Analyzing CRMs: Relevance and Contribution to Business Model Evolution

Published on October 11, 2021
3 min read
News
Icon Saphyte Team
3 min read
Updated:

Any industry, especially technology-intensive ones, has to undergo a necessary evolution of business models. That means they have to develop new product and service offerings, enter into partnerships with other companies, and utilize new sales channels (such as online), among others.

Businesses that are able to adapt and integrate technological innovations are the ones that usually survive a disrupted business environment. They are able to explore new business opportunities, respond to erratic consumer behavior, and take advantage of emerging trends.

For example, IBM owes its over 110 years of existence to business model evolution. Starting out as a manufacturer of time clocks, weighing scales, ​​automatic meat slicers, and coffee grinders, among others, it gradually moved into IT infrastructure hosting and consulting.

On the other hand, firms that are unable to adapt are doomed to fail. For example, despite Eastmann Kodak Co’s legendary status in the field of photography, it filed bankruptcy in 2012 at the height of the digitalization of its industry. 

How Businesses Evolve

There are four generic components that are involved in business model evolution: (1) market, (2) resources, (3) business processes and value structure, and (4) offering. 

1. Market: the space where customers, competitors, and product/service substitutes are situated in. 

2. Resources: the business’s vital resources such as its physical inputs, labor, knowledge, and financial capital. This may include physical resources like computers, server halls, and sales offices locations.

3. Business Processes and Value Structure: this refers to the business activities that are involved in the acquisition and transformation of resources into offerings up to their delivery to the consumer market.

4. Offering: also known as value proposition. This refers to the meaning the customers perceive from your product or service.

To illustrate how these components work, take a look at this example:

In the healthcare market (1), companies no longer wait for customers to approach them. Nowadays, they utilize online channels, which typically require a website and a staff to maintain the website (2), to communicate with patients (3) who actively rely on the Internet for their needs. Websites provide convenience (4) to patients as they cut short the process of exchanging information between the healthcare provider and the patient. 

What It Takes to Grow Today

There are two main approaches to modern-day business growth: (1) being customer-centric and (2) making use of business insights

Being customer-centric means knowing the expectations and experiences of your customers and acting on that knowledge. 

It involves knowing what your customers:

Think and Feel: What they think counts the most. What their major preoccupations are. What their worries and aspirations are.

Hear: What their boss, friends, family, and influencers say.

See: Their environment. What the market offers.

Say and Do: Their behavior in public and private spaces. Their appearance. Their interactions with other people.

Ignoring these would result in poor customer service, which could dissuade customers from purchasing from you and may even lead them to buy from your competition.

Making use of business insights means using data and analytics properly to guide your marketing decisions and strategy. Unlike estimates and just pure guessing, business insights are supposed to show accurate results of your business performance. This allows you to take action with more precision.

Both approaches can be independent of each other or interdependent on each other. But what’s best for businesses is to combine these two approaches— collecting data from customers, analyzing the data you’ve gathered, and reshaping the brand to give value to serve and suit customers’ needs and preferences.

Relevance and contribution of CRM 

CRM allows you to take both approaches simultaneously. With a CRM, you’ll be able to systematically store and organize data you’ve gathered from your customers. The CRM can also be designed to generate analytics automatically based on the data it has gathered. 

Furthermore, with its tools and features, the CRM can also let users make efficient workflows through automation. 

Here’s an example of how CRM contributes to the evolution of a business:

CRMs allow businesses to take on the online world at an advantage. They help capture leads visiting your websites, social media pages, and apps, and they can also help in sales promotion through email marketing.

With tools that perform analytics, they can let users do sales forecasts without making manual computations. They can also help in customer support— alerting sales teams for important appointments and consultations and in organizing customer feedback and complaints through the ticketing system.

Because communication is much more difficult to do online, CRMs arm sales teams with the tools they need to make the exchange of information smoother. 

They organize the data in a way that makes it easy for sales teams to perform personalized services to customers— overcoming barriers to communication and allowing salespeople to be proactive when it comes to their customers’ needs.

In a world where being customer-centric and deciding based on business insights are what it takes to grow, CRMs certainly perform a massive role in the development and evolution of businesses.

Sources:

Hedman, Jonas & Henningsson, Stefan & Antero, Michelle. (2013). Evolution of business models: A case study of sap.

Stropek, Rainer. (2012). Business Model Evolution: Why the journey to SaaS makes sense.

Curious how digital ecosystems can help improve your business?

Check out how digital ecosystems can boost your company performance by getting started here.

Book a Demo
May 18, 2022