New business buzz words and acronyms are invented all the time, but in the 1990s few were talked about in marketing circles as excitedly as CRM (customer relationship management). The hype surrounding this then-new technology, an evolution of the enterprise databases of the 1980s, was considerable. As far as marketers at the time were concerned, CRM would be the panacea to enable more effective communication with customers.
Sadly, the three little letters failed at the time to live up to the enormous expectations put upon them. Early CRM systems were cumbersome and expensive, making them mostly accessible only to large organisations. Despite an early explosion in their use, by the start of the noughties there had come a drastic reduction in CRM technology expenditure, causing the death of many of its first generation providers.
Whether the technology can claw its way back onto the mainstream marketing agenda has been a source of on-off debate ever since. But recent evidence would suggest that the answer to this question is heading for a resounding ‘yes’. “CRM use has taken off again within the past two years and is being viewed more and more as an essential for most modern businesses,” says Peter Elgar, head of marketing at Concentrix. “In the 90s there were some real horror stories but the technology and culture around CRM has, and is, continuing to change significantly.”
David Beard, pre-sales manager for Sage’s Enterprise division agrees – pointing out that it’s not just technological advances that have breathed new life into CRM, but the very nature of how businesses perceive the concept. “In the early days a lot of people weren’t really sure about what they wanted CRM systems to do, and on top of that a lot of sales staff were probably wary that it was a tool used by bosses for tracking them, and so were resistant to it,” he explains. “But now, CRM is perceived as being much less about sales force management and much more about what the ‘C’ stands for – the customer.”
CRM is cast a safety net
In the main, CRM has the Internet to thank for its re-emergence as a must have marketing application. Pre-Internet, systems had to be installed physically, ‘on-premise’, onto every PC in an organisation in order to work. “(Early) systems were seen as a slight extension to an everyday address book and mainly helped with tracking contact details and the occasional note,” says Hayley Bass, marketing manager at Microsoft UK. “Today, CRM systems are available via the web so the user has instant access to information without the heavy installation of software. They blend with everyday applications, such as Outlook, and are typically used across many departments from sales, marketing, service and beyond to give a single central view of the customer.”
These web-based solutions, frequently referred to as either ‘on-demand’ or ‘Software as a Service’ (SaaS) applications, are not only making CRM more attractive again, they’re making it more affordable too – meaning smaller and mid-sized businesses – who would previously have struggled with the up-front costs associated with installing an on-premise solution – can now adopt the strategy. “A web based CRM system takes days rather than weeks to implement, and you tend to pay for it monthly – there’s none of the big up-front costs associated with more traditional systems – giving many smaller businesses the opportunity to try it out,” says Stuart Wheldon, director of client services EMEA & Asia-Pacific at Eloqua.
However the jury is still out on whether these on-demand systems will completely replace more traditional forms of CRM – and not just because of the differing costs. Woodson Martin is vice president of EMEA marketing at Salesforce.com, one of the top CRM vendors, and at the forefront of pushing web-based or ‘cloud’ solutions. Understandably, Martin is an advocate of web-hosting when it comes to CRM. “My view is that anyone still investing in on-premise systems is wasting their money and their time,” he argues. “The amount of value you can get from applications online are many times greater – and evolving rapidly.” Citing an example of the benefits of web-hosted CRM, he explains that Salesforce.com customers are fed, via the web, a service upgrade three times a year. “With three releases a year, we’re on around the 28th generation of a given CRM application. In the last 10 years, someone using a more traditional system might be on their second or third upgrade by now. So the agility of your CRM system is so much greater using this cloud computing model,” he says.
Renting versus buying
Not all vendors share this view. Many clients at Concentrix – another CRM specialist which offers both web-hosted and on-premise solutions – are testing the water with hosted solutions now that they are readily available, and within three to five years are switching their CRM systems to an on-premise model – suggesting that this more traditional form of CRM is far from dead. “We tend to find that our customers still prefer the on-premise systems in the longer term,” says Elgar. “Hosted solutions can work out very expensive in the long term. It depends on your overall company strategy, but it’s like renting versus buying a house. For many companies, hosting is a good way of trying it out before committing.”
Leaps and bounds in technology aside, there are still some stigmas attached to CRM. It is often branded as a sales tool and not of use to marketers. This, argues John Harris, product manager at Hubbard One, is a dangerous misconception to make – it shouldn’t be seen as ‘just’ a sales tool or even ‘just’ a marketing tool – but as both.
“When firms set out to buy CRM systems, they are typically looking for two things. First, they need relationship intelligence tools that empower their business development professionals to grow client relationships, identify and manage prospects and promote cross-selling of services. Second, they need marketing automation tools that help improve the efficiency and effectiveness of how they communicate with these same clients and prospects,” he explains.
“If marketing and sales each have their own silo-ed systems, there is bound to be an overlap causing inaccurate data, which in turn will reduce effectiveness of the firm’s marketing and sales efforts and lead to a diminished client experience.”
It is the rise in the number of marketing automation platforms in recent years that seems to be further helping to repair and make shine the reputation of CRM. Platforms such as Eloqua and Silverpop Engage are designed to give marketers ownership of data, taking the leg work out of knowing when to contact prospects.
“Companies like Eloqua compliment CRM companies, as the marketing automation platforms analyse the data produced from CRM systems and identify key trends to target certain contacts for future campaigns,” says Bass. “These contacts are identified by the platform’s advanced search systems using keywords, for example, to filter through the data, producing the final target list. The platform will then use an html tool to create an email that can be sent to your targets, and once this is sent out the platform can analyse how many clicks the email has had and from where – providing a multi-channel report that can then be fed back into CRM.”
Maria Pergolino, senior manager of inbound marketing at Marketo, agrees that CRM and marketing automation go hand in hand. “Marketing automation was created to fill the marketing gaps in CRM systems, but these systems now go beyond emailing, lead scoring and lead nurturing. They provide insight into which leads are best for sales and share insight into the behaviours of prospects,” she says.
The future of CRM?
Much is currently being made of the role social media can play. In September, Salesforce.com announced that it was adding new Twitter and crowdsourced technical support options as a free add-on to the businesses it supplies CRM solutions to. The integration automates the process of finding tweets related to customer-service issues and tracks conversations.
According to Martin, the buzz around the potential that Twitter has to offer CRM users has really only surfaced in the past two months. “I was at the recent Call Centre Expo in Birmingham promoting our cloud technology services and we had so many people approaching us about how they can take advantage of opportunities in social media and in Twitter. People in B2B environments are really starting to think about this a lot,” he says.
Web technology and the opportunities it offers now play such a pivotal role in CRM that many are beginning to refer to eCRM, in recognition of the fact that the majority of customer relationship management is now conducted in an online environment (see box out). Beyond this, says Harris, the fact that the technology behind CRM continues to offer new possibilities is testament to the fact it’s now a key marketing tool. “One area we are excited about is tools that can analyse relationship data to predict outcomes or identify areas of opportunity or risk. CRM systems can analyse the trends in a firm’s communications to identify relationships that may be deteriorating, and suggest preventative measures. Similarly, CRM software might gauge the likelihood of winning a new account,” he says.
CRM, not so long ago considered a dated concept and inaccessible to many, now appears to have a much brighter future. “Essentially, it’s the web that has changed the face of CRM,” says Wheldon.
