Source: Katarina Krempova¸ PKF Malta
The world of business is full of ongoing challenges which are playing a crucial role¸ reflecting profitability¸ competitive position¸ industry respect and long-term business growth. Thereby¸ Entrepreneurs should keep in mind that all these success factors are directly related to the value assigned by the customer to the company and its products. However¸ remember that it is not the product but the customer that ensure the profitability and long-term growth.
The implementation of Customer Relationship Management (CRM) can help you to concentrate your efforts on creating¸ maintaining and expanding strong long-term customer relationships. Use this change to gain strategic benefits¸ such as greater customer satisfaction¸ customer loyalty¸ better word-of-mouth publicity and higher response to cross-selling efforts.
In order to provide you better information about the Impact of CRM on your cost and profit¸ here’s a simple overview that can help you by making decisions about investments in CRM.
1. CRM implementation enhances firm’s profit potential
The key to enjoying higher profits is the ability to anticipate the changing landscape of the marketplace and to respond to customer needs. Interaction with customers and understanding of their experience enables firms to provide customers with products that meet their needs more precisely. But this is not as easy as easy as it seems. Firms usually do not get in direct contact with the customer and as a result fail to understand its needs. But Amazon sells a lot of its products every day¸ even if there is no personal contact with its customer. How? First¸ it is important to address the need in the mind the customer¸ in other words¸ to see the world through customers’ eyes. Second¸ also Feedback providing¸ good customer service and the ability to communicate with customers shouldn’t be missing. In order to manage these relationships more effectively¸ you should consider implementing or improving CRM.
The American Marketing Association’s study (2009) demonstrates that U.S. banks observed a 27¸5 % improvement in profit efficiency as a result of their strong support of CRM.
2. CRM implementation is long-term investment associated with decreases in the cost efficiency
To establish and maintain strong long-term customer relationship¸ firms can’t be afraid of making sacrifices. “Rome was not built in a day.” It takes time to adopt CRM. This is a complex procedure that involves changes in organizational processes¸ appropriate technology¸ customization of outputs¸ customer information management and better-skilled and trained employees. As a logical consequence of this step¸ firms have to count with an increase in operating costs and with a decline in cost efficiency. In other words¸ it comes at extra costs to raise customer satisfaction and to understand their needs. The findings of the American Marketing Association’s study shows that CRM implementation decreases cost efficiency by an average of 5¸4 %.
Afterwards¸ the implementation of CRM can’t guarantee firms’ quick returns. It takes time for CRM