What Is the Link Between Customer Relationship Management and Organizational Performance?

Customer relationship management and organizational performance are closely linked, which is one reason why CRM platforms have become so prevalent in today’s workplace.

Below, we will explore this connection in more detail, focusing on:

  • How customer relationship management impacts organizational performance
  • The keys to effective customer relationship management
  • How to improve customer relationship management

Let’s start by looking at the first point – how customer relationship management impacts organizational effectiveness and performance.

Understanding the Link Between Customer Relationship Management and Organizational Performance

Customer relationship management (CRM) is the business function devoted to, as the name suggests, managing customer relationships.

It is a sales function that manages customer contact details, their interactions with sales, scheduling of sales interactions, and more.

This is a crucial sales function that can have a significant impact on organizational performance, because it affects:

  • Customer Growth – Better relationships translates into a more effective sales pipeline. And a more effective sales pipeline improves customer acquisition and growth rates. 
  • Customer Retention – Customer retention also increases with the quality of customer relationships. Better sales communications, for instance, can improve the customer experience, customer onboarding, and more.
  • Brand Experience – A positive sales experience naturally leads to a better brand experience and brand perception. 
  • Revenue – Revenue is perhaps the biggest bottom-line benefit that organizations can hope for when investing in relationship management. 

Insofar as an organizations performance depends on its customers and revenue, we can clearly see the value of customer relationship management.

Keys to Effective Customer Relationship Management

Effective customer relationship management, like many other business functions, depends on a variety of factors. 

Employees, training, tools, processes, as well as external circumstances all impact the effectiveness of customer relationship management.

The keys to effective relationship management include:

  • Modern Tools – Today, technology plays a huge role in how effective organizations are at managing customer relationships. This in part explains why CRM platforms, such as Salesforce, are so popular.
  • Motivation and Engagement – Engaged employees will work harder and perform better when interacting with customers. In sales, engagement and enthusiasm also affect the results of interactions – enthusiastic, engaged sales staff will meet their objectives more often.
  • Customer Data – Customer data is collected throughout the life cycle of a customer. More, higher quality data helps businesses better meet their customers’ needs, create better experiences, and develop better relationships.
  • Well-Trained Staff – Of course, tools are only useful if employees are proficient with those tools. Employee training, therefore, is also important to the success of customer relationship management programs. 

Of course, there are plenty of other variables that can influence the effectiveness of customer relationship management.

These can include internal business processes, the organizational culture, management styles, the external marketplace, and so on.

However, most businesses are naturally concerned with those areas that they can affect, such as those listed above.

How to Improve Customer Relationship Management

There are several steps an organization can take to improve customer relationship management within its business. 

Businesses should, for instance:

  • Implement the right tools. CRM platforms, as well as other relevant sales and marketing tools, can make all the difference. There are a wide variety of platforms available, so organizations should evaluate carefully before choosing tools that fit their particular circumstances, needs, and budget.
  • Train employees. Employee training affects productivity, which directly affects organizational performance. The right training tools, such as digital adoption platforms (DAPs), can improve proficiency, accelerate time-to-competency, and increase the ROI of CRM tools.
  • Ensure that employees are engaged and motivated. Engagement and motivation go hand-in-hand with skills, at least when it comes to performance. Improving engagement levels takes effort and resources, but the returns make it worth the investment. 

Naturally, an organization should start with low-hanging fruit – the steps that deliver the highest returns for the lowest cost.

In many cases, this means implementing a cutting-edge digital strategy.

After all, digital tools can deliver a high return in little time.

An organization that wants to digitize its sales pipeline would follow steps such as:

  • Choosing and implementing a new CRM platform
  • Using modern training tools, such as digital adoption platforms, to ensure employees are proficient and productive
  • Optimizing their training approach over time, in order to increase employee proficiency, accelerate training time, and earn even more returns from their CRM tools

With the proper approach, an organization can significantly enhance its sales pipeline. 

However, such changes may affect existing business processes, so an organization should be ready to change.

Final Thoughts

Customer relationship management is an important business function that can have a large impact on organizational performance.

Today, digital technology plays a crucial role in the sales process. 

In fact, modern sales technology – such as CRM platforms – are quickly becoming a prerequisite for success in the digital economy.

To improve organizational performance, it is critical to stay current with these technology trends and ensure that employees are well-trained and productive.

Chris is the Lead Author & Editor of Change Blog. Chris established the Change blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to Change Management.