CRM applications track customer behavior, integrate transaction data, and provide insights for businesses to improve customer service and retain customers. They range from small to large business suites, with security concerns and limitations. However, they cannot replace human interaction or develop a competitive strategy, and some consumers have privacy concerns.
A customer relationship management (CRM) application is a software program that a business can use to track customer behavior. It helps the company’s sales, marketing, customer service, and management better understand customers’ needs, preferences, and buying habits. Businesses can also use it to improve customer service and retain existing customers.
Typically, a CRM application integrates information about the company’s transactions with each customer. The company collects and inputs data during the exploration, acquisition, development and retention phases of its interactions with a customer. Analyzing this data reveals the factors that contributed to success or failure at every interaction and stage of the relationship.
The software allows the company to build queries that show important historical correlations and trends. CRM application software also provides businesses with a way to communicate useful information to their customers in a timely manner. In general, CRM information and marketing products go beyond the traditional greeting card or annual calendar. Using a CRM application allows a business to anticipate customer needs, respond to customer inquiries, and capitalize on sales opportunities.
Data collected from customers can point a business towards opportunities to grow its revenue from an existing customer. Customer data analysis provides insight into upselling potential. It can reveal opportunities for a company to provide solutions that drive customer demand for additional product lines.
CRM applications range from products aimed at small and medium-sized businesses to complete business suites. Larger companies may be able to justify the expense of purchasing and maintaining custom CRM applications designed for specific industries. Smaller companies traditionally use web-hosted applications and services that have lower cost of entry. Some also have limited functionality and fewer customization options.
The security of sensitive customer data is always a concern for companies whether the company’s CRM application is on the Internet or hosted on company servers. Both types of software use some level of encryption to protect customer data from hackers and competitors. Few applications have safeguards that can protect a customer’s data from a disgruntled employee who decides to swap or destroy data files.
A flaw of CRM applications is that they cannot help a company develop a competitive strategy for its customers. Technology can’t even replace human interaction. Some consumers who have privacy concerns are critical of CRM applications. Consumers object to the amount of personal data that companies collect and store about their customers.
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