The Necessity of CRM (Customer Relationship Management) in Marketing: Key Points for Product Comparison and Selection

What Is CRM?

CRM stands for Customer Relationship Management and is an IT tool commonly referred to as a customer management system. CRM centralizes customer information and is used to nurture relationships with leads and existing customers. As a result, users can benefit from streamlined customer management, improved customer satisfaction, and enhanced data accessibility.

The Importance of CRM and the Background of Its Growing Popularity

Why is CRM important for businesses? Below, we explain the importance of CRM and the background behind its growing popularity.

Responding to Diversified Consumer Needs

As a result of the widespread use of the internet and social media, which has made information easily accessible, the needs and values of modern consumers have become increasingly diverse. In this environment, providing highly satisfying services to each individual customer requires a detailed understanding of their specific needs and the execution of personalized strategies.

This is where CRM, which allows for the centralized management of customer information, is becoming increasingly important. CRM can store a vast amount of insights useful for understanding customer needs—such as age, gender, purchase history, and inquiry history—thereby helping businesses respond to diversified consumer needs.

Improving LTV and Retaining Existing Customers

In today's market, which is saturated with similar products and services, it has become difficult to differentiate from competitors based solely on quality or price. Consequently, the cost of acquiring new customers is on the rise. In such a situation, shifting the focus from new customer acquisition to retaining existing customers and increasing the Lifetime Value (LTV) of each individual is becoming a highly effective strategy. The increase in subscription-based services is also a factor accelerating this trend.

To retain existing customers, it is necessary to improve customer satisfaction and loyalty. As discussed later, CRM is equipped with a wide range of functions—including customer analysis, marketing support, and customer support assistance—in addition to basic customer information management. This makes it a highly sought-after solution that meets modern business needs.

Key CRM Functions

CRM is characterized not only by its ability to store customer information but also by its wide variety of functions designed to utilize that data effectively. Below, we introduce the main functions of CRM.

Customer Management

Customer management is the core function of CRM. CRM allows you to manage all customer relationship information, including basic data such as name (or company name), age, gender, and address, as well as transaction history, customer support inquiry history, and sales meeting schedules. Because the data stored in the CRM can be shared in real-time with the sales team and other departments, the entire company can leverage customer information for business purposes. For example, by using CRM to segment customers, you can provide better services to them more efficiently.

Marketing Support

CRM is equipped with functions for multi-faceted analysis and reporting based on the stored customer information. By using these functions to visualize metrics such as profitability, customer retention rates, and the effectiveness of marketing campaigns, it becomes easier to formulate effective marketing strategies. CRM serves as the foundation for implementing data-driven marketing.

Promotion Management

Some CRM products allow for promotion management, such as the automated delivery of emails and coupons based on each customer's attributes. By automating these workflows, sales representatives can save time, avoid duplicate tasks, and complete appropriate actions at each stage of the sales process. Since you can also track how many of the delivered items were opened by customers, this leads to the improvement of marketing campaigns.

Customer Support

CRM is also equipped with functions useful for customer support. Specifically, it allows you to manage inquiries from customers and their response history. By centralizing inquiries from multiple channels such as web forms, email, and telephone, you can expect to reduce response times and prevent duplicate responses. Additionally, CRM allows for the creation of help pages, inquiry forms, and customer satisfaction surveys. Leveraging these CRM functions makes it easier to provide personalized customer support, which can lead to improved customer satisfaction.

Benefits of Using CRM

What benefits can companies receive by utilizing the various functions of CRM? Below, we introduce the advantages of using CRM.

Improving Operational Efficiency

The first benefit of CRM is improved operational efficiency. Using CRM allows you to centrally manage all customer data across all channels. This makes managing and accessing customer data more efficient, making it easier to check necessary data when needed. In particular, as many cloud-based CRMs are now mobile-compatible, the ability to check customer information at any time using a smartphone while on the go is a significant advantage.

Furthermore, by analyzing customers based on CRM data, you can identify customers with high profitability or high potential for closing deals. Using the previously mentioned promotion management functions allows for the automation of tasks like email distribution, which can significantly improve sales efficiency.

Leading to Improved Customer Satisfaction

The second benefit of CRM is improved customer satisfaction. By introducing CRM and accumulating customer information, you can build comprehensive customer profiles, allowing for a deeper understanding of each customer's needs and values.

This enables you to make optimal proposals to each individual customer in a timely manner, which in turn leads to improved customer satisfaction and LTV. Being able to make optimal proposals to each customer also leads to a reduction in sales and marketing costs.

Facilitating the Sharing of Customer Information

The third benefit of CRM is that it makes sharing customer information easier. Personal information and correspondence history tend to be held by individual representatives, but such a situation leads to the personalization of tasks and makes appropriate management difficult. Furthermore, if departments use separate databases, misunderstandings are likely to occur in inter-departmental communication, making it difficult for the organization to act consistently.

In this regard, by introducing CRM and consolidating customer information there, you can integrate customer information company-wide, allowing everyone to access necessary information in real-time. This allows managers to check the progress of each sales representative's negotiations and provide follow-up as needed, or to collaborate with marketing and customer support departments to provide higher-quality services.

Disadvantages of Using CRM

While there are benefits as described above, there are several points to be aware of when introducing CRM. Below, we introduce the disadvantages of using CRM.

Requiring a Mid- to Long-Term Perspective

The first disadvantage of CRM is that immediate results are difficult to expect. CRM is not a solution that will instantly transform operations or increase sales upon introduction. Due to the nature of CRM, companies that lack sufficient customer data will find it difficult to realize the benefits of the system immediately. In this case, you must first start by enriching the customer data to be entered into the CRM.

Even if customer data is sufficient, it still takes a reasonable amount of time to go through the process of analyzing that data, reflecting it in sales and marketing measures, and having customers become satisfied with those measures to increase LTV. Therefore, companies introducing CRM are required to have a mid- to long-term perspective.

Requiring Initial Costs for Implementation

The second disadvantage of CRM is the need for initial costs. Although it varies depending on the product, introducing CRM involves significant economic costs, such as initial fees and license fees.

Additionally, if you have been managing customer information using spreadsheets or separate databases, work will be required to integrate that information into the CRM. There is no point in introducing a tool if you cannot use it effectively, so it is important to establish a system that allows for the effective utilization of CRM, including employee training.

Differences Between CRM and SFA

There is a solution called "SFA" that is highly relevant to CRM. SFA stands for Sales Force Automation and is a system that supports the efficiency and automation of sales activities. Both CRM and SFA share the broad goal of streamlining sales activities. So, what is the difference between the two?

Simply put, the main difference between CRM and SFA is that SFA is a tool for acquiring customers, whereas CRM is a tool for maintaining and managing good relationships with customers after they have been acquired. SFA provides functions to support daily operations, such as managing the progress of negotiations, reporting on contract cases, checking the achievement rates of individuals or entire departments, and creating daily sales reports and estimates. In contrast, the main function of CRM is to collect and centrally manage data regarding customers for the purpose of maintaining future relationships.

It is important to understand that CRM and SFA are not a matter of which is superior, but rather that they are complementary when integrated. In fact, some CRMs are integrated products that also include SFA functions.

Differences Between CRM and MA

Let's also confirm the difference between CRM and MA. MA stands for Marketing Automation and is a tool that can be used to cultivate new customers and automate communication with them.

The difference between CRM and MA is that while MA is a solution for discovering and approaching prospective customers and nurturing leads, CRM is responsible for maintaining relationships after they have become customers. In that sense, the difference between CRM and MA is analogous to the difference between CRM and SFA. That said, the role of MA is positioned at an even earlier stage than SFA. Another difference is that while CRM and SFA are intended to be used primarily by the sales department, MA is a solution intended for use by the marketing department.

MA, CRM, and SFA are also complementary. By integrating MA, CRM, and SFA, you can build a system where the marketing and sales departments can collaborate more effectively—for example, by handing over leads nurtured by MA to SFA to help close deals, and then covering the subsequent relationship maintenance with CRM.

Points for Selecting a CRM

Even if we call it CRM, there are actually many products available, so many people may be worried about choosing the right one. Finally, we will introduce points for selecting a CRM suitable for your company.

Usability

First, thoroughly consider the functions your company requires from a CRM. If requirements are not met, inconveniences will arise; conversely, introducing a product with excessive functions beyond your requirements will likely lead to waste in terms of cost. Prioritizing features by categorizing them into "must-have functions" and "nice-to-have functions" is a key tip for clarifying functional requirements.

Also, no matter how feature-rich a product is, if the personnel on the front lines who actually use the product cannot master it, high implementation effects cannot be expected. There are cases where a product with poor operability is introduced, only to fail to permeate the workplace and end up being a waste of resources. Therefore, when choosing a product, it is important to select one that is easy to use, taking into account the IT skills of the personnel on the front lines. If a product has a free trial version, it is a good idea to try that first.

Integration Tools

Integration with other tools is also a point that should be checked. Because customer information is useful for various purposes, CRM is often used in conjunction with other tools. For example, the SFA and MA mentioned above are examples of this.

Therefore, when introducing a CRM, it is important to understand how comprehensive its integration functions are for external tools. We recommend prioritizing and selecting based on integration with existing tools your company already uses or tools you plan to introduce in the future.

Support System

The quality of the support system is also an important point. Especially for companies that are unfamiliar with the introduction and operation of CRM, this is a point that should be checked with priority.

For example, check the quality of support by researching reviews regarding the support desk's business hours, communication methods with the vendor, and the speed of troubleshooting. If the product is from an overseas company, it is also necessary to be careful about whether support and manuals are available in English.

Security Level

The security level of the product is also a point that should not be forgotten. Since CRM accumulates customer personal information, the robustness of security is extremely important. If customer personal information were to be leaked, the company's social credibility would be greatly diminished, and there is a risk of a negative impact on sales.

However, to make information security robust, it is important not only to have tool functions but also to thoroughly improve the security awareness of employees. This is especially necessary now that many companies are adopting remote work, increasing the opportunities to use systems and data outside the office. If there is any anxiety about such points, consider conducting compliance training in conjunction with the introduction of the tool.

Summary

CRM is an IT tool designed to centrally manage all information regarding customers and to build and maintain good relationships between a company and its customers. By utilizing CRM, companies can deepen their understanding of each individual customer, making it easier to provide products and services with high customer satisfaction and to deploy cost-effective marketing.

Furthermore, as consumer values continue to diversify, the implementation and utilization of CRM are becoming increasingly important to maintain existing customers while streamlining the acquisition of new ones. To further advance and optimize sales and marketing processes, it is highly effective to integrate uSonar, a customer data integration solution that leverages one of Japan's largest corporate databases.

By utilizing uSonar, you can manage data seamlessly from prospect outreach to existing customer follow-up through CRM integration, enabling smooth execution of analysis and strategic initiatives. By keeping customer information consistently up-to-date and accurate, you can achieve higher-precision targeting strategies and long-term customer development, thereby supporting overall business growth.