https://web.archive.org/web/20210603095805/https://dynamicsuser.net/nav/w/history/131/navision-solutions-3-00 |archive-date=3 June 2021 |access-date=7 January 2019}}</ref> started extending their sales, distribution and customer service capabilities with [[List of embedded CRM systems|embedded CRM modules]]. This included embedding [[Sales force management system|sales force automation]] or extended customer service (e.g. inquiry, activity management) as CRM features in their ERP.
Customer relationship management was popularized in 1997 due to the work of Siebel, [[Gartner]], and [[IBM]]. Between 1997 and 2000, leading CRM products were enriched with shipping and marketing capabilities.<ref name="COMP">{{Cite news |title=History of CRM Software |url=http://comparecamp.com/introduction-history-crm-software/ |access-date=8 February 2017 |work=comparecamp.com}}</ref> Siebel introduced the first mobile CRM app called Siebel Sales Handheld in 1999. The idea of a stand-alone, cloud-hosted customer base was soon adopted by other leading providers at the time, including [[PeopleSoft]] (acquired by Oracle),<ref name="McMillan-2005" /> [[Oracle CRM|Oracle]], [[SAP CRM|SAP]] and [[Salesforce.com]].<ref>{{Cite book |last=Jha |first=Lakshman |url=https://books.google.com/books?id=NbnZwhUjlF0C |title=Customer Relationship Management: A Strategic Approach |publisher=Global India Publications |year=2008 |isbn=9788190721127 |access-date=8 June 2017}}</ref>
The first open-source CRM system was developed by [[SugarCRM]] in 2004. During this period, CRM was rapidly migrating to the cloud, as a result of which it became accessible to sole entrepreneurs and small teams. This increase in accessibility generated a huge wave of price reduction.<ref name="COMP" /> Around 2009, developers began considering the options to profit from social media's momentum and designed tools to help companies become accessible on all users' favourite networks. Many startups at the time benefited from this trend to provide exclusively [[social CRM]] solutions, including [[Base CRM|Base]] and [[Nutshell CRM|Nutshell]].<ref name="COMP" /> The same year, Gartner organized and held the first Customer Relationship Management Summit, and summarized the features systems should offer to be classified as CRM solutions.<ref>{{Cite press release |title=Gartner Announces Customer Relationship Management Summit 2009 |date=5 August 2009 |url=http://www.gartner.com/newsroom/id/1114712 |access-date=8 February 2017 |url-status=dead |archive-url=https://web.archive.org/web/20140122085755/http://www.gartner.com/newsroom/id/1114712 |archive-date=22 January 2014 |website=[[Gartner]]}}</ref> In 2013 and 2014, most of the popular CRM products were linked to business intelligence systems and communication software to improve corporate communication and end-users' experience. The leading trend is to replace standardized CRM solutions with industry-specific ones, or to make them customizable enough to meet the needs of every business.<ref>{{Cite news |title=Industry Specific/Vertical Market CRM Solutions |url=http://www.smallbizcrm.com/vertical-market-crm/ |access-date=8 February 2017 |work=smallbizcrm.com}}</ref> In November 2016, [[Forrester Research|Forrester]] released a report where it "identified the nine most significant CRM suites from eight prominent vendors".<ref name="forrester-crm">{{Cite report |url=https://www.forrester.com/report/The+Forrester+Wave+CRM+Suites+For+Enterprise+Organizations+Q4+2016/-/E-RES129311 |title=The Forrester Wave: CRM Suites For Enterprise Organizations, Q4 2016 |date=21 November 2016 |publisher=[[Forrester Research|Forrester]] |access-date=13 September 2017}}</ref>
== Types ==
=== Strategic ===
Strategic CRM concentrates upon the development of a customer-centric business culture.<ref>{{Cite book |last1=Buttle |first1=Francis |url=https://books.google.com/books?id=slGhBgAAQBAJ&pg=PA5 |title=Customer Relationship Management: Concepts and Technologies |last2=Maklan |first2=Stan |date=2015-02-11 |publisher=Routledge |isbn=9781317654766}}</ref>
The focus of a business on being customer-centric (in design and implementation of their CRM strategy) will translate into an improved [[Customer lifetime value|CLV]].<ref>{{Cite journal |last1=Feiz |first1=Setareh |last2=Ghotbabadi |first2=Ali Ramezani |last3=Khalifah |first3=Zainab Bte |date=2016 |title=Customer Lifetime Value in Organizations |url=http://www.indianjournals.com/ijor.aspx?target=ijor:ajrssh&volume=6&issue=5&article=004 |journal=Asian Journal of Research in Social Sciences and Humanities |language=en |volume=6 |issue=5 |pages=53 |doi=10.5958/2249-7315.2016.00103.9 |issn=2249-7315}}</ref>
=== Operational ===
The primary goal of CRM systems is integration and [[Business process automation|automation]] of sales, marketing, and customer support. Therefore, these systems typically have a dashboard that gives an overall view of the three functions on a [[single customer view]], a single page for each customer that a company may have. The dashboard may provide client information, past sales, previous marketing efforts, and more, summarizing all of the relationships between the customer and the firm. Operational CRM is made up of three main components: sales force automation, marketing automation, and service automation.<ref name="crmsoftware-2015">{{Cite web |title=Types of CRM and Examples |url=http://www.crmsoftware.com/types-of-crm-and-examples/ |access-date=22 November 2015 |website=CRM Software}}</ref>
* [[Sales force management system|Sales force automation]] works with all stages in the sales cycle, from initially entering contact information to converting a prospective client into an actual client.<ref name="WhatIs-2015">{{Cite web |title=What is sales force automation (SFA)? - Definition from WhatIs.com |url=http://whatis.techtarget.com/definition/sales-force-automation-SFA |access-date=26 November 2015 |website=WhatIs.com |language=en-US}}</ref> It implements [[sales promotion]] analysis, automates the tracking of a client's account history for repeated sales or future sales and coordinates sales, marketing, call centers, and retail outlets. It prevents duplicate efforts between a salesperson and a customer and also automatically tracks all contacts and follow-ups between both parties.<ref name="WhatIs-2015" /><ref>{{Cite book |last=Buttle |first=Francis |title=Customer relationship management |publisher=Routledge |year=2003 |isbn=9781136412578 |location=London}}{{page needed|date=July 2024}}</ref>
* [[Marketing automation]] focuses on easing the overall marketing process to make it more effective and efficient. CRM tools with marketing automation capabilities can automate repeated tasks, for example, sending out automated marketing emails at certain times to customers or posting marketing information on social media. The goal with marketing automation is to turn a sales lead into a full customer. CRM systems today also work on [[customer engagement]] through social media.<ref name="SearchCRM-2015">{{Cite web |title=What is customer relationship management (CRM) ? - Definition from WhatIs.com |url=http://searchcrm.techtarget.com/definition/CRM |access-date=22 November 2015 |website=SearchCRM |language=en-US}}</ref>
* Service automation is the part of the CRM system that focuses on direct customer service technology. Through service automation, customers are supported through multiple channels such as phone, email, [[knowledge base]]s, ticketing portals, FAQs, and more.<ref name="crmsoftware-2015" />
=== Analytical ===
The role of analytical CRM systems is to analyze customer data collected through multiple sources and present it so that business managers can make more informed decisions.<ref>{{cite journal |last1=Josiah |first1=Ahaiwe |last2=Ikenna |first2=Oluigbo |date=February 2015 |title=Role of Technology in Accounting and E-accounting |url=https://www.academia.edu/12111029 |journal=International Journal of Computer Science and Mobile Computing |volume=4 |issue=2 |pages=208–215 |access-date=27 October 2018 }}</ref> Analytical CRM systems use techniques such as data mining, correlation, and [[pattern recognition]] to analyze customer data. These analytics help improve customer service by finding small problems which can be solved, perhaps by marketing to different parts of a consumer audience differently.<ref name="crmsoftware-2015"/> For example, through the analysis of a customer base's buying behavior, a company might see that this customer base has not been buying a lot of products recently. After reviewing their data, the company might think to market to this subset of consumers differently to best communicate how this company's products might benefit this group specifically.
=== Collaborative ===
The third primary aim of CRM systems is to incorporate external stakeholders such as suppliers, vendors, and distributors, and share customer information across groups/departments and organizations. For example, feedback can be collected from technical support calls, which could help provide direction for marketing products and services to that particular customer in the future.<ref name="Tavana-2013">{{Cite journal |last1=Tavana |first1=Ali Feizbakhsh |last2=Fili |first2=Saeed. |last3=Tohidy |first3=Alireza |last4=Vaghari |first4=Reza |last5=Kakouie |first5=Saed |date=November 2013 |title=Theoretical Models of Customer Relationship Management in Organizations |journal=International Journal of Business and Behavioral Sciences |volume=3 |issue=11 |s2cid=167523749}}</ref>
===Customer data platform===
{{main|Customer data platform}}
A [[customer data platform]] (CDP) is a computer system used by marketing departments that assembles data about individual people from various sources into one database, with which other software systems can interact.<ref name=ZDnet/>  {{As of|February 2017}}, about twenty companies were selling such systems and revenue for them was around US$300&nbsp;million.<ref name=ZDnet>{{Cite news|url=https://www.zdnet.com/article/introduction-to-customer-data-platforms/|title=How customer data platforms can benefit your business|last=Greenberg|first=Paul|work=ZDNet|date=13 February 2017|language=en}}</ref>
== Components ==
[[File:CRMTypesComponents2.png|thumb|762px|Components in the different types of CRM<ref name="Tavana-2013"/>]]
The main components of CRM are building and managing customer relationships through marketing, observing relationships as they mature through distinct phases, managing these relationships at each stage and recognizing that the distribution of the value of a relationship to the firm is not homogeneous. When building and managing customer relationships through marketing, firms might benefit from using a variety of tools to help organizational design, incentive schemes, customer structures, and more to optimize the reach of their marketing campaigns. Through the acknowledgment of the distinct phases of CRM, businesses will be able to benefit from seeing the interaction of multiple relationships as connected transactions. The final factor of CRM highlights the importance of CRM through accounting for the profitability of customer relationships. By studying the particular spending habits of customers, a firm may be able to dedicate different resources and amounts of attention to different types of consumers.<ref name="Reinartz-2004">{{Cite journal |last1=Reinartz |first1=Werner |last2=Krafft |first2=Manfred |last3=Hoyer |first3=Wayne D. |date=August 2004 |title=The Customer Relationship Management Process: Its Measurement and Impact on Performance |journal=Journal of Marketing Research |volume=41 |issue=3 |pages=293–305 |doi=10.1509/jmkr.41.3.293.35991 |s2cid=167683988}}</ref>
Relational Intelligence, which is the awareness of the variety of relationships a customer can have with a firm and the ability of the firm to reinforce or change those connections, is an important component of the main phases of CRM. Companies may be good at capturing [[demographic data]], such as gender, age, income, and education, and connecting them with purchasing information to categorize customers into [[profitability]] tiers, but this is only a firm's industrial view of customer relationships.<ref name="Brown-2015">{{Cite web |title=What's Your Relational Intelligence? |url=http://www.strategy-business.com/article/15103?gko=5de4a |access-date=23 November 2015 |website=strategy+business}}</ref> A lack of relational intelligence is a sign that firms still see customers as resources that can be used for [[up-selling|up-sell]] or [[cross-sell]] opportunities, rather than people looking for interesting and personalized interactions.<ref name="Avery-2014a">{{Cite journal |last1=Avery |first1=Jill |last2=Fournier |first2=Susan |last3=Wittenbraker |first3=John |date=July–August 2014 |title=Unlock the Mysteries of Your Customer Relationships |url=https://hbr.org/2014/07/unlock-the-mysteries-of-your-customer-relationships |journal=Harvard Business Review |access-date=22 November 2015}}</ref>
CRM systems include:
* [[Data warehouse]] technology, which is used to aggregate transaction information, to merge the information with CRM products, and to provide key performance indicators.
* [[Opportunity management]], which helps the company to manage unpredictable growth and demand and implement a good forecasting model to integrate sales history with sales projections.<ref name="Zeng-2003">{{Cite journal |last1=Zeng |first1=Yun E |last2=Wen |first2=H. Joseph |last3=Yen |first3=David C |date=1 March 2003 |title=Customer relationship management (CRM) in business-to-business (B2B) e-commercenull |journal=Information Management & Computer Security |volume=11 |issue=1 |pages=39–44 |doi=10.1108/09685220310463722 |issn=0968-5227}}</ref>
* CRM systems that track and measure marketing campaigns over multiple networks, tracking customer analysis by customer clicks and sales.
* Some CRM software is available as a [[software as a service]] (SaaS), delivered via the internet and accessed via a web browser instead of being installed on a local computer. Businesses using the software do not purchase it but typically pay a recurring subscription fee to the software vendor.<ref name="crmsoftware-2015" />
* For small businesses, a CRM system may consist of a contact management system that integrates emails, documents, jobs, faxes, and scheduling for individual accounts. CRM systems available for specific markets (legal, finance) frequently focus on event management and relationship tracking as opposed to financial [[return on investment]] (ROI).
* CRM systems for [[eCommerce]] focus on marketing automation tasks such as cart rescue, re-engaging users with email, and personalization.
* Customer-centric relationship management (CCRM) is a nascent sub-discipline that focuses on customer preferences instead of customer leverage. CCRM aims to add value by engaging customers in individual, interactive relationships.<ref name="Reinartz-2004" />
* Systems for non-profit and membership-based organizations help track constituents, fundraising, sponsors' demographics, membership levels, membership directories, volunteering and communication with individuals.
* CRM not only indicates technology and strategy but also indicates an integrated approach that includes employees knowledge and organizational culture to embrace the CRM philosophy.
==Effect on customer satisfaction==
[[Customer satisfaction]] has important implications for the economic performance of firms because it has the ability to increase customer loyalty and usage behavior and reduce customer complaints and the likelihood of customer defection.<ref>{{cite journal |last=Bolton |first=Ruth N. |year=1998 |title=A Dynamic Model of the Duration of the Customer's Relationship with a Continuous Service Provider: The Role of Satisfaction |journal=Marketing Science |volume=17 |issue=1 |pages=45–65|doi=10.1287/mksc.17.1.45 }}</ref><ref>{{cite journal |last=Fornell |first=Claes |date=January 1992 |title=A National Customer Satisfaction Barometer: The Swedish Experience |journal=Journal of Marketing |volume=56 |pages=6–22|doi=10.1177/002224299205600103 }}</ref> The implementation of a CRM approach is likely to affect customer satisfaction and customer knowledge for a variety of different reasons.
Firstly, firms can customize their offerings for each customer.<ref name="Mithas-2005">{{Cite journal|title = Why Do Customer Relationship Management Applications Affect Customer Satisfaction?|last1=Mithas |first1=Sunil |last2=Krishnan |first2=M.S. |last3= Fornell |first3=Claes |date = October 2005|journal = Journal of Marketing|volume=69|issue=4|pages=201–209|doi = 10.1509/jmkg.2005.69.4.201 |s2cid = 4650003|doi-access=free}}</ref> By accumulating information across customer interactions and processing this information to discover hidden patterns, CRM applications help firms customize their offerings to suit the individual tastes of their customers.<ref name="Mithas-2005" /> This customization enhances the perceived quality of products and services from a customer's viewpoint, and because the perceived quality is a determinant of customer satisfaction, it follows that CRM applications indirectly affect customer satisfaction. CRM applications also enable firms to provide timely, accurate processing of customer orders and requests and the ongoing management of customer accounts.<ref name="Mithas-2005" /> For example, Piccoli and Applegate discuss how Wyndham uses IT tools to deliver a consistent service [[customer experience|experience]] across its various properties to a customer. Both an improved ability to customize and reduced variability of the consumption experience enhance perceived quality, which in turn positively affects customer satisfaction.<ref name="Piccoli_Applegate_2003">{{cite report |last1=Piccoli |first1=Gabriele |first2=L. |last2=Applegate |year=2003 |title=Wyndham International: Fostering High-Touch with High-Tech |number=Case Study No. 9-803-092 |publisher=Harvard Business School |url=https://www.hbs.edu/faculty/Pages/item.aspx?num=29481}}</ref> CRM applications also help firms manage customer relationships more effectively across the stages of relationship initiation, maintenance, and termination.<ref name="Piccoli_Applegate_2003"/>
=== Customer benefits ===
With CRM systems, customers are served on the day-to-day process. With more reliable information, their demand for [[self-service]] from companies will decrease. If there is less need to interact with the company for different problems, then the [[customer satisfaction]] level is expected to increase.<ref>{{cite journal |last=Leach |first=B. |title=Success of CRM systems hinges on the establishment of measurable benefits |journal=Pulp & Paper |year=2003 |volume=77 |issue=6 |page=48}}</ref> These central benefits of CRM will be connected hypothetically to the three kinds of equity, which are relationship, value, and brand, and in the end to [[customer equity]]. Eight benefits were recognized to provide value drivers.<ref>{{cite journal |last1=Richards |first1=A. Keith |first2=E. |last2=Jones |title=Customer relationship management: Finding value drivers |journal=Industrial Marketing Management |year=2008 |volume=37 |issue=2 |pages=120–130|doi=10.1016/j.indmarman.2006.08.005 }}</ref>
# Enhanced ability to [[:wikt:targeting|target]] profitable customers.
# Integrated assistance across channels.
# Enhanced [[sales|sales force]] efficiency and effectiveness.
# Improved [[pricing]].
# Customized products and services.
# Improved customer service efficiency and effectiveness.
# Individualized marketing messages are also called campaigns.
# Connect customers and all channels on a single platform.
=== Examples ===
Research has found a 5% increase in [[customer retention]] boosts lifetime customer{{what|date=March 2024}} [[Profit (economics)|profit]]s by 50% on average across multiple industries, as well as a boost of up to 90% within specific industries such as [[insurance industry|insurance]].<ref name="Gillies-2002">{{Cite web|title = The story behind successful CRM - Bain & Company|url = http://www.bain.com/publications/articles/the-story-behind-successful-crm.aspx|website = www.bain.com| date=June 2002 |access-date = 23 November 2015}}</ref> Companies that have mastered customer relationship strategies have the most successful CRM programs. For example, [[MBNA]] Europe has had a 75% annual profit growth since 1995. The firm heavily invests in screening potential cardholders. Once proper clients are identified, the firm retains 97% of its profitable customers. They implement CRM by marketing the right products to the right customers. The firm's customers' card usage is 52% above the industry norm, and the average expenditure is 30% more per transaction. Also 10% of their account holders ask for more information on cross-sale products.<ref name="Gillies-2002" />
[[Amazon.com|Amazon]] has also seen successes through its [[customer proposition]]. The firm implemented personal greetings, [[collaborative filtering]], and more for the customer. They also used CRM training for the employees to see up to 80% of customers repeat.<ref name="Gillies-2002" />
==Customer profile==
{{see|Consumer behaviour|Biology and consumer behaviour|Buying decision}}
A customer profile is a detailed description of any particular classification of customer which is created to represent the typical users of a product or service. Customer profiling is a method to understand your customers in terms of demographics, behaviour and lifestyle. It is used to help make customer-focused decisions without confusing the scope of the project with personal opinion. Overall profiling is gathering information that sums up [[consumption (economics)|consumption]] habits so far and [[extrapolation|projects them into the future]] so that they can be grouped for marketing and [[advertising]] purposes.<ref>{{cite web | last=DeVault | first=Gigi | title=Wondering How to Create the Ideal Consumer Profile? Learn the Basics | website=The Balance Small Business | date=2012-03-28 | url=https://www.thebalancesmb.com/consumer-profile-defining-the-ideal-customer-2296932 | access-date=2018-08-15}}</ref>
Customer or consumer profiles are the essences of the [[customer data|data]] that is collected alongside core data (name, address, company) and processed through [[customer analytics]] methods, essentially a type of [[profiling (information science)|profiling]].
The three basic methods of customer profiling are the psychographic approach, the consumer typology approach, and the consumer characteristics approach. These customer profiling methods help you design your business around who your customers are and help you make better customer-centered decisions.
== Improving CRM ==
Consultants hold that it is important for companies to establish strong CRM systems to improve their relational intelligence.<ref>{{Cite web|title = A Dozen Simple Ways to Improve Customer Relations - Enterprise Apps Today|url = http://www.enterpriseappstoday.com/crm/ways-to-improve-customer-relations-1.html|website = www.enterpriseappstoday.com| date=27 July 2011 |access-date = 23 November 2015}}</ref> According to this argument, a company must recognize that people have many different types of relationships with different brands. One research study analyzed relationships between consumers in China, Germany, Spain, and the United States, with over 200 brands in 11 industries including airlines, cars, and media. This information is valuable as it provides demographic, behavioral, and value-based customer segmentation. These types of relationships can be both positive and negative. Some customers view themselves as friends of the brands, while others as enemies, and some are mixed with a love-hate relationship with the brand. Some relationships are distant, intimate, or anything in between.<ref name="Avery-2014a"/>
=== Data analysis ===
Managers must understand the different reasons for the types of relationships, and provide the customer with what they are looking for. Companies can [[data collection|collect]] this information by using [[survey (human research)|surveys]], interviews, and more, with current customers.
Companies must also improve the relational intelligence of their CRM systems. Companies store and receive huge amounts of data through [[email]]s, [[online chat]] sessions, phone calls, and more.<ref>{{Cite web|title = A CRM success story|url = http://www.computerworld.com/article/2578532/crm/a-crm-success-story.html|website = Computerworld| date=7 November 2002 |access-date = 23 November 2015}}</ref> Many companies do not properly make use of this great amount of data, however. All of these are signs of what types of relationships the customer wants with the firm, and therefore companies may consider investing more time and effort in building out their relational intelligence.<ref name="Brown-2015"/> Companies can use [[data mining]] technologies and [[web search]]es to understand relational signals. [[Social media]] such as social networking sites, [[blog]]s, and forums can also be used to collect and analyze information. Understanding the customer and capturing this data allows companies to convert customers' signals into information and knowledge that the firm can use to understand a potential customer's desired relations with a brand.<ref name="Avery-2014">Avery, Jill. (2014). "Unlock the Mysteries of Your Customer Relationships", Harvard Business Review. August 2014. https://hbr.org/2014/07/unlock-the-mysteries-of-your-customer-relationships Retrieved: 20 November 2015</ref>
=== Employee training ===
Many firms have also implemented training programs to [[Employee training|teach employees]] how to recognize and create strong customer-brand relationships. Other employees have also been trained in [[social psychology]] and the [[social science]]s to help bolster customer relationships. [[Customer service]] representatives must be trained to value customer relationships and trained to understand existing customer profiles. Even the finance and legal departments should understand how to manage and build relationships with customers.<ref>{{Cite web|title = 9 Ways to Improve Your Company's CRM System|url = http://www.cio.com/article/2376209/enterprise-software/9-ways-to-improve-your-company-s-crm-system.html|website = CIO|access-date = 23 November 2015}}</ref>
==In practice==
===Call centers===
[[Call centre|Contact centre]] CRM providers are popular for small and mid-market businesses. These systems codify the interactions between the company and customers by using analytics and [[key performance indicator]]s to give the users information on where to focus their marketing and customer service. This allows agents to have access to a caller's history to provide personalized customer communication. The intention is to maximize [[average revenue per user]], decrease [[churn rate]] and decrease idle and unproductive contact with the customers.<ref name=sap1>{{cite web |website=SAP Insider |date=15 November 2007 |url=http://www.sdn.sap.com/irj/scn/go/portal/prtroot/docs/library/uuid/e044e180-8375-2a10-a2b2-b5709ea68ccb |title=Still Struggling to Reduce Call Center Costs Without Losing Customers? |archive-url=https://web.archive.org/web/20120116092748/http://www.sdn.sap.com/irj/scn/go/portal/prtroot/docs/library/uuid/e044e180-8375-2a10-a2b2-b5709ea68ccb |archive-date=16 January 2012 }}</ref><ref>{{Cite web| url=http://www.genesys.com/definitions/what-is-contact-center-crm| title=What Is Contact Center CRM?| author=Genesys}}</ref><ref>{{Cite web| url=http://www.networkworld.com/article/3176118/software/the-contact-center-and-crm-collision-leads-to-a-new-dominant-species.html| archive-url=https://web.archive.org/web/20170302235025/http://www.networkworld.com/article/3176118/software/the-contact-center-and-crm-collision-leads-to-a-new-dominant-species.html| url-status=dead| archive-date=2 March 2017| title=The contact center and CRM collision leads to a new dominant species| work=Network World| date=2 March 2017}}</ref>
Growing in popularity is the idea of gamifying, or using game design elements and game principles in a non-game environment such as customer service environments. The gamification of customer service environments includes providing elements found in games like rewards and bonus points to customer service representatives as a method of feedback for a job well done.<ref>{{Cite web|title = Gamification Comes to the Contact Center|url = http://www.destinationcrm.com/Articles/ReadArticle.aspx?ArticleID=93677|website = CRM Magazine|access-date = 26 November 2015}}</ref>
[[Gamification]] tools can motivate agents by tapping into their desire for rewards, recognition, achievements, and competition.<ref>{{Cite web|title = CRM in Customer Service|url = http://www.destinationcrm.com/Articles/ReadArticle.aspx?ArticleID=99909|website = CRM Magazine|access-date = 22 November 2015|archive-url = https://web.archive.org/web/20150923214157/http://www.destinationcrm.com/Articles/ReadArticle.aspx?ArticleID=99909|archive-date = 23 September 2015|url-status = dead}}</ref>
===Contact-center automation===
Contact-center [[automation]],  CCA, the practice of having an integrated system that coordinates contacts between an organization and the public, is designed to reduce the repetitive and tedious parts of a contact center agent's job. Automation prevents this by having pre-recorded audio messages that help customers solve their problems. For example, an automated contact center may be able to re-route a customer through a series of commands asking him or her to select a certain number to speak with a particular contact center agent who specializes in the field in which the customer has a question.<ref>{{Cite web|title = Contact center automation takes flight|url = http://searchcrm.techtarget.com/tip/Contact-center-automation-takes-flight|website = SearchCRM|access-date = 26 November 2015|language = en-US|archive-date = 21 August 2018|archive-url = https://web.archive.org/web/20180821031646/https://searchcrm.techtarget.com/tip/Contact-center-automation-takes-flight|url-status = dead}}</ref> Software tools can also integrate with the agent's desktop tools to handle customer questions and requests. This also saves time on behalf of the employees.<ref name="SearchCRM-2015"/>
=== Social media ===
[[Social CRM]] involves the use of social media and technology to engage and learn from consumers.<ref>{{cite journal |title=Setting the future of digital and social media marketing research: Perspectives and research propositions |url=https://www.sciencedirect.com/science/article/pii/S0268401220308082 |journal=International Journal of Information Management |access-date=25 June 2023 |date=August 2021|doi=10.1016/j.ijinfomgt.2020.102168 |last1=Dwivedi |first1=Yogesh K. |last2=Ismagilova |first2=Elvira |last3=Hughes |first3=D. Laurie |last4=Carlson |first4=Jamie |last5=Filieri |first5=Raffaele |last6=Jacobson |first6=Jenna |last7=Jain |first7=Varsha |last8=Karjaluoto |first8=Heikki |last9=Kefi |first9=Hajer |last10=Krishen |first10=Anjala S. |last11=Kumar |first11=Vikram |last12=Rahman |first12=Mohammad M. |last13=Raman |first13=Ramakrishnan |last14=Rauschnabel |first14=Philipp A. |last15=Rowley |first15=Jennifer |last16=Salo |first16=Jari |last17=Tran |first17=Gina A. |last18=Wang |first18=Yichuan |volume=59 |hdl=10454/18041 |hdl-access=free |display-authors=4}}</ref> Because the public, especially young people, are increasingly using social networking sites, companies use<ref name="Avery-2014a"/> these sites to draw attention to their products, services and brands, with the aim of building up customer relationships to increase demand. With the increase in the use of social media platforms, integrating CRM with the help of social media can potentially be a quicker and more cost-friendly process.<ref>{{Cite book|last=Roberts-Phelps|first=Graham|title=Customer Relationship Management: How to Turn a Good Business Into a Great One!|publisher=Thorogood|year=2001|isbn=978-1854181190|pages=140}}</ref>
Some CRM systems integrate social media sites like Twitter, LinkedIn, and Facebook to track and communicate with customers. These customers also share their own opinions and experiences with a company's products and services, giving these firms more insight. Therefore, these firms can both share their own opinions and also track the opinions of their customers.<ref name="Tavana-2013"/>
Enterprise feedback management software platforms combine internal survey data with trends identified through social media to allow businesses to make more accurate decisions on which products to supply.<ref>{{Cite journal|title = Customer relationship management from theory to practice: Implementation steps|last = Prasongsukarn|first = Kriengsin|date = 2006|journal = Inspire Research Company}}</ref>
=== Location-based services ===
CRM systems can also include technologies that create geographic marketing campaigns. The systems take in information based on a customer's physical location and sometimes integrates it with popular [[location-based services|location-based]] GPS applications. It can be used for networking or contact management as well to help increase sales based on location.<ref name="SearchCRM-2015" />
===Business-to-business transactions===
Despite the general notion that CRM systems were created for customer-centric businesses, they can also be applied to B2B environments to streamline and improve customer management conditions. For the best level of CRM operation in a B2B environment, the software must be personalized and delivered at individual levels.<ref name=Henderson>{{cite web |first=Rebekah |last=Henderson |website=B2B Insights |year=2013 |url=http://www.b2binsights.com/how-to-build-a-b2b-friendly-crm/ |title=How to build a B2B-friendly CRM |archive-url=https://web.archive.org/web/20171228232740/http://b2binsights.com/how-to-build-a-b2b-friendly-crm/ |archive-date=28 December 2017 }}</ref>
The main differences between business-to-consumer (B2C) and [[business-to-business]] CRM systems concern aspects like sizing of contact databases and length of relationships.<ref>{{Cite web|title = B2B Marketing: What Makes It Special? {{!}} B2B International|url = https://www.b2binternational.com/publications/b2b-marketing/|website = B2B International|access-date = 22 November 2015|language = en-US}}</ref>
==Market trends==
=== Social networking ===
In the Gartner CRM Summit 2010 challenges like "system tries to capture data from social networking traffic like Twitter, handles Facebook page addresses or other online social networking sites" were discussed and solutions were provided that would help in bringing more clientele.<ref>[http://www.hcltech.com/sites/default/files/CRM_Trends_Insurance.pdf CRM Trends in Insurance Industry] {{Webarchive|url=https://web.archive.org/web/20210717210736/https://www.hcltech.com/sites/default/files/CRM_Trends_Insurance.pdf |archive-url=https://web.archive.org/web/20141210081118/http://www.hcltech.com/sites/default/files/CRM_Trends_Insurance.pdf |archive-date=2014-12-10 |url-status=live |date=17 July 2021 }}''CRM Trends in Insurance Industry'': April 2010</ref>
The era of the "social customer" refers to the use of social media by customers.<ref>{{cite book|last=Greenberg|first=Paul|title=CRM at the Speed of Light|publisher=McGraw Hill|year=2009|edition=4th|page=7}}</ref>
=== Mobile ===
Some CRM systems are equipped with mobile capabilities, making information accessible to remote sales staff.<ref>{{Cite web |date=2018-08-23 |title=Closing More Deals With NoCRM.io's Improved Mobile App |url=https://crm.org/news/closing-more-deals-with-nocrmios-improved-mobile-app |access-date=2022-06-29 |website=CRM.org |language=en-us}}</ref><ref>{{Cite web |title=Salesforce Platform |url=https://www.salesforce.com/eu/campaign/sem/platform/ |access-date=2022-06-29 |website=Salesforce.com |language=en}}</ref><ref>{{Cite web |date=2018-12-19 |title=What Is Mobile CRM? Definition, Features & Best Apps |url=https://crm.org/crmland/mobile-crm |access-date=2022-06-29 |website=CRM.org |language=en-us}}</ref>
=== Cloud computing and SaaS ===
Many CRM vendors offer subscription-based web tools ([[cloud computing]]) and [[Software as a service|SaaS]]. [[Salesforce.com]] was the first company to provide enterprise applications through a web browser, and has maintained its leadership position.<ref>[https://www.pcworld.com/article/193463/put_cloud_crm_to_work.html Put Cloud CRM to Work] ''PC World'': April 2010</ref>
Traditional providers moved into the cloud-based market via acquisitions of smaller providers: [[Oracle Corporation|Oracle]] purchased [[RightNow]] in October 2011,<ref>[https://techcrunch.com/2011/10/24/oracle-buys-cloud-based-customer-service-company-rightnow-for-1-5-billion/ Oracle Buys Cloud-based Customer Service Company RightNow For $1.5 Billion] ''Techcrunch'': 24 October 2011</ref> and [[Taleo]]<ref>{{Cite web|date=2012-02-09|title=News Analysis: The Implications Of Oracle's Acquisition Of Taleo|url=https://enterpriseirregulars.com/45817/news-analysis-the-implications-of-oracles-acquisition-of-taleo/|access-date=2021-08-04|website=Enterprise Irregulars|language=en-US}}</ref> and Eloqua<ref>{{Cite news|date=2012-12-20|title=Oracle to Buy Eloqua in $810 Million Deal|language=en-US|work=[[The Wall Street Journal]]|url=https://online.wsj.com/article/SB10001424127887323777204578191171409150846.html|access-date=2021-08-04|issn=0099-9660}}</ref> in 2012; [[SAP AG|SAP]] acquired [[SuccessFactors]] in December 2011<ref>[https://web.archive.org/web/20120106051646/http://www.businessweek.com/news/2011-12-07/sap-challenges-oracle-with-3-4-billion-successfactors-purchase.html SAP Challenges Oracle With $3.4 Billion SuccessFactors Purchase] ''Bloomberg Businessweek'': 7 December 2011</ref> and [[NetSuite]] acquired Verenia in 2022.<ref>{{Cite web |title=NetSuite acquires most of Verenia, the CPQ and CRM vendor |url=https://www.enterprisetimes.co.uk/2022/01/10/netsuite-acquires-most-of-verenia-the-cpq-and-crm-vendor/ |website=enterprise times}}</ref>
=== Sales and sales force automation ===
Sales forces also play an important role in CRM, as maximizing [[Sales Effectiveness|sales effectiveness]] and increasing sales [[productivity]] is a driving force behind the adoption of CRM software. Some of the top CRM trends identified in 2021 include focusing on customer service automation such as chatbots, hyper-personalization based on customer data and insights, and the use of unified CRM systems.<ref>{{Cite web|title=CRM Trends 2021: How the Pandemic Altered Customer Behavior Forever|url=https://www.informationweek.com/software/enterprise-applications/crm-trends-2021-how-the-pandemic-altered-customer-behavior-forever/d/d-id/1340192|access-date=2021-08-04|website=www.informationweek.com|date=18 February 2021 |language=en}}</ref><ref>{{Cite web|last=Forrester|title=Three Key CRM Trends In 2021 That Will Allow You To Better Engage Your Customers|url=https://www.forbes.com/sites/forrester/2021/04/09/three-key-crm-trends-in-2021-that-will-allow-youtobetter-engage-your-customers/|access-date=2021-08-04|website=Forbes|language=en}}</ref> CRM vendors support sales productivity with different products, such as tools that measure the effectiveness of ads that appear in 3D video games.<ref>{{Cite web|last=Gagliordi|first=Natalie|title=Oracle announces in-game ad measurement technology in new CX portfolio update|url=https://www.zdnet.com/article/oracle-announces-in-game-ad-measurement-technology-in-new-cx-portfolio-update/|access-date=2021-08-18|website=ZDNet|language=en}}</ref>
Pharmaceutical companies were some of the first investors in sales force automation (SFA) and some are on their third- or fourth-generation implementations. However, until recently, the deployments did not extend beyond SFA—limiting their scope and interest to Gartner analysts.<ref>{{cite web | title = Gartner's Top 54 CRM Case Studies, Sorted by Industry, for 2005 | url=https://www.gartner.com/doc/481170/gartners-top--crm-case | access-date=20 May 2005}}</ref>
=== Vendor relationship management ===
Another related development is [[vendor relationship management]] (VRM), which provide tools and services that allow customers to manage their individual relationship with vendors. VRM development has grown out of efforts by ProjectVRM at Harvard's [[Berkman Center for Internet & Society]] and Identity Commons' Internet Identity Workshops, as well as by a growing number of startups and established companies. VRM was the subject of a cover story in the May 2010 issue of ''CRM'' Magazine.<ref>[http://www.destinationcrm.com/Issue/1776-May-2010.htm Destinationcrm.com] ''CRM Magazine'': May 2010</ref>
=== Customer success ===
Another trend worth noting is the rise of [[Customer Success]] as a discipline within companies. More and more companies establish Customer Success teams as separate from the traditional Sales team and task them with managing existing customer relations. This trend fuels demand for additional capabilities for a more holistic understanding of customer health, which is a limitation for many existing vendors in the space.<ref>Nirpaz G., Pizarro F., Farm Don't Hunt: The Definitive Guide to Customer Success, March 2016, p. 101</ref> As a result, a growing number of new entrants enter the market while existing vendors add capabilities in this area to their suites.
=== AI and predictive analytics ===
In 2017, [[artificial intelligence]] and [[predictive analytics]] were identified as the newest trends in CRM.<ref>{{Cite web| url=http://www.cmswire.com/customer-experience/7-top-crm-trends-for-2017-a-look-ahead/| title=7 Top CRM Trends for 2017: A Look Ahead| work=CMS Wire}}</ref>
==Criticism==
{{see also|Anonymization|Customer rights}}
Companies face large challenges when trying to implement CRM systems. Consumer companies frequently manage their customer relationships haphazardly and unprofitably.<ref>{{Cite web|title = CRM and ERP: What's The Difference?|url = http://www.crmswitch.com/crm-value/understanding-crm-erp/|website = CRM Switch| date=8 August 2013 |access-date = 26 November 2015}}</ref> They may not effectively or adequately use their connections with their customers, due to misunderstandings or misinterpretations of a CRM system's analysis. Clients may be treated like an exchange party, rather than a unique individual, due to, occasionally, a lack of a bridge between the CRM data and the CRM analysis output. Many studies show that customers are frequently frustrated by a company's inability to meet their relationship expectations, and on the other side, companies do not always know how to translate the data they have gained from CRM software into a feasible action plan.<ref name="Avery-2014a"/> In 2003, a [[Gartner]] report estimated that more than $2 billion had been spent on software that was not being used. According to CSO Insights, less than 40 percent of 1,275 participating companies had end-user adoption rates above 90 percent.<ref>{{Cite web|title = Demystifying CRM Adoption Rates|url = http://www.destinationcrm.com/Articles/Columns-Departments/Reality-Check/Demystifying-CRM-Adoption-Rates-42496.aspx|website = CRM Magazine|date = 1 July 2006|access-date = 22 November 2015}}</ref> Many corporations only use CRM systems on a partial or fragmented basis.<ref>It's all about the Customer, Stupid – The Importance of Customer-Centric Partners.{{full citation needed|date=July 2024}}</ref> In a 2007 survey from the UK, four-fifths of senior executives reported that their biggest challenge is getting their staff to use the systems they had installed. Forty-three percent of respondents said they use less than half the functionality of their existing systems.<ref>{{Cite web |last=Dickie |first=Jim |date=2006-07-01 |title=Demystifying CRM Adoption Rates |url=https://www.destinationcrm.com/Articles/Columns-Departments/Reality-Check/Demystifying-CRM-Adoption-Rates-42496.aspx |access-date=2024-10-18 |website=Destination CRM}}</ref> However, market research regarding consumers' preferences may increase the adoption of CRM among developing countries' consumers.<ref>{{cite magazine |last=Joachim |first=David |title=CRM tools improve access, usability |magazine=B to B |volume=87 |issue=3 |date=11 March 2002}}</ref>
[[Data collection|Collection]] of customer data such as [[personally identifiable information]] must strictly obey [[customer privacy]] [[privacy law|laws]], which often requires extra expenditures on legal support.
Part of the paradox with CRM stems from the challenge of determining exactly what CRM is and what it can do for a company.<ref>{{cite journal|title=From customer relationship management to customer-managed relationship: unraveling the paradox with a co-creative perspective|year=2003|journal=Marketing Intelligence & Planning|volume=21|issue=1|pages=51–60|doi=10.1108/02634500310458153|first1=Monica|last1=Law|first2=Theresa|last2=Lau|first3=Y.H.|last3=Wong|hdl=10397/60525}}</ref> The CRM paradox, also referred to as the "dark side of CRM",<ref>{{Cite journal |doi = 10.1108/07363761311290812|title = The dark side of CRM: Advantaged and disadvantaged customers|journal = Journal of Consumer Marketing|volume = 30|pages = 17–30|year = 2013|last1 = Nguyen|first1 = Bang|last2 = Simkin|first2 = Lyndon|url = https://eprints.soas.ac.uk/21171/1/Chapter%209%20-%2010%20Dec%202014%20-%20ANA-ACT%5B1%5D.pdf}}</ref> may entail favoritism and differential treatment of some customers. This can happen because a business prioritizes customers who are more profitable, more relationship-orientated or tend to have increased loyalty to the company. Although focusing on such customers by itself isn't a bad thing, it can leave other customers feeling left out and alienated potentially decreasing profits because of it.<ref>{{cite journal |last1=Nguyen |first1=B. |last2=Lee-Wingate |first2=S. N. |last3=Simkin |first3=L. |year=2014 |title=The customer relationship management paradox: Five steps to create a fairer organisation |journal=Social Business |volume=4 |issue=3 |pages=207–230 |doi=10.1362/204440814X14103454934177|url=https://pure.coventry.ac.uk/ws/files/22425011/Binder1.pdf }}
</ref>
CRM technologies can easily become ineffective if there is no proper management, and they are not implemented correctly. The data sets must also be connected, distributed, and organized properly so that the users can access the information that they need quickly and easily. Research studies also show that customers are increasingly becoming dissatisfied with contact center experiences due to lags and wait times. They also request and demand multiple channels of communication with a company, and these channels must transfer information seamlessly. Therefore, it is increasingly important for companies to deliver a cross-channel customer experience that can be both consistent as well as reliable.<ref name="SearchCRM-2015"/>
==See also==
{{div col}}
* {{annotated link|Comparison of CRM systems}}
* {{annotated link|Corporate social responsibility}}
* {{annotated link|Customer value model}}
* {{annotated link|Farley file}}
* {{annotated link|History of marketing}}
* {{anl|Healthcare CRM}}
* {{annotated link|Intersubjectivity}}
* {{annotated link|Relationship marketing}}
* {{annotated link|Socially responsible marketing}}
* {{annotated link|Sustainable market orientation}}
* {{annotated link|Vendor relationship management}}
{{div col end}}
* <small>{{portal-inline|Business}}</small>
== References ==
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[[Category:Customer relationship management| ]]
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[[Category:Marketing techniques]]
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