CRM software applications and business performance

Abstract

After a period of decline at the turn of the century, demand for customer relationship management (CRM) software is rebounding. Our investigation of the Australian context, however, shows that a large proportion of companies are still undeveloped in terms of their application of software to support their customer management strategies. Less than 40 per cent of companies use CRM software. When it is used, the software is more commonly deployed for customer retention and customer development purposes. It is less extensively used to support customer acquisition, but when this does happen it results in more cost-effective marketing campaigns. Companies that do employ CRM software are generally satisfied with their return on investment (ROI) from the software. Our data suggest that companies’ level of satisfaction with software performance varies directly with its reported impact on business profitability. The performance of the software in meeting companies’ expectations of customer retention is a statistically significant predictor of profitability. Larger companies tend to be less satisfied with software ROI, while service companies appear to be more likely to adopt CRM software than companies in other sectors. We find that the intelligent application of CRM software can yield improvements in business performance.