Untangling the Customer Relationship Management Conundrum: Can Blockchain Revolutionise CRMs?

Wilfred Oliver Antwi, MBA Digital Business and Management, Novia University of Applied Sciences
Henrik Virtanen, Ph.D. (Econ.) Senior Lecturer, Digital Business and Management, Novia University of Applied Sciences

Customer Relationship Management (CRM) or Electronic Customer Relationship Management (E-CRM) software platforms empower businesses to manage customer interactions systematically. These platforms encompass functionalities such as customer knowledge (KYC) management, customer data record keeping, marketing automation for products and services, and automation of pre-sales, sales, and post-sales activities. CRMs are responsible for prospecting sales and leads, collecting customer data, and integrating, and interpreting multichannel data to identify buying patterns for personalised marketing. With popular examples being Salesforce, Microsoft Dynamic 365, Hubspot, Pipedrive, and Zoho, CRM allows for the integration of companies' customer-facing activities. As of 2018, CRM had over 90% company usage across the board. Sales and marketing teams spend almost 63% of their time on technologies including CRM (18% of overall time) to enhance value appropriation (Scheiner, 2024).

The utilisation of CRM/E-CRM systems as Decision Support Systems (DSS) to enhance value appropriation (a process of capturing and maximising the benefits generated by these technologies) faces significant challenges. Department-specific adoption and siloed data often hinder CRM software unified effectiveness. But what if data security is the concern? Can a centralised system provide security and a 3600 view of customers simultaneously? Since data security is a valid concern, centralised access can undermine valuable customer insights, restrict full data usage, and dwarf the potential of CRMs as DSS. Such a wholesome responsibility of CRMs makes them susceptible to data-related vulnerabilities. Fragmented databases, departmental silos, and inconsistent data collection across touchpoints all heighten these shortfalls. Limited and deliberately restricted access further exacerbates the issue. A Forrester (2021) study revealed that a staggering 78% of large companies struggle with CRM data management and migration to other platforms for use. This data quality concern leads nearly half (48%) of employees to question the reliability of their CRM data for decision-making.

What is more, a concerning trend has emerged within the CRM/E-CRM domain. While some organisations leverage CRM data solely for initial market penetration, subsequent utilisation for market share expansion often stagnates. Early CRM experts like Chaffey, Ellis-Chadwick, Johnston, and Mayer (2006) have argued that only a mere 43% of companies continue to actively employ CRM functionalities beyond this initial phase. This suboptimal utilisation could result in a 75% CRM failure rate after early-stage implementations. These suggest that successful CRM adoption necessitates fundamental changes to established organisational processes which may be difficult for some firms.

Finnish firms aren’t an exception to these challenges. Exploratory research by Antwi (2023) investigated the quality of CRM data and its utilisation as a DSS within the marketing and sales functions. The study employed a survey instrument with 23 questions targeting 87 staff from companies using CRM as a DSS. With a 30% response rate from 11 different Finnish companies, the following was revealed;

 This blog post explores how innovative technologies like Blockchain and Distributed Ledger Technology (DLT) reserve an innate advantage of revolutionising CRM. DLT offers potential benefits for both businesses and customers in managing customer data. It could create a secure and shared view of this data, improve accessibility while maintaining security, and enable more transparent marketing strategies. Additionally, DLT could support the development of multi-firm loyalty programs. To proffer solutions to some of these challenges, 12 Blockchain developers and experts also responded to 21 survey questions, and interviews on how Blockchain could enhance CRM data, and how DLT is directly used in loyalty programmes to augment the acquisition and retention of customers. Antwi’s (2023) findings revealed that;

•  Interoperability as used in the research refers to the potential of a software system to be a repository of shared varied data, communicated data, exchange, and data utilisation for analytical, and decision purposes across separate platforms. This interoperability feature of Blockchain-augmented CRM would result in shared customer data transparency and smooth cross-departmental or intra-firm usage, offering fully fledged KYC.
•  DLT including Blockchain is a practical and newfangled way of finding lasting solutions to limited accessibility (account managers, and top-level managers only) problems. Evidence points that Agile software projects, Cybersecurity Applications, and Decentralised Applications (DApps) are being executed on Blockchain networks to prevent data silos while offering maximum security (unhackable).
•  A profound insight into the workings of Blockchain-augmented CRM/E-CRM involves a model that adopts a decentralisation of the software product at the application level using Blockchain technology. The Backend is based on open-source platforms like Hyperledger/ R3, IBM Blockchain, SAP Blockchain (Cloud Platform Blockchain) etc. to support business-to-business and business-to-customer transactions. And a Frontend where the business information is natively protected by cryptographic techniques provided by the Blockchain protocols to curb data hacks.
•  Data immutability and transparency. Blockchain could also enhance data warehouse immutability and secure decentralised departmental and company-wide shared CRM/E-CRM access for informed decision-making, especially for Salesforce, and Dynamic 365 users. Data becomes decentralised yet cannot be copied or manipulated without permission neither can a new chain be added without a consensus mechanism required by other nodes on the chain.
•  Blockchain-augmented CRM could harbour better advantages especially the Public-Permissioned type where singular data harvesting and deletion, missing data, and deliberately restricted access as part of current CRM problems could be thwarted.
•  Blockchain-augmented CRM database could be better suited for partnership reward programmes such as discount codes or free delivery (supply chain and last mile tracking). Transferable discounts could give customers the thoughts of smart purchases, enhance purchase intent, gratification of savings, and economic worth. Free delivery on the other hand promotes conversion rate and recommended purchases.
•  Multi-firm rewards marketing strategies could be better planned with Blockchain-augmented systems. Blockchains for transparency and better monitoring purposes are being tested by Instacart and Delta Airlines in the US where members transfer into SkyMiles points from grocery purchases and delivery (1 mile per dollar spent on delivery) and vice versa. This enhances points transfers and higher redemption rates amongst customers which directly enhances customer loyalty and repurchases.
•  Moreover, Blockchain features of tokenisation, smart contracts, transparency and transferrable points, reduced transaction cost, influencer and affiliate marketing codes and link security hacks prevention through DApps.

To sum it up, Blockchain is gaining traction in the front and back-office applications, and matching up with, Cloud-computing, and Artificial Intelligence potentials in terms of ERP systems such as CRMs. Businesses of all sizes do not necessarily have to set up Blockchains but can subscribe to well-established ones such as R3, IBM Blockchain, Amazon Managed Blockchain, SAP Blockchain (Cloud Platform Blockchain), and ConsenSys Quorum Blockchain Service. Finally, marketing strategies such as Loyalty Programmes are viewed as the best way of adding value and validating CRM use with the potential to increase retention, reduce cost, increase Customer Lifetime Value (CLTV), promote regular purchases from buyers, improve operational profit, and acquire new customers. Apparently, Blockchain is making these possible innovatively.

Useful links

•  Antwi, Wilfred Oliver (2023). Prospecting Blockchain-augmented CRM, and the Emerging Usage of DLT in Reward Programme Decisions Amongst Finnish Companies. MBA thesis, Novia University of Applied Sciences. https://urn.fi/URN:NBN:fi:amk-2023120835358
•  Chaffey, D., Ellis-Chadwick, F., Johnston, K. & Mayer, R. (2006). Internet Marketing; Strategy Implementation and Practice (3rd Edition). Prentice Hall.
•  Forrester (2021). The State Of Enterprise CRM Data Management. Commissioned by Odaseva. https://go.odaseva.com/hubfs/Odaseva%20White%20Paper%20and%20Ebook/Forrester%20Research%20-%20The%20State%20of%20Enterprise%20CRM%20Data%20Management%202021.pdf
•  Grand View Research (n.d.). Market Analysis Report 2018-2023.
• https://www.grandviewresearch.com/industry-analysis/customer-relationship-management-crm-market
•  IBM (n.d.). IBM Blockchain. https://www.ibm.com/blockchain
•  McKinsey & Company (n.d.). Blockchain & Digital Assets. https://www.mckinsey.com/industries/financial-services/our-insights/blockchain-and-digital-assets
•  Scheiner, M. (2024). 17 CRM Statistics: Growth, Revenue & Adoption Trends in 2023. https://crm.org/crmland/crm-statistics

The blogpost has been reviewed by Novia's editorial board and accepted for publication on 6.6.2024.