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What is CRM? Everything you need to know about Customer Relationship Management
What is CRM?
CRM stands for customer relationship management
CRM stands for customer relationship management – which does a lot to explain what CRM is. Distilled, CRM is simply a tool that helps you manage your relationships with your individual customers and prospects.
An example of CRM software in action
Here’s a nice example: let’s say you run a publishing business. Even with just one product – say, a magazine which you sell to subscribers directly – you have customer relationships to manage. You need to make sure your subscribers get their magazines on time every month. And you need to do so even though people’s addresses change constantly, as do their bank details, as do their subscription plans and multiple other variables.
CRM makes managing customer relationships easy – in fact, it makes a huge chunk of costly business admin (such as updating customer details) entirely automatic. That’s handy when you consider most companies have dozens of products and revenue streams, and therefore several categories of ‘customer’ to manage. Our publishing outlet, for example, might sell not just to subscribers directly but to newsagents in bulk. It’s probable the company sells media space to advertisers. And to advertising agencies, too. Plus, these days, publishers frequently host events as yet another income stream.
CRM makes managing so many different customer relationships simple (and increasingly profitable – more on that shortly).
CRM and prospecting
Of course, it’s not just customer relationships CRM software allows you to manage.
CRM also allows businesses to manage relationships with prospects – which is where things get really interesting. With CRM software keeping a note of leads and prospecting conversations, it becomes relatively simple to convert prospects to customers. Again, when paired with marketing automation, CRM software can even convert prospects to customers while you sit back with your feet up.
When was CRM introduced?
The introduction of digital CRM software
It’s a good question – and most answers revolve around the introduction of the contact management software ACT in 1986. There’s truth in the story… but it’s arguably misleading. CRM, after all, is simply a vehicle for managing customer relationships. To that extent, consider the early market traders who knew their customers by name – and what each regular customer was most likely in need of.
Were the traders employing a rudimentary form of CRM?
Clearly, when most people today question when CRM was introduced, what they really want to know is when digital CRM software was introduced. And the short answer is indeed in 1986, with the introduction of ACT.
However, the story is layered.
Direct marketing and Lester Wunderman
Almost twenty years earlier, on a winter’s day in 1967, a relatively unknown advertising man named Lester Wunderman took to a Boston stage to begin the talk Direct Marketing – The New Revolution in Selling.
In the talk, Wunderman pointed out that technologies such as the telephone and, surely, the computer, were about to change the way things were bought and sold. Wunderman explained an upcoming era in which people would demand individual goods and services.
“A computer can know and remember as much marketing detail about 200,000 consumers as did the owner of a crossroads general store about his handful of customers,” Wunderman explained. He predicted a revolution in marketing and sales was about to take place, and he went on to help companies satisfy consumer demands on an individual basis.
To that extent, Wunderman’s role in ushering in CRM software was more significant than many know of. Indeed, in 1984, two years before ACT’s digital rolodex, Wunderman’s agency were selling Gevalia coffee to consumers on a subscription basis, accounting for individual pace of consumption, caffeination, roasting and grinding preferences.
Salesforce and Software-as-a-Service CRM
While ACT might have been the first in a new wave of CRM software, the technology was soon usurped. Relatively advanced CRM systems like Siebel Sales Handheld soon emerged before, in the late 90’s, Salesforce introduced the first Software-as-a-Service CRM (sometimes known as ‘CRM without software’) and became the leading market player. (Happily, G2 recently found Workbooks to outperform Salesforce in 21 of 37 categories, including order management, email marketing, customer support and overall customer satisfaction.)
How CRM improves business performance
As CRM helps businesses manage customer and prospect relationships, the business benefits of CRM seep into pretty much every division – but let’s start with the sales team.
The sales benefits of CRM
CRM increases the number and percentage of prospects that become customers.
On a rudimentary level, CRM gives salespeople visibility of what customers and prospects have been up to recently, helping sales teams focus their efforts.
When salespeople know things like the value of potential contracts, how far along people are in the buying process and the stakeholders involved in a buying decision, they can plan accordingly – thus maximising the revenue they secure as business.
The strategy benefits of CRM
Really, that’s just the beginning. Over time, aggregated customer insights reveal strategic business opportunities. How, for example, are consumer demands changing? How could the customer experience be improved? CRM helps analysts tease out market patterns. It’s not going too far to say CRM software can shape the future of an organisation.
The customer service benefits of CRM
And when you improve your products and/or service? All else being equal, customers stay with you longer. This is perhaps easiest to see in customer service (or customer experience, or customer success) departments, where managers keep a watchful eye on customer churn.
Individual CRM records show individual levels of customer satisfaction and dissatisfaction – and allow customer service staff to respond accordingly.
The marketing benefits of CRM
CRM records also reveal how both prospects and customers react to marketing materials, allowing marketing teams to enhance marketing ROI.
By shifting marketing investment towards activities that offer greater returns, for example, it becomes cheaper to acquire and retain customers. As discussed above, CRM with marketing automation can even make marketing automatic.
The administrative benefits of CRM
On the admin side of the equation, CRM can reduce operation costs. As already mentioned, CRM can reduce or eliminate lengthy manual processes. Customers can update their own records, for example. Marketing communications can be triggered automatically. Salespeople can generate quotes or order forms in seconds, freeing them up to spend more time with customers.
Why CRM is needed today
The rise of the internet and CRM
In any business, there are two routes to increasing profitability: increasing revenues or decreasing costs. As an aid to both, CRM has long been seen as a valuable business asset by organisations large and small. However, employing CRM is probably more essential today than it’s ever been – following the arrival of digital communication.
That’s because today, prospects armed with an internet connection have on-demand access to more information on their potential purchases than they ever hadve before. And we’re happy to call on the information: according to Forbes, even prospects seeking out complex B2B solutions can be as much as 60% of the way through sales cycles before they engage with sales people.
With no CRM in place, as much as 60% of a buying journey takes place in the dark (in B2C markets, the share frequently reaches 100%). Advanced CRM software can be something of a spotlight: CRM records reveals what prospects are up to online before they contact a company, presenting endless opportunities for both increasing revenues and reducing costs.
Say, for example, CRM software shows a particular piece of marketing communication as especially successful in generating leads. Such a seemingly simple insight might increase an organisation’s marketing ROI several times over. And when insights help shape a product, service or offering, businesses can evolve to overtake competitors.
Maybe not. Although CRM software for freelancers now exists, it seems entirely conceivable that smaller businesses or solopreneurs could get by without CRM software. CRM arguably becomes essential, however, when business pursuing growth wish to achieve and better the efficiency levels of their competitors. And here at Workbooks, we would know: we designed our CRM software as a solution for growing, mid-market businesses who need it all – CRM with email marketing, CRM with invoicing, CRM with marketing automation, CRM with project management; the list goes on. So far, research suggests we’ve achieved our aim. According to G2’s Summer 2019 Grid® Report:
A greater percentage of people would recommend Workbooks than any other CRM software
Workbooks outranks all CRM solutions for ease of setup, ease of admin, ease of doing business, ease of use and quality of support
Workbooks’s Net Promoter Score is greater than all others