Don’t underestimate or overestimate CRM systems

CRM systems, also called CRM software, are an essential component to customer-focused business & CRM. The implementation of these systems is often both underestimated and overestimated. The amount of effort and money required for a successful implementation is often underestimated, while the effects of a CRM system on the organization are often overestimated. It’s not a magic bullet to make your organization customer-focused while increasing revenue all at once. Passionned Group is experienced in successfully implementing CRM systems.

CRM systems are gaining popularity

The first CRM systems were introduced toward the end of the 90s. In the mid 2000s they became increasingly popular, with Siebel systems being the poster child at the time. CRM systems have undergone an explosive growth ever since. These days there are hundreds of vendors. In recent years, more and more CRM systems are being offered as cloud-based solutions. The most well-known vendor is SalesForce.

Collective name for CRM software

CRM software collective name for CRM systemsCRM software is a collective name for (usually) multiple types of software. This software can be used for maintaining customer contacts across various channels. There’s no singular definition for CRM software. CRM software often has the following hallmarks:

  • CRM software processes customer data.
  • Supports processes in the front office.
  • Enables communication with customers across various channels.
  • Helps with social media communication.

Everyone has their own definition. That’s not wrong per se, but it’s important to keep in mind. CRM software is an essential component of customer relationship management, but it can only be successful if the business is customer-focused. You can only achieve success when the customer value is clear and customer data is stored correctly and completely.

An approach using an architecture model

There’s some confusion around CRM systems, but an architecture model can provide insight into the entire domain. Take a look at the general architecture model below:

CRM architecture model

This model consists of the following components, from top to bottom:

  1. The customer is the start and end point of any CRM system. Without customers there’s no interaction and no revenue.
  2. The customer communicates with the organization across various channels. The amount of channels is increasing drastically, and customers switch channels frequently. The biggest challenge right now is continuously following the customer.
  3. Portals are a structured way to keep communicating with customers across different channels. Portals encompass not just online communication, but also offline, such as physical mail, which is strongly decreasing in frequency and volume.
  4. Customer interaction often goes through a front office or reception. But other departments can also manage this contact. The front office typically handles three processes: registration, processing, reaction. These are the basic processes of intelligent organizations.
  5. The front office uses all kinds of data sources and systems. These can be divided into operational CRM systems and analytical systems. Operational systems record and support the operational process. Analytical CRM focuses on analyzing the right indicators and applying that knowledge in future customer interactions.
  6. ICT systems support the entire customer interaction process. Often there are multiple systems, each of which takes care of a part of the process.
  7. The integration layer automates data exchange between systems in the front office and the back office, or the cloud services. This integration layer consists of two components. There’s the so-called information bus, which manages information exchange between systems. The second component consists of a workflow management system. That ensures the automated processing of (part of) the customer interaction process.
  8. The back office applications are the systems that the rest of the organization uses to support its internal company processes. Consider, for example, ERP systems, bookkeeping systems, and HR systems.
  9. Cloud services are systems hosted by vendors in external servers: the cloud. You could store various functionalities in the cloud, for example e-mail systems, or video conferencing systems.

This architecture can be fully automated, for example in an e-commerce environment. But it can also be partially automated, so that employees still execute parts of your processes. Whether or not you can fully implement this architecture, and with which systems, depends on the objectives and the organization’s maturity. Consider the maturity level of customer contact, the market your organization operates in, and the type of market: B2B or B2C.

Trends in CRM software

Trends in CRM softwareCRM software is developing quickly, necessitated by the dynamic (technological) environment. What are the most important trends?

  • Multi-channel is an important tool for letting CRM systems follow the customer across all channels.
  • Smartphones and other mobile devices are increasing in functionality, and they’re becoming more user-friendly. Customers can get direct access to customer data, but the same goes for employees, who are using smartphones at work more and more. Mobile CRM is becoming essential.
  • CRM software is increasingly being offered from the cloud. Gartner predicts that this will be the case 80% of the time by the end of 2019.
  • Business Intelligence (BI) is becoming the ‘engine’ powering CRM. It increasingly forms the basis for communicating with customers. Consider personalized offers. We call this a data-driven organization.
  • Big Data is becoming more important within CRM systems. Why? Because it can be used to extract information from giant volumes of data.
  • CRM Software is becoming more user-friendly. The focus of CRM software vendors isn’t just on offering new functionality, but also on optimizing the user experience. Lack of adoption of CRM systems by users is the most important cause of CRM projects failing, according to Forrester research.
  • Webcare, or real-time reaction to online conversations about organizations, has become an essential component of CRM systems. It used to be niche players who offered this functionality, but large CRM vendors are now integrating this functionality into their existing software.

Pitfalls of CRM systems

Research by Gartner, Forrester Research, Butler Group and others has shown that over 50% of CRM projects fail. It’s important to know the pitfalls. Some pitfalls are directly related to the choice of CRM software:

  1. The CRM system isn’t flexible enough to match the changing needs of customers.
  2. The systems are not equipped to make organizations work data-driven. The organization is missing a data warehouse, for example.
  3. The system is seen as a separate entity. It isn’t integrated with others systems.
  4. The implementation of a CRM system is seen as an ICT hobby horse, or it becomes one.

Besides these pitfalls, other factors also play a part, for example user acceptance. But those are organizational risks. The most important advice is: always work “under architecture” when you’re implementing such a massive change. If you want to know more about avoiding these pitfalls, or how to implement changes using architecture, feel free to contact us. We’d love to help you out.

Not every organization is ready

Not every organization is ready for CRMNot every organization is ready to implement a CRM system. As with every new development, there are leaders and followers. Passionned Group uses its own model for CRM implementation, the nine-layer model. By determining, as an organization, where you are and where you want to be (IST and SOLL), you can determine what the first logical step should be in increasing your organization’s maturity. But all too often, companies skip several stages of maturity. And that’s the cause of unsuccessful implementation of CRM software systems.

Don’t focus on one aspect

CRM technology is just one of the nine aspects of the nine-layer customer model. Ensure that you’re equally mature in every aspect. Focusing on one of the aspects, like state of the art CRM software, without working on, for example, a customer-focused organization, causes a mismatch between ambition and reality.

A final tip

Not every organization has to strive for the leadership phase. What the final stadium should be strongly depends on the organization’s position in the market. And of course also the maturity of the entire market, and the possibilities of the organization to distinguish themselves within it.

Do you want to know more about our approach or apply the maturity model in your organization? Do you want to determine the next logical step for your organization? We’d love to talk you through it. Feel free to contact us.

A CRM implementation is never finished

The implementation of a (new) CRM system is often seen as a one-time activity. Unfortunately, thanks to the rapid developments in customer interactions, the enormous growth in customer channels, and the data-driven focus on customer interaction, a process of continuous change and improvement is necessary.

Change can’t be implemented through one large CRM project that solves everything. To keep up with current, quick changes, a process of continuous innovation and improvement is necessary.

One-time change has become continuous change. An approach like PDCA is the ideal way for the organization to stay current and innovate at the same time. If you really want to be a customer-focused business, change becomes the only constant.

Do you want to work with good CRM software?

We have over 25 years of experience in implementing CRM software within companies and other organizations. Using countless solutions and our own approach, we’re eager to help your organization implement CRM systems faster, better, or more efficiently.

If you want to discuss this topic with one of our experts, make an appointment with us. We’d love to tell you more about our approach and the results you can expect.

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