HomeBlogBusinessReal-World Benefits of Customer Relationship Management

Real-World Benefits of Customer Relationship Management

Rory Sutherland

“More data leads to better decisions. Except when it doesn’t.” – Rory Sutherland

We are constantly told that digital tools will revolutionize the way we work. Often, we hear about how AI is taking over, rendering thousands of sales jobs obsolete and leaving humans in the dust.

Similarly, it’s said that the CRM systems and solutions have become so advanced that sales representatives are nearly unnecessary. Claims are made that sales could skyrocket by thousands of percent, customer service could become top-notch overnight, and businesses could achieve unprecedented profitability.

However, after reviewing nearly fifty articles on this subject, I couldn’t find a single one that discussed the actual benefits of improved customer service and relationship management.

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    What are the benefits of CRM and what does a CRM tool actually do for your business? What can you realistically expect from implementing a CRM system? And most importantly, which of these promises will remain just that—promises?

    This article is my attempt to explain how a CRM system can truly benefit your business, from one businessman to another. So, make yourself comfortable, and let’s get started.

    Oh, by the way – if you read till the end, a bonus infographic is waiting for you.

    What Is Customer Relationship Management (CRM)

    At this point, you might be thinking, “Well, I clearly know what a CRM system is, right?” It seems to be a piece of software designed to remember all your customers, organize customer data, produce reports, automate your tasks, make your employees happier, life easier, and business owners richer, right?

    Well, no, it’s not. Not on its own.

    Ask yourself, will a great set of cutlery improve your cooking? No, it won’t. It might make bad food easier to consume, maybe a bit fancier, but it will still leave subpar food just as unappetizing.

    Customer Relationship Management is simply a modern term for a concept as old as time.

    Thousands of years ago in Rome, a blacksmith who produced swords for the king was already using his customer relations, though unknowingly, to earn an extra penny for his swords through reputation, a guarantee of quality, and respectful behavior.

    If you have existing customers, and you’re conducting business, you already have Customer Relationship Management in place.

    Perhaps you didn’t realize that you are as sophisticated as any tech startup on the market. Maybe even more so; you just don’t have the sleek, expensive software to flaunt in front of overexcited investors during your next pitch for a billion-dollar investment.

    CRM Software vs CRM Strategy

    In my career as a consultant, I’ve realized that it is profoundly difficult—nearly impossible—to explain to inexperienced software buyers that a CRM system will not solve any issues on its own.

    CRM Software vs CRM Strategy

    I’ve noticed that CRM vendors do an astonishing job of brainwashing their prospective customers describing CRM benefits and elevating their expectations to the moon, often resulting in very disappointing experiences. It is fundamental to understand the difference between CRM software and CRM strategy.

    CRM strategies can be divided into various categories, but for the sake of simplicity, let’s assume there are only two main strategies: Customer Acquisition and Customer Retention.

    Customer Acquisition

    Now, ask yourself: What is your CRM strategy for customer acquisition?

    • Do you engage in cold calling? If so, your strategy involves generating more leads by calling random (or known) numbers, processing them through a script, and attempting to “warm” them up to convert them into prospects.
    • Or do you rely on advertising? Then your CRM strategy for customer acquisition should ensure you call back your leads as soon as they leave their contact information. It’s crucial that you don’t miss any opportunities.
    • Or perhaps you depend on word of mouth? Then it would be beneficial if, every time you complete a job, your customer would recommend a friend.

    These are just three of an almost infinite number of customer acquisition strategies. And none of them inherently involve CRM software.

    Software could support these strategies, or it could introduce more obstacles if you don’t know how to use it properly. But it’s not a strategy on its own.

    Customer Retention

    Now, let’s examine a few examples of Customer Retention CRM strategies. How do you improve customer service and manage customer relationships to ensure your customers stay with you?

    • Perhaps you provide exceptional customer support. Then your strategy is to resolve any issues as quickly as possible and in a manner that leaves the customer happy and willing to return.
    • Or maybe you rely on a loyalty program? Consider this one: “Buy 9 coffees, and the 10th is on us.” This is a pricing strategy, effectively offering a 10% discount to encourage customer loyalty. You might track the number of coffees purchased with a stamp card or a digital solution.
    • Or do you offer a personalized experience? Think of boutique stores with relaxing scents, great lighting, pleasing music, and warmly welcoming staff. Here, you’re relying on creating an experience as a strategy to retain customers.

    The Role of Software

    Now, will software help you in these strategies? Let me simplify it for you: no, it will not. Not on its own.

    Software might become an integral part of your operation, like purchasing a parking ticket via a phone app instead of a traditional ticket machine that only accepts coins, which you never seem to have when needed.

    Software can enhance convenience but cannot fundamentally change your business model. Or can it?

    CRM Strategies That Heavily Rely on Software

    Some CRM strategies are inherently tied to software. In fact, they are direct results of technological advancements and seamlessly integrate into the physical world. Here are a few examples:

    Platforms

    As noted by Alex Mozaed and Nicholas Johnson in their book Modern Monopolies: What It Takes to Dominate the 21st Century Economy, platforms like Amazon, Tinder, and Google bring potential customers and suppliers together in one place thanks to technology. This integration could not be achieved without software.

    Platforms

    Historically, a privately owned market was a good example of an offline platform, where one owner gathered buyers and sellers under one roof. However, this model was not feasible for all businesses and industries. In the modern era, software has expanded this concept to include more industries and businesses.

    E-commerce

    E-commerce

    Fashion companies provide another excellent example. Today, thousands of smaller brands from around the world compete with large labels, something made possible by e-commerce. These brands can place their products in the same space as larger players.

    This level of accessibility was not feasible in the past due to high entry costs. Now, any relatively knowledgeable business owner can start their own Shopify store and begin selling. While this still requires a significant effort, it is not comparable to the prohibitive investments needed to secure shelf space in large retail chains.

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      Self-Service Portals

      Many businesses have developed self-service portals for their B2B customers to enhance the shopping experience, making it similar to B2C transactions. This approach is part of a customer retention strategy and focuses on experience building. These portals allow customers to manage their customer interactions with the company more independently and efficiently, which strengthens customer relationships and loyalty.

      Digitizing Rare Knowledge

      Another compelling example of CRM through technology involves our client, Mida, a company in the complex roofing industry.

      Digitizing Rare Knowledge

      Traditionally, each project required manual calculations by an expert engineer—a process that was not only extremely inefficient but also costly.

      Recognizing the inefficiencies, Mida realized that achieving a pricing accuracy within 15% was sufficient for winning most medium-sized building projects.

      This preliminary estimate would allow them to secure projects, after which they could provide a more precise quote.

      To streamline their process, Mida digitized and standardized the expertise of their most experienced engineers. This allowed average employees—let’s call them the metaphorical John Does, no offense intended—to input available project data and instantly generate a quote.

      This integration of technology significantly reduced the dependency on specialized knowledge for initial assessments, speeding up the quotation process and reducing costs.

      Real Benefits of Implementing a CRM Systems

      Now, we’re getting to the core issue. As I’ve highlighted before, CRM software on its own doesn’t offer any real benefits. However, it can catalyze profound changes within a company.

      It’s a mantra worth repeating: CRM software only supports your CRM strategy. Once you begin implementing CRM software, you’ll be compelled to rethink your other business processes and re-evaluate how you interact with customers. Here’s how you might benefit from CRM software implementation:

      Develop a CRM Strategy

      Inevitably, you’ll develop your CRM strategy, focusing on how you acquire customers, retain them, and most importantly, your sales data and how you profit from them.

      This process will benefit you by making operations more scalable or more efficient.

      “Efficient” here means less costly, while “scalable” implies making your operations more accessible to your staff, reducing the skill level required of your employees.

      Rethink How You Sell Your Product

      Often, companies are pushed into adopting digital tools by competition. Perhaps your competitors already have a popular self-service portal that customers love.

      Rethink How You Sell Your Product

      But before you rush to a company that builds such a platform, you’ll need to digitize your product catalog, possibly streamline it by removing some items or restricting variability.

      You’ll need to centralize your customer data, ensuring that your team keeps track of changes and updates the system accordingly.

      This shift will require a change in mindset. Remember, it’s not the software alone that brings this benefit.

      Change Your Business Model

      Sometimes, businesses are forced to overhaul their business models. A notable example is how some coffee companies have transitioned from selling coffee to offering subscriptions.

      This shift is facilitated by digital tools but requires a complete transformation of the business model, beyond just implementing the necessary software to enable subscriptions.

      Perhaps it’s time for you to reconsider your business model?

      Change in Working Culture

      Another significant transformation that occurs when you successfully embrace digital is a shift in your company culture.

      Digital operations differ vastly from other business aspects. They require a clear-headed approach, a culture of trial and error, and a readiness for constant changes.

      Companies that adopt this digital-first mindset often find it beneficial to apply what they’ve learned from digital adaptations to other aspects of their business.

      This cultural shift can lead to greater agility and innovation across the board.

      Examples of How Companies Benefit from Customer Relationship Management

      Skyrocketing Driving School Sales

      This example from my consulting career is one of my favorites, and I consider it the most successful case where we achieved a 254% increase in sales within just one week of the so-called go-live (the launch of the CRM system).

      Credo Autoprieks, a leading driving school in Northern Europe, approached us with a challenge in tracking their leads.

      They had been launching marketing campaigns but couldn’t pinpoint why increasing the budget did not correlate with an increase in sales.

      We implemented a very simple lead-tracking platform based on Salesforce. Astonishingly, just a week after launch, we saw remarkable results.

      However, the success wasn’t due to the implementation of the software alone; the real game changer was transparency. The sales team and manager could now see every lead that a sales representative had neglected.

      Promptly, within just three business days, they implemented a motivational system. They introduced a bonus paid out at the end of each day to the best-performing sales rep, which improved the sales process and resulted in outstanding growth in the sales pipeline.

      This case highlights how CRM, when paired with strategic management changes, can drastically boost customer satisfaction and enhance business outcomes. I wish we had more such cases!

      Enabling a Family-Owned Business to Sell Worldwide

      One of my friends’ parents runs a small fashion brand. Their longstanding issue was the inability to sell worldwide.

      Running a web store is one thing, but ensuring that only verified people could view the collection, place orders, and ensuring that orders did not exceed manufacturing capabilities was a challenge.

      It took two years from the beginning of the process until the launch of their B2B Commerce store.

      They had to rethink their product catalog, the number of options available, the terms on which they accepted bulk orders, and hire and train people with skills previously unnecessary in a fashion company.

      As the company manager admitted, it wasn’t just the store they launched—it was their entire way of working and customer satisfaction that had changed.

      Choosing the Right CRM Solution

      Now we come to the ‘HOW’ part of this post. Instead of telling you what to do, I’ll offer some food for thought on what NOT to do.

      There is one crucial point on this list.

      DO NOT start looking for CRM solutions before you clearly define your CRM strategy.

      I’ve touched on this earlier in the article, but it bears repeating.

      Ask yourself: What are you trying to achieve with this CRM tool that is not available to you now? Don’t rush into browsing the web and discovering capabilities and benefits of CRM.

      Are you trying to make quotes faster? Or perhaps you want to ensure all your customers are remembered with regular follow-ups? What is the benefit for the business? Have you tried to achieve these goals without a digital system?

      Avoid searching for best practices right away. You might end up being sold on the idea of the software, and start desperately wanting it.

      Alternatively, consider talking to me or one of my colleagues. We have years of experience and often help our clients save years of wasted time by guiding them in the right direction. Just let us ask you these questions.

      Our first consultation is always free.

      Final Word

      If there would be only one key takeaway from this article, what would it be for you?

      If you ask me, I’d say: Remember, “CRM software is only a support to your CRM strategy.

      On this note, I’d like to extend an invitation to join my CRM Crafter mailing list, where I share a small piece of food for thought every Tuesday.

      Looking forward to hearing from you.

      Cheers,
      J.

      BONUS – CRM Statistics Infographics

      BONUS - CRM Statistics Infographics

      If found this great recourse for quote some entertaining numbers. Just be sure to fact check, I found that some figures don’t match (like CRM market size valuation).

      Join Our Exclusive Weekly Digest for Bold, Unfiltered Takes on CRM and Beyond. No Fluff, Just Real Talk. Subscribe Now & Elevate Your Knowledge Game!

        By submitting this form, you are consenting to receive marketing emails from: Muncly. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe link, found at the bottom of every email. Emails are serviced by Constant Contact.

        System Thinker, Technology Evangelist, and Humanist, Jeff, brings a unique blend of experience, insight, and humanity to every piece. With eight years in the trenches as a sales representative and later transitioning into a consultant role, Jeff has mastered the art of distilling complex concepts into digestible, compelling narratives. Journeying across the globe, he continues to curate an eclectic tapestry of knowledge, piecing together insights from diverse cultures, industries, and fields. His writings are a testament to his continuous pursuit of learning and understanding—bridging the gap between technology, systems thinking, and our shared human experience.

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