CRM is key to finding, retaining and targeting customers.
Credit: CRM image via Shutterstock
Do you really need customer relationship management (CRM) software? Research reveals CRM is more important than ever.
CRM plays a significant role in any business, as it is the underlying force that defines wise business decisions.
This is because the business world is undergoing a transition, one in which decisions are made based on data, not opinion, said Reo Song, CRM and business intelligence expert and assistant professor of marketing at Kansas State University's College of Business Administration.
"It's all being done today by data analysis," Song said in a statement. "The data companies analyze include customer demographic information; purchase history, such as purchase time, amount, quantity, price; purchase channel — online, offline or catalog; payment medium — cash, debit card or credit card; and whether the purchase was a response to promotion."
Although business smarts and intuition are still essential traits for decision makers, their value is "enhanced" by data analyses, he said. Such data-driven decision-making can be seen everywhere, from business to sports and politics.
"The role of the business managers who make decisions based on hunches is dwindling," Song said. "[They] are being replaced by analysts who can tackle massive data for insight."
Benefits of CRM
Using customer data and trends derived from CRM, the benefits of using CRM software are two-fold: the ability to provide customized offerings to different customers and deliver highly-targeted marketing campaigns.
For instance, by analyzing data, such as customers' shopping habits, CRM can help determine when and which customers will receive promotional materials and whether those materials should be sent by mail or email marketing.
"In this way, firms can increase return on investment (ROI)," Song said. "That is, given the same amount of investment, profits or revenues become higher when they use customer relationship management techniques. This is because more people will respond to advertising and promotions as firms target the right customers who have higher probability to purchase."
CRM data sources
CRM software collects data from various sources, Song said. Loyalty cards and website registrations contain treasure troves of data, such as purchase history and demographic information, while social media and Web analytics can provide additional information. Data can also be purchased from credit card companies and data warehousing companies, which can combine and analyze data from multiple sources and provide consulting services, he said.
Another source of data is mobile commerce (m-commerce). CRM is trending toward mobile devices, such as smartphones and tablets, Song said.
"Companies still send mail catalogs, but many customers purchase on the companies' websites after looking at catalogs instead of ordering via phones," he said.
Originally published on BusinessNewsDaily.