For a number of years, many organisations have seen Customer Relationship Management systems as a nice to have rather than a must have for the day to day running of the business. However, as a result of the recent depressed state of the economy, more and more companies are realising that they really need to look after their existing customer base. A recent report by Dr Ken Blanchard highlighted that the inability of managers to develop relationships with both their employees and customers is a key reason why many businesses fail. This has subsequently provided many organisations with the ideal catalyst to implement a CRM system; after all it costs more money to attract new clients than it does to retain existing customers.

Why do organisations need CRM?

The cause of the majority of problems within many organisations is that there are significant gaps in employee knowledge and these gaps are simply amplified by the fact that key customer data is stored all over the place, on different spreadsheets, in peoples heads and in paper files. The ultimate consequence of this is that the customers have a bad experience and as a result do not come back. But not only do they not come back, on average an unhappy customer will tell 11 people about their experience. And subsequently an organisation can lose a significant number of customers and potential customers.

So what is CRM and how does it work?

Customer Relationship Management is a way of improving businesses efficiency, it is all about building and strengthening relationships with customers to ensure that they keep coming back, at the same time as helping an organisation to attract new customers.

One of the key advantages of implementing a CRM system is that it enables organisations to store all of their key customer information in one place, rather than having it stored on a number of databases and in different people's heads. The result is that employee knowledge is greatly improved and this is consequently reflected in the customer service which is delivered. CRM systems streamline internal business processes and with the centralised source of data none of the departments within your organisation will be working in silos. This provides complete transparency throughout the organisation which enables everyone in your organisation to work together and share critical information. Essentially CRM systems provide a clear, informed insight into what's happening within a company, helping users forecast, adjust and plan strategically for the future.

So does CRM only apply to relationships with Customers?

No, the customer part of the term CRM is slightly misleading as the strategy, software and processes apply equally to the management of any relationship, whether it is a company and customer, student and university or member and club relationship. Essentially the word Customer could be replaced with anything , not just customers.

Microsoft refer to this concept as XRM, where the 'X' can be replaced with anything. Essentially XRM provides organisations with a structured way to store and access information, provide better customer service, make more informed business decisions and ultimately to ensure the long term profitability of the organisation.

So does CRM/XRM bring benefits to every organisation?

No, not always. The solutions will deliver significant benefits but only if they're deployed and used correctly. Simply buying a solution, implementing it and leaving it will have no impact. To make a difference a company needs choose the right partner, invest in employee training and be prepared for a complete cultural shift once the solution is implemented.