Advantages and Disadvantages of CRM – Customer Relationship Management 

Table of Contents:-

Advantages of Customer Relationship Management (CRM)

The key benefits of CRM processes in marketing practices are given below:

Advantages of CRM

1. Increase In Sales Revenues and Reduced Sales Cost 
2. Lower Costs of Recruiting Customers
3. Evaluation of Customer Profitability
4. Customer Knowledge
5. Positive Referral Creation
6. Opportunity to Cross-Sell and Up-Sell
7. Increased Customer Satisfaction
8. Increased Customer Retention and Brand Loyalty
9. Excellent Customer Service
10. Customisation
11. Reduced Costs through Customer Self-Service
12. Decreased General Sales and Marketing Administrative Costs

1) Increased Sales Revenues & Reduced Cost of Sales: Increased sales result from spending more time with buyers, which results from spending less time chasing needed information. Reduced costs, because the correct things are being done. A strong point in customer relationship management is that it is making customers a partner in the business, not only a subject. 

2) Increased Customer Satisfaction: CRM Increases customer satisfaction because they are getting exactly what they want. The customer feels that he is more “part of the team” rather than just a subject for sales and customer service is better, his needs are anticipated. There is no doubt that customer satisfaction will grow. 

3) Lower Costs of Recruiting Employees: CRM ensures savings on marketing,  contact, mailing, fulfilment, services, follow-up, and so on. In the presence of CRM, there is no need to recruit so many employees to maintain a steady volume of business (especially in business-to-business marketing environments). 

Related Article: Product Life Cycle

4) Increased Customer Retention and Loyalty: Customers stay longer, buy more, contact for their requirements (which increases the bonding relationship), and customers buy more often. CRM, therefore, increases the accomplishment and opportunity of real lifetime value. A better-served and delighted customer slowly becomes loyal.

5) Evaluation of Customer Profitability: Knowing which customers are truly profitable, which customers should be changed from no/low profit through up-selling/cross-selling; which customers may not ever become profitable; which customers should be managed by external factors; and which customers drive forthcoming business. 

6) Excellent Customer Service: CRM manages to drive customer interaction onward. CRM is an approach to customers that looks at primarily strengthening the relationship. Customer loyalty is a natural by-product as CRM provides better fidelity with customers. It helps them to create and retain faithful customers. CRM gives the consumer incentive to remain loyal and increase his purchases over a lifetime.

7) Customer Knowledge: It makes possible a shared knowledge base that is readily accessible to all employees within the organization. It enables a company to primarily look into the stored data and provide accurate information to employees about customers. It helps the organisation to make informed and right decisions.

8) Customisation: CRM delivers customised solutions that are specifically built for the small and medium industry market and that is not complex. Ease of integration with other business procedures is the keyword of CRM. 

CRM provide for customisation and the capability to change to business needs. Configuration with ease using interfaces and workflow procedures becomes possible contributing to increased ease in customisation.

9) Positive Referral Creation: A satisfied customer continually spreads positive things about the company. Such a positive opinion proves to be more reliable and authentic than companies’ propaganda, including advertisements and hence brings in more customers.

10) Reduced Costs through Customer Self-Service: The majority of calls placed to customer service representatives are made to ask a short and predictable list of questions. User profiles let companies anticipate customer support needs and prepare answers automatically. 

11) Opportunity to Cross-Sell and Up-Sell: A satisfied customer is expected to come back to the same organisation to repeat the purchase. In case of any cross-sell and up-sell, he comes back to the same organisation and with no extra expenditure, the company can get him more products.

12) Decreased General Sales and Marketing Administrative Costs: This decrease occurs since the company has specified its target segment customers, it knows their needs better, and thus it is not wasting time and money, for example, on mailing information to all customers in all existing and potential target segments.

Disadvantages of Customer Relationship Management (CRM)

Like all other things, CRM also has a few flaws that they need to overcome. The major disadvantages that stop CRM from becoming a perfect tool for any business are given below:

Disadvantages of CRM

1. Requires Top-Management Support
2. Confusion in Attributes
3. Building Relationship
4. Problem in Implementation
5. Not Functionally Organised
6. Customer Dissatisfaction
7. Front Line Staff

Related Article:- Scope of Marketing

1) Requires Top-Management Support: If top management still needs convincing that (the honest) CRM is necessary to make the life of both the company and the customer more accessible, then no amount of lobbying will do. Without the support of top management, CRM can not be successfully deployed.

2) Confusion in Attributes: Generally, the reason for the barrier is because, most organisations that employ CRM, experience a lot of confusion about its attributes and what it is. Some people would define it as a business strategy while other people view it as something to do with technology. 

3) Problem in Implementation: There is a significant problem in Implementation. One of the actual purposes of CRM (customer relationship management) has always been to develop a technique that will help organisations to improve customer satisfaction, customer retention and customer loyalty.

4) Building Relationships: The other major barrier is building relationships. When a marketer fails to contact its customers repeatedly, no relationship is built. As a result, the customer has no reason to be loyal to the company. 

Most companies are unintentionally committing the above mistakes, but in this day and age when the customers have many options, it is a violation of all ten commandments of business, not to mention CRM, to ignore customers and not try to show appreciation and care to keep customers loyal.

5) Not Functionally Organised: Many organisations are still not functionally organised.

6) Customer Dissatisfaction: Although many businesses have implemented CRM to focus on customers, several clients are still dissatisfied with its execution.

7) Front Line Staff: Training to the front line support staff is still not customer-centric. It is still a major challenge for many firms to train their frontline staff well enough so that they could implement CRM in the same way as it is desired. 

You May Also Like:-