The importance of Customer Relationship Management (CRM)

The importance of Customer Relationship Management (CRM)

Over the last month, our Management Trainee Mikkel Ahlgren has participated in creating a customer relationship management (CRM) strategy for the division in Visma that serves small- and medium-sized companies. Read on to learn more about the project and why having a CRM strategy is such an important part of the overall business strategy. 

CRM can be defined as an organisation’s strategy for managing relationships and interactions with customers and potential customers. It includes philosophy for managing relationships, technology, and processes. CRM is therefore not only confined to the technology, but revolves around a company’s ability to become customer-centric.

In fact, managing CRM as an IT project is one of the central reasons why so many CRM initiatives fail. This emphasises that CRM is a practice that spans over the entire organisation, and that CRM systems merely form the technology supporting the processes needed to reach the company’s CRM strategy.

Companies are investing more in CRM than ever. According to Gartner (2017), CRM systems became the world’s largest software market in 2017. It is further expected to be the fastest-growing software market by 2018. There are many reasons why CRM is so important, and I would like to point out three reasons that are of particular importance for Visma.

The importance of CRM in business

A first is how customer-centricity increases the productivity of core business processes such as sales, support and marketing. Better lead qualification and reduced time spent sending leads through the sales funnel can increase sales by as much as 29%. A proactive Visma business unit in Finland recently finished an 18 month CRM project, and even managed to double its sales per salesperson(!). Similarly, for support, customer-centricity increases customer satisfaction, which can reduce churn rates with as much as 27%.

CRM increases an organisation’s agility and flexibility

A second reason is how having a CRM system as the backbone for all systems that support internal processes, reduces integration efforts and manual tailoring. This increases a company’s ability to execute on strategic goals. Imagine that you initiate many good initiatives, but manual development requires you to start from scratch and to develop the solutions that get you there completely on your own.

I like to think of a CRM platform as being well-equipped for going cross-country skiing, and to think of the vast integration possibilities as prepared ski-tracks. You might be able to get a nice trip by creating your own tracks in knee-high powder-snow, but being well-equipped and heading off in prepared-ski tracks reduces the required effort for heading where you want.

Customer relationship management: Think of a CRM platform as being well-equipped for going cross-country skiing, and the vast integration possibilities as prepared ski-tracks

Analytics first, then AI–CRM is an enabler

A last principal benefit provided by a CRM system and strategy is that it enables a company to have all data available by storing it in one place and to ensure sufficient quality of that data. Reading technology-reviews and news these days gives the impression that almost any problem can be solved just by throwing AI on it.

However, having sufficient amounts and quality of data is a premise for getting any use of AI. CRM, therefore, increases one’s AI readiness. There is a narrow gap from doing analytics on this data to applying AI.

During this project, we have interviewed 10 central units within this division and mapped their concerns and needs. Based on these, we will provide advice on the overarching guidelines that should be in place, both in business processes and technology-wise, in order to create a successful CRM strategy.

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