Why is a good CRM so vital to customer relationship management?

Written by Formus Pro – regular exhibitor at marketingSHOWCASE events

The modern customer, more than at any other time in the past, expects immediacy and personalisation from any and all organisations they deal with. And a modern, cutting-edge CRM serves as the linchpin to this new form of customer relationship management.

But you have to view it as more than just a software solution.

Instead, it should be seen as a strategic approach that will allow an organisation to build lasting and profitable relationships with their customers.

How does it do that?

  • Centralised Customer Data: In a world that’s awash with data, a good CRM should help you consolidate all your customer information into a single, easily accessible hub. This enables a 360-degree view of each customer to better facilitate personalised interactions and improved decision-making.
  • Improved Customer Engagement: The ability to engage with customers on an actual personal level (rather than just inserting their name at the start of a mass mail shot) has become the differentiating factor to successful modern organisations. CRM tools enable personalised communication, from (and here’s the important bit) targeted marketing campaigns tailor-made to hyper-specific segments of your database, creating deeper connections and driving higher brand loyalty.
  • Streamlining Sales And Marketing Processes: Sales and marketing teams are just more efficient and productive with a CRM that’s fit for purpose. Automation of tasks, lead management and the ability to track the entire customer journey simplify operations, which saves both time and resources.

Benefits Of An Effective CRM

So, assuming words like personalisation, immediacy, efficiency or a single source of truth aren’t just more buzzwords… what is it a good CRM can actually do for you that you can’t just accomplish with a big spreadsheet?

Good question and the answer is…  a lot!

Improved Customer Data Management

Managing customer data effectively is the cornerstone of building stronger and lasting customer relationships. A good CRM system will revolutionise this process in several ways, including:

  • Centralisation of Customer Data: A great CRM system should serve as a centralised single-source-of-truth for all customer-related information. This means that the data, whether it’s contact information, purchase history, communication logs (phone, email and social media being just three examples) or customer preferences, gets stored in one place. That level of centralisation then makes it a simple matter to access and update data, ensuring that all teams, from marketing to sales to customer support, are working with the most current and accurate information.
  • 360-Degree Customer View: Once all your customer data is in one place, you can begin to develop a comprehensive view of each individual customer. This holistic perspective will then enable your team(s) to understand customer behaviours, needs and preferences. As an example, you could see not only what they’ve purchased in the past but also when they last interacted with the company, what it was they enquired about and/or how they responded to a particular marketing campaign. The very best CRM’s will even let you know if a particular customer is talking about you on social media.
  • Personalised Interactions: Armed with this new 360-degree customer view, you can begin to offer highly personalised interactions. Whether it’s tailored marketing, customising product recommendations or addressing customer service inquiries, a modern CRM system should allow you to make every customer feel valued and understood. This personalisation leads to higher customer satisfaction and even greater brand loyalty.
  • Data Security And Compliance: A CRM system will typically include robust security measures to protect customer data. But in a world increasingly concerned with data privacy and regulatory compliance (such as GDPR or CCPA), having a secure CRM that goes above and beyond will help you adhere to those standards whilst avoiding costly legal and reputational damage.
  • Efficiency And Time Savings: Searching for customer information across different spreadsheets, email inboxes or paper records is not only incredibly annoying but can also be time-consuming and pretty error prone. With a CRM system, it’s easy to quickly find the data you need, saving valuable time that can be better spent on strategic activities.
  • Collaboration And Data Sharing: A good CRM system should also facilitate collaboration amongst your different teams. Sales, marketing and customer support can easily share relevant customer information, ensuring consistent and coherent communication across the entire customer journey.

Enhanced Customer Engagement

Moving on to customer engagement, the true benefit of a robust, modern CRM system, I’ll try to cover off all the tools that will significantly improve your communication and interactions with customers, making each engagement more impactful.

How CRM Tools Improve Communication And Interactions with Customers

  • Personalisation: A good CRM system has to maximise the amount of information you capture about your customers. From their preferences and purchase history to their communication history with your company, with it, you should be able to effortlessly tailor your interactions to their individual needs. For instance, sending personalised product recommendations or offering exclusive promotions based on their past behaviour can significantly enhance their experience (and your bottom line).
  • Multi-Channel Communication: CRMs should also let you seamlessly interact with customers across various channels such as email, social media, live chat and phone in a ‘joined-up’ fashion. This omnichannel approach ensures that customers can engage with your business on their preferred platforms, whilst you don’t miss important data, leading to more effective communication.
  • Timely And Relevant Communication: CRM systems often include automation features that allow you to send messages and notifications at the right time. For instance, sending a follow-up email after a purchase or a birthday greeting creates timely and relevant touchpoints that strengthen customer relationships.

How CRMs Streamline The Sales And Marketing Processes

The other main benefit to a new CRM system is in using it to streamline your sales and marketing processes.

One of the big ways it will do this is through improved lead management, automating lead capture for you and then nurturing them down a funnel. Leads can automatically be assigned to a member of your sales team, with the status of the lead tracked through the entirety of its life cycle, reducing the chances of ‘hot leads’ falling through a crack in the system.

Nurturing can also be automated with automatic email marketing; differing triggers sending different emails at various points in a lead’s sales cycle.

Perhaps even more useful is the forecasting that a modern CRM makes available, using current leads and historical data to provide accurate forecasts, allowing sales managers to set more realistic targets for the teams.

As I’ve mentioned before, by centralising everything, marketing and sales start to work a lot closer together, with both being able to see leads generated and opportunities closed. Sales get a much better picture of what’s coming in, whilst the marketing team can see what’s working, following the progress of the leads they’ve generated.

Data-Driven Decision Making

The next aspect of a new CRM that I’d like to take a deeper look at is its ability to provide valuable data insights and analytics which empower organisations to make well-informed decisions.

Customer Insights And Analytics

CRM systems will provide invaluable customer insights and analytics by:

  • Segmentation: With a single source of truth at your disposal, you can now easily segment your customer base. You can group customers by demographics, purchase history, engagement levels or by any other metric you might find useful. That level of segmentation then helps in tailoring marketing efforts and communication to specific customer groups or demographics.
  • Behaviour Analysis: CRM systems can also analyse customer behaviour patterns. For example, they can track the products or services that customers view but don’t purchase, when they buy them, what devices are used as well as a whole host of other metrics. This information can then be used to refine marketing and sales strategies.

Forecasting And Predictive Analytics

Modern CRM systems play a hugely pivotal role in predicting customer behaviour and potential future trends, obviously aiding in planning and resource allocation by:

  • Lead Scoring: A good CRM systems should include some form of lead scoring (and if it doesn’t, walk away and find another that does) that assigns a score to a lead based on customer behaviour and engagement, enabling the sales team(s) to prioritise leads that are most likely to convert, as well as offering valuable marketing intel on the kinds of leads to generate going forward.
  • Sales Pipeline Predictions: By analysing historical sales data and current leads, CRM systems can forecast future sales. This information can then help businesses prepare for fluctuations in demand and set realistic targets.
  • Customer Churn Prediction: Through advanced data analysis, CRM’s worthy of the name can identify and make you aware of signs that a customer is at risk of churning. Early detection obviously lets you take preventive measures to retain valuable customers.

Real-World Examples Of How That Might Help

The quickest and easiest example is probably inventory management. Forecasting, powered by the data in your CRM, can be an incredibly powerful tool in a c-suite’s arsenal, letting you anticipate product demand 12 months or more ahead.

That then helps with budget allocation, efficiency savings, storage costs and everything that goes along with that.

However, it can also help analyse where additional staffing and training is needed, feeding back to line managers and HR on customer service issues such as peaks in demand or knowledge gaps on common (or not so common) complaints.

All of which feeds right back into your customer retention strategies, predicting customer churn and, of course, reducing it with the proactive measure I’ve already discussed.

Scalability And Adaptability

One of the biggest points to consider when picking your new CRM will be how scalable and adaptable your new solution will be… is it going to meet your current needs, and perhaps even more importantly… will it be able to meet your future needs, so you don’t need another new CRM in two to five years’ time.

How to balance those two needs though, without paying for the CRM you might need in five years?

Meeting Current And Future Needs

A good CRM system has to have the capability to adapt to evolving business requirements in several, differing ways:

  • Customisation: A flexible CRM should allow businesses to customise fields, workflows and processes, meaning that as your business grows or changes, the CRM can be adjusted to accommodate new data and procedures. So, if your sales team adopts a new lead qualification process, your CRM should easily adapt to reflect those changes.
  • Modular Features: Many CRM systems offer a modular approach, allowing you to add or remove features as needed, which means you’re not paying for functionality you’re not using, and you can expand the system’s capabilities as your business grows.
  • Scalable Pricing: Much like modular features, scalable pricing plans are there to grow or contract with your business needs. This prevents you from over-investing in features or capacity that you don’t need immediately but ensures you have the room to grow when the time does come.
  • Mobile Access: With the increasing need for remote and mobile work, a good CRM should also provide mobile access, enabling your team to use the system from anywhere.

The Importance Of Scalability For Long-Term Success

Why is all the above so important? Why does the same CRM need to meet your needs both now and in five years?

Well, that’s because they can be expensive.

Sure, you can find a cheap one now but it’s not going to be fit for purpose in five years… meaning the money spent now is wasted. And by the same token, if you spend all the money now, it’s five years before it really comes into its own.

That’s why scalability is so important. You can spend what you need now, then up (or even decrease) your budget in relation to how your business is doing. That obviously has huge potential on your organisations bottom line, with better cash flow and cost efficiency when it’s needed most.

Integrating Into Existing Systems

If your CRM implementation is part of a wider digital transformation (or even if it isn’t), an often-overlooked aspect of it is integration with existing systems.

Unless you’re getting rid of everything from the ground up and replacing it with custom solutions, chances are a key requirement of your CRM will be the ability to talk to existing systems… If it can’t, you’re back to wasting a lot of money again.

Ask yourself… will your shiny, new CRM be able to handle:

  • Third-Party Integrations: Many CRM systems offer a wide array of third-party integrations, from email marketing platforms to accounting software… but many don’t, so be careful to check. These integrations are vital in allowing you to connect your CRM to the tools your team already uses, streamlining workflows.
  • API Access: Application Programming Interfaces (APIs) are there to enable custom integrations. Your CRM should offer robust API capabilities, allowing you to tailor connections with your existing systems, again… if your chosen solution doesn’t, consider walking away.
  • Data Import And Export: The efficient importing and exporting data will be vital for maintaining data consistency across your organisation. A good CRM system should support data exchange with your existing databases and software… and you know what to do if it doesn’t, right?

Why Seamless Integration Is So Important

  • Reduces Manual Data Entry: Manual data entry is time-consuming and error prone. Efficient integration automates data transfer, eliminates errors and frees up your team for more strategic tasks.
  • Centralises Data: By integrating your CRM with existing systems, you centralise data into a single source of truth, creating a holistic view of your customers and operations, which, as mentioned earlier,  is invaluable for several different operations.
  • Enhances Collaboration: When systems seamlessly integrate, teams can collaborate more effectively, as they’re working with the same up-to-date information.
  • Future-Proofing: As your business grows and adopts new tools, seamless integration ensures that your CRM system can adapt to these changes without disruption.

How To Choose A CRM

As should be clear by know… if you have any hope of managing engagement with your customers to drive growth, you’ll need a CRM system that’s up to the task.

How do you pick the right one though?

Well as I work for FormusPro, a Microsoft Partner, I have to say that Microsoft’s Customer Engagement is what you need… but that’s also what I’d say even if I didn’t work here as it’s pretty awesome and integrates with the entire Microsoft Stack seamlessly.

Assuming you won’t just take my word for it though, what do you need to take into account?

Factors To Consider When Choosing A CRM

  • Industry-Specific Features: Different sectors will have unique requirements so try to consider a CRM system that can be tailored to meet your specific needs, such as healthcare compliance in the healthcare industry or regulatory reporting in the finance sector.
  • Compliance and Security: Make sure that the CRM system you choose aligns with industry-specific regulations and offers robust security measures. As you’d guess, Microsoft Dynamics 365, including Customer Engagement, provides incredibly robust security and compliance features.
  • Adaptability: Always look for a CRM system that’s highly adaptable. Customisation options allow you to tailor the system to your organisation’s unique processes and workflows. Again… Microsoft Customer Engagement offers extensive customisation capabilities, allowing you to create workflows, fields and entities that align with your unique business requirements.
  • Scalability: As your business grows, your CRM will need to grow with it. A scalable CRM like Microsoft Customer Engagement ensures you can adapt to changing demands without requiring a complete system overhaul.
  • Vendor Support: Evaluate the level of support and training offered by the CRM vendor. One of the reasons I’m such a Microsoft fan is that they provide strong support options for its products, ensuring you’ve access to assistance when needed.
  • Community User Groups: Maybe consider the presence of a user community and support forums when picking a CRM? Microsoft Dynamics 365 has a large and active user community, providing valuable resources and insights for users… including many Microsoft partners like ourselves to help if you need it.
  • Total Cost of Ownership (TCO): Analyse the total cost of ownership over time, including licensing, implementation, and ongoing maintenance costs. Microsoft Dynamics 365 offers flexible pricing and licensing options, allowing you to choose a plan that aligns with your budget.
  • Scalability for ROI: Consider how the CRM system’s scalability and adaptability can impact your return on investment. Microsoft Customer Engagement’s scalability ensures you can make the most of your investment as your business expands.
  • User-Friendly Interface: Evaluate the ease of use of the CRM system. A user-friendly interface is vital for high user adoption and CE, being a Microsoft product, will most likely be familiar to your staff already using MS Office.
  • Remote Work Capabilities: In today’s business landscape, mobile access is essential. Microsoft Customer Engagement offers mobile apps that enable your team to work from anywhere, increasing productivity and accessibility.

ROI Analysis

Calculating the return on investment (ROI) of a CRM system is the last, critical step for decision makers. It allows you to assess the financial impact and effectiveness of your CRM investment.

Here’s how you can calculate CRM ROI, including a formula and examples to help you make an informed decision.

How to Calculate CRM ROI

Calculate the Net Gain: Start by determining the net gain from your CRM system.

To do this, subtract the total costs of implementing and maintaining the CRM from the total benefits it generates. This includes increased revenue, cost savings, and any other financial benefits directly linked to the CRM.

Net Gain = Total Benefits – Total Costs

Determine the ROI Percentage: To express ROI as a percentage, divide the net gain by the total costs and multiply by 100.

ROI (%) = (Net Gain / Total Costs) * 100

Example: Increased Revenue:

Suppose you invest £50,000 in implementing a CRM system.

Over the next year, it helps you generate £100,000 in additional revenue through improved customer engagement, marketing automation, and sales efficiency.

Net Gain = £100,000 – £50,000 = £50,000

ROI (%) = (£50,000 / £50,000) * 100 = 100%

In this example, the CRM system delivers an ROI of 100%, meaning that for every pound invested, you gained an additional one in return.

Final Thoughts

In conclusion, selecting the right CRM is a decision that can significantly impact an organisation’s success.

Written by Formus Pro – regular exhibitor at marketingSHOWCASE events

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