Customer Relationship Management (CRM)


When talking about relationship management in the context of software solutions, most people think of customer relationship management (CRM). However, relationships also exist between companies and their vendors, companies and their customers, vendors and their suppliers, employees, different departments of the same company, and so on. The Relationship Management Evaluation Center concentrates on CRM and supplier relationship management (SRM), as software and information and communication technology (ICT) play a major role in facilitating effective relationship management among all parties involved.
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There are other software types than can be considered when talking about relationship management.
  • Customer care and billing (CCB): These systems are used mostly by utilities companies (e.g., Internet and telecommunications service providers) to manage mediation, provisioning and activation, and customer care and billing. Even though those products can help a company manage relationships, they are not created especially for this and can only be used by utilities companies.
  • Quote to order (Q2O or QTO): Sales quotes are usually created in a CRM or enterprise resource planning (ERP) system, but both options are far from being perfect because ERP does not offer enough marketing information to the sales people and CRM does not provide enough information about the products they sell. Also, tracking all the stages from quote creation to its conversion into an order is either done in just one system (CRM or ERP) or in both, but only partially. Only a Q2O product will allow users to track a quote through its entire life cycle.
  • Merchandising and retail systems: These systems are used mainly by retail companies to manage inventory, track sales data, and record product performance. This type of product may offer relationship management functionality for interactions with both customers and suppliers, but this is not one of its strongest points.
Among the types of solutions mentioned above, only CRM and SRM are specifically created to manage relationships. The main difference between CRM and SRM solutions is the target audience, but here are some of the things they have in common.

  • Business relationships are becoming too complex to be managed in the traditional way (i.e. without the use of a software solution).
  • The word 'satisfied' is usually associated with 'customer'—but happy suppliers are also essential for a company's success, especially one involved in manufacturing and distribution.
  • Both customers and suppliers should be considered partners by the company, which involves establishing and maintaining ongoing relationships with them. It's always better to keep old customers than look for new ones and the risks of contracting a new vendor can be higher than the advantages (lower costs)
  • CRM systems can provide information about what you need to produce, which is very important when deciding what to purchase; SRM systems allow access to valuable information about the suppliers that provide the right components for the products requested by your customers.
  • CRM and SRM systems can be used for both products and services.
And here are a few other things that differentiate SRM and CRM solutions.
  • Customers and suppliers have different needs, so your relationships with them will be different—and therefore need to be managed differently.
  • Many companies working directly with customers use CRM, whereas supplier management solutions are quite rare in the manufacturing field.
  • From the user's point of view, working with suppliers is called collaboration, because both the user and the supplier have the same goal—get the right product (raw material, component, or finished product) at the right price; but working with customers is called profit-oriented activity.
  • CRM is often used as a stand-alone product, but SRM is usually used with an ERP system.
  • As a general rule, SRM reduces costs, whereas CRM increases sales. Of course, low costs can increase sales and CRM can reduce marketing costs if used properly, but these are only exceptions to the rule.
  • CRM will rarely be used for relationships between customers, but SRM is often used for interactions between suppliers.
More and more software vendors offer complex and reliable relationship management solutions, but when implementing such a product, the main challenge has its origins in the client company itself. A business solution should be seen as a tool that helps users define strategies and track results, but these activities cannot be done efficiently unless companies understand what's best for all parties (employees, customers, suppliers, etc).

In order to fill the gap between expectations and reality, more and more vendors are providing consultancy on how to build customized business processes or workflows. Some vendors have predefined templates that can be used out of the box, and modified if need be. Software vendors dealing with hundreds or thousands of customers have enough experience to know how to deal with specific needs, but they can also guide you when product customization is required.

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