A customer relationship management application solves customer-based business problems, supports the sales process, and advances enterprise resource planning (ERP) initiatives.

Forrester defines customer relationship management (CRM) (link resides outside ibm.com) as “the business processes and supporting technologies that support the key activities of targeting, acquiring, retaining, understanding, and collaborating with customers.”

Customer relationship management software helps companies measure and control their lead generation and sales pipelines. It can also be used for lead management, sales forecasting, and managing communications with potential customers. For example, within a call center environment, a sales CRM system can analyze the frequency, volume, and outcome of follow-up communications with new leads. The data is then used to research and analyze the overall customer relationship and improve workflows.

Today’s CRM solutions include multiple technologies relative to deployment size, business model, and industry verticals. In addition to supporting e-commerce and marketing tools like Mailchimp, CRM applications offer order, revenue, social media, and opportunity management.

Forrester’s recent CRM Playbook (link resides outside ibm.com) indicates that 61% of global software decision-makers were implementing, had implemented, or were expanding their implementation of customer service software. Meanwhile, 58% of software decision-makers intend to do the same for sales force automation (CRM) applications; 17% of decision-makers plan to adopt customer service software within the next year; and 18% intend to adopt sales force automation.

When properly integrated into your system, a good CRM adds value to your business in two significant ways:

1. Business strategy enhancement: An effective CRM strategy identifies and develops business objectives, benefits customer service protocols, clearly articulates CRM features and processes, and addresses functional needs. It should include customer information, customer service goals, employee roles, and strategic opportunities. In addition, a CRM strategy should include metrics relative to company initiatives and overall goals.
   
   
2. Cloud agility and adaptability: As more CRM platforms and solutions migrate to the cloud, their workflow automation and the infrastructure on which they run becomes more critical. For example, Salesforce augments its sales cloud on Amazon Web Services (AWS), while Microsoft augments on Azure. Each cloud platform has a distinct suite of analytics and machine learning (ML) that greatly influences insights and determines CRM results.

When quantifying the business value of CRM, its benefits should address revenue generation and cost-efficiency. Therefore, your CRM should support existing business processes and technological capabilities. According to Forrester, CRM benefits fall into three distinct categories (link resides outside ibm.com):

• Higher revenue: Increase your revenue by improving product mix, value and price realization.
  
  
• Lower direct costs:  Reduce exposure to unprofitable customers and enhance operational efficiency and sales productivity.
  
  
• Lower indirect costs: Improve vendor contracts and technology support by consolidating CRM instances, minimizing CRM application customization, and increasing technology adoption and usability while reducing end-user training times.

These benefits help build customer lifetime value, which ultimately increases customer retention. In fact, CRM automation alone increases customer retention by as much as 15% ¹.

To remain competitive and achieve customer satisfaction, companies must adopt innovative CRM tools from vendors offering feature-packed products and services that are often industry-specific. With the availability of multiple solutions, it is important to consider what is driving your overall business objectives. Whether it be the technology, architecture, functionality and usability of your application, the overall cost, risk and speed of your project, or the product vision and partner services provided by your selected vendor, your CRM is critical to the present and future development of your enterprise.

The CRM needs and capabilities of a business-to-business (B2B) enterprise differ from those of a business-to-consumer (B2C) enterprise, as the CRM needs and capabilities of small businesses differ from those of large companies. As a result, there are four primary types of CRM solutions specific to large companies, small- to mid-size businesses (SMBs), and start-ups:

1. CRM suites for large organizations: Providing full capability and available in multiple languages and various locations for 1,000 or more employees, these suites include dedicated support and resources for various industries. Vendors may also provide affordable, prepackaged solutions to mid-size organizations.
   
   
2. CRM suites for mid-size organizations or divisions: Providing limited capability for 250-999 employees, these suites cater to various departments (e.g., channel sales teams, incentive compensation, field service). Vendors may also provide upgraded solutions to large organizations.
   
   
3. CRM suites for small organizations: Providing limited capability for up to 250 employees, these suites cater to individual business owners and small teams (e.g., contact management tools, social channel engagement, email marketing campaigns). Vendors may also provide end-to-end CRM solutions for salespeople, customer service reps, and marketing teams.
   
   
4. CRM specialty solutions: Providing limited general capability with deep customization (e.g., marketing automation, customer service) for 250-1000+ employees, these suites cater to various industries (e.g., financial services, life sciences, healthcare, government, nonprofits).

According to Gartner, larger organizations must manage a diverse portfolio of CRM applications at different maturity levels. It is advised that companies “engage one core CRM vendor to meet your broader organizational goals, but accept that others will need to be integrated to the core.” ²

Smaller organizations typically only need one CRM tool, whereas larger organizations may require additional CRM applications and third-party integrations. Regardless of company size, versatile CRM platforms that unify data entry, business processes, and security within various departments are becoming more prominent in the market:

• Marketing: Multichannel messaging and distribution.
  
  
• B2B/B2C: E-commerce and sales cycle automation.
  
  
• Support: Customer engagement and satisfaction.

The transformation of customer engagement is one of the primary benefits of CRM, and it must be achieved in increments. Forrester identifies three important areas of risk associated with CRM implementation ¹:

1. Size: Organizational project management teams tend to be less accurate with CRM pricing and benefit estimates for larger projects versus smaller ones. The larger the project, the wider the range of risk.
   
   
2. Vendor risk: Organizations, at times, must replace a CRM vendor because their product is no longer meeting their business needs or the vendor has been acquired. In either case, CRM costs may significantly increase.
   
   
3. User adoption: Organizations must properly prepare and train their sales reps to operate a new CRM application, otherwise they are less likely to accept the new user experience.

AI-powered virtual agents use natural language processing (NLP) to interact with business systems and provide new customers with high-level solutions across messaging platforms, applications, channels, or devices. These virtual agents can guide human support agents to the information they need to resolve customer queries, thus improving the overall customer and human support agent experiences. When conversational AI is paired with ML-driven speech-to-text capabilities, first contact information and resolution during voice interactions are significantly improved.

Some virtual agents can integrate with your existing CRM and customer care systems, helping you improve issue routing by connecting customers to the right agents the first time.

• Agent assist: The preferred method for integrating customer service automation and humans.
  
  
• Customer self-service: Deploys a customer-facing chatbot that responds and contains simple queries, searches for complex.
  
  
• Employee self-service: Answers employee questions internally while augmenting HR and IT help desks.

• Automate customer experience: Streamlines customer interactions across any digital or voice channel and reduces response times.
  
  
• Connect to CRM systems: Integrates with the best CRM software like Keap, Pipedrive, Hubspot CRM, ZohoCRM, and SugarCRM via natural language processing (NLP).
  
  
• Derive real-time insights from customer data: Virtual agents can extract data and present valuable insights for agents and customers.
  
  
• Improve agent productivity: Equips human agents with smart tools that help them answer and resolve queries in less time, thus improving their performance and reducing costs.