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Why Customer Relationship Management (CRM) Is Still Relevant

November 19, 2019

Customer relationship management (CRM) software is not a new technology. It first made its debut in the mid-'80s before the term CRM was even coined. The combination of database marketing and contact management was handy in a world just realizing the utility of relatively small and inexpensive desktop computers; businesses haven’t looked back since.

At least, until fairly recently. By the mid-2000s, executives and sales managers were starting to see CRM as a disappointment, a magic bullet that missed. The failure rate for CRM implementation was first reported by Gartner Group in 2001 as 50%; sources differ on the specific figure but the rate is still high, ranging from 30% (Nucleus Research) to 70% (Butler Group) across various studies. The truth behind the numbers is users’ tendency to forget that any software application is only as good as the information you put into it. Unwilling to consider their own role in mediocre results, some businesses thought it was time to consider other options. Those other options were usually CRM with a new name or a different focus; some vendors refused to call their product CRM despite it having the functionality of CRM.

Read reviews on CRM Software, HERE →

It’s possible to have a conversation about business and business technology without mentioning CRM, and for many people (not me) those conversations are more interesting. It’s staggering, considering how much is being developed with business applications (e.g., artificial intelligence, augmented reality, virtual reality, and machine-to-machine interaction) that nobody has time to discuss the finer points of lead nurturing or multichannel contact centers.

The thing is, despite some grumbling from time to time, CRM is still with us and more relevant than ever. As my article about CRM and CRM databases highlights, CRM continues to power a legion of high-impact business applications and is still the preferred system used for customer-facing operations.

Hub and spokes, and so much more

CRM will be with us for a long, long time. Sure, this is partly a legacy issue—CRM was designed to be the core of business operations, and the reengineering required to build around something else entails hard work—but the fact remains that CRM is so gosh-darn useful. Go and have a look at any sales, marketing, digital advertising, or customer service product categories on G2. Their descriptions often explicitly point to their reliance on, or integrations with, CRM. The same is true for many categories in analytics, B2B marketplace platforms, commerce, ERP, and others as well. In short: Break the CRM system, and you break the business.

The hub and spoke model is popular when diagramming business systems. It’s apt, but it’s not quite enough. CRM is the axle of the wheels of business, enabling forward motion while bearing a load. The wheel is a curiosity; the wheel and axle is a machine. 

Commerce is both global and local. The internet and low-cost shipping mean you never know all your competitors for a given customer; there's only so much businesses can do to mitigate that. However, businesses can know who their past, current, and potential customers are. What's more, the speed of commerce and the availability of information means businesses must know who they are. What do customers want or need? Knowing that, what else do you have that might entice them? How do customers prefer to be engaged? How quickly can you meet their needs? It’s all there in CRM.

Omnichannel customer engagement tools are great, no doubt. Without CRM, they don’t know who the customers are and can’t connect the dots of all their points of contact. How do companies ship products when they don’t have the customer address, or any of the special instructions necessary to ensure delivery? Where does a business intelligence platform get its data? How do you successfully segment and market to your customers when you have no identifiable campaign results? If a field service truck rolls at the wrong time, or doesn’t have the necessary equipment to perform the service, does the customer make a sound? You bet they do, and you won’t like to hear it.

Photo showing woman at large desk with customers in the distance. Customer relationship management software isn't always exciting but it is necessary for many businesses.

Necessary, but not necessarily exciting

By now we’ve established that CRM is critically relevant to businesses. This doesn’t make it a hot topic, and I recognize this. Only certain kinds of people get worked up about CRM, at least in a good way—there are plenty of haters, but few fans. CRM software has a reputation for being tedious to work with, and therefore yields mixed results. If employees don’t put information into the CRM system, or don’t use the information that is there, it’s useless. That’s why so many methods trying to automate the whole thing have been tested.

Funnily enough, CRM grew out of sales force automation, and much of its value comes from its ability to push customer data around the company without manual input. So all the efforts I just mentioned in the last paragraph are an attempt to automate the automation. (Well, it’s funny to me anyway.)

RELATED: The Impact of Artificial Intelligence (AI) on Customer Experience (CX)

Comical or not, this iterative automation has mostly worked. Lead intelligence, marketing account intelligence, and sales intelligence are three closely related means of feeding CRM systems with minimal human effort. Most applications touched by CRM have two-way integration, so anything entered into those systems is added to CRM. CRM and its peripheral apps support one another in ways you only wish your friends and family did.

Business systems are self-feeding. With machine learning technology, they can be self-teaching as well. Despite that, it’s all still in our complete control. I don’t know about you, but that’s pretty exciting to me.

Read reviews on Machine Learning Software, HERE →

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