The Differences between CRM and Traditional Systems

Worldwide, the market of Customer Relationship Management (CRM) systems is increasing as more companies acknowledge its importance. It is expected to reach $36.5B by 2017 from $31.7B in 2016 (Columbus, 2013). Despite the growing number of the market, there are many businesses prefer to use traditional systems. This blog post discusses CRM and its differences to traditional systems. This blog post also overviews requirements toward successful CRM.  

 

CRM versus Traditional Systems

 

CRM is “a set of software programs that support management activities performed to obtain, enhance relationships with, and retain customers” (Pearlson and Saunders, 2013, p.153). It allows the business to have a more comprehensive understanding of customers’ profiles which are pulled from all electronic touch points such as website/the internet, e-mail, call centre, KIOSKS, in real-time (Chen and Popovich, 2003). Based on the profiles (i.e. demography, geography, and consumer behaviour, etc.), the business then develops marketing strategies (Scullin, Fjermestad and Romano Jr, 2004). CRM, through e-contact centres also provides customers with services that can be reached anytime, anywhere, and require no physical contact and queue (Scullin, Fjermestad and Romano Jr, 2004). These result in customers retentions which in turn increase sales growth  (Yim, Anderson and Swaminathan, 2014).

 

Moreover, CRM can be integrated with Enterprises Resource Planning (ERP) systems to have a wider relationship with other divisions within the business. SAP software for CRM, for example, can be integrated with SAP for ERP. The integration enables the business to have a more effective and efficient operation as it gives 360° views of the business activities (Klie, 2015). Picture 1 below shows the display of order in SAP.

 

 

Meanwhile, the staff of the business using traditional systems communicate with customers and other staff by telephone, mail service, email, and face to face. They also employ spreadsheet or database software that has not integrated each other. These take a transaction longer to proceed than it is in CRM. The systems usually are inflexible for sales and service staff to get even basic information of customers i.e. order history and credit status (Ledingham and Rigby, 2004). They also have a higher probability of error like getting the wrong products, information, and price which leads to loss of sales. However, many businesses keep using the systems as they do not need to allocate extra budget for purchasing, training and development and maintaining the data, as those utilising CRM.

 

Towards Successful CRM

 

Implementation of CRM is not always successful. In fact, its failure rate is high, about 63% (Prezant, 2013). Ryals and Knox (2001) put forward three critical issues that determine the success of CRM; the organisational issues i.e. culture and communication, management metrics and cross-functional integration, especially between marketing and information technology. In this regard, the business can employ RACE (Reach, Act, Convert, Engage) framework to leverage the results for CRM, which each of the steps has key performance indicators (KPIs) to measure the success (Chaffey, 2016).

 

 

Conclusion and Recommendations

 

The market of CRM software is increasing due to its significant contribution to business performance. Nevertheless, many businesses prefer to use traditional systems since they do not need to put more efforts to apply CRM and bear the risk of its failure. Eventually, businesses using CRM are recommended to employ RACE framework which has KPIs measures in every step, to leverage the systems.

 

 

References:

 

Chaffey, D. (2016) The RACE Digital Marketing Planning Framework. Available from: http://www.smartinsights.com/digital-marketing-strategy/race-a-practical-framework-to-improve-your-digital-marketing/ [Accessed 21 July 2017].

 

Chen, I.J. and Popovich, K. (2003) Understanding customer relationship management (CRM): People, process and technology. Business Process Management Journal. 9  (5), pp. 672–688. doi:10.1108/14637150310496758.

 

Columbus, L. (2013) Gartner Predicts CRM Will Be A $36B Market By 2017. Available from: https://www.forbes.com/sites/louiscolumbus/2013/06/18/gartner-predicts-crm-will-be-a-36b-market-by-2017/#6cb1c4077e31 [Accessed 15 July 2017].

 

Klie, L. (2015) Integrate CRM and ERP for Better Intelligence CRM Magazine [online]. Available from: http://www.destinationcrm.com/Articles/ReadArticle.aspx?ArticleID=106020&PageNum=2.

 

Ledingham, D. and Rigby, D.K. (2004) CRM Done Right. Harvard Business Review. (November), .

 

Pearlson, K.E. and Saunders, C.S. (2013) Managing & Using Information Systems: A strategic Approach. 5th edition. New Jersey: John Wiley & Sons, Inc.

 

Prezant, J. (2013) 63% of CRM Initiatives Fail. Direct Marketing News. (July), .

 

Ryals, L. and Knox, S. (2001) Cross-functional issues in the implementation of relationship marketing through customer relationship management. European Management Journal. 19  (5), pp. 534–542. doi:10.1016/S0263-2373(01)00067-6.

 

Scullin, S.S., Fjermestad, J. and Romano Jr, N.C. (2004) E-relationship marketing: changes in traditional marketing as an outcome of electronic customer relationship management. Journal of Enterprise Information Management. 17  (6), pp. 410–415. doi:10.1108/17410390410566698.

 

Yim, F.H.-K., Anderson, R.E. and Swaminathan, S. (2014) Customer Relationship Management : Its Dimension and Effect on Customer Outcomes. Journal of Personal Selling and Sales Management. 24  (4), pp. 263–278.