Software as a Service CRM software
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 Private and Public Sector CRM Solution Differences | How Different Are They?

As thoughtful government executives continue to increase their focus on customer service and their constituent relationships, many are examining and adopting the Customer Relationship Management (CRM) software systems that have been proven so successful in the private sector for over a decade. Having retooled the technology to address government service delivery and having renamed the moniker to “Constituent” Relationship Management (also CRM), software manufacturers promote building a “single customer view” in order to achieve a “customer-centric” agency. In other words, most or all relevant governmental information on a citizen and their contacts with agencies will be accessible by one agent, be they serving the citizen in person or remotely. Thereby, the agent has a holistic view of the governments’ relationship with the constituent and is better suited to resolve issues and meet expectations. 

That is certainly a worthwhile - if not idealistic – public service goal, but the thoughtful administrator also realizes that while there are similarities in providing customer service between the public and private sectors, there are also important differences. The following discussion illustrates the most salient similarities and differences between industry and government as seen through the lens of these diverse CRM software solutions.

Alike:  Principles and Technology

At the highest level, the use of CRM strategies and accompanying software solutions in the public and private sectors is similar in two fundamental ways. Both use use CRM to focus on the customer while helping improve service delivery and customer care and both use the same underlying technology and principles. The biggest difference between both sectors is the type of customer that each serves.

Different:  CRM Goals

The implementation and operation of CRM software in the private sector often focuses on increasing sales, customer retention and profits. Of course, government agencies don’t sell many products or services, and most don’t expect CRM to increase revenue. In the public sector, CRM is primarily concerned with efficiently delivering services to citizens. In the private sector, the number of products and services are often in the thousands, while the services offered by a government, particularly at the state and local level, generally range in the dozens to the hundreds.

Alike:  Many Value Propositions

Many reasons that businesses use CRM also apply to the public sector: cost reduction, product and service delivery improvement, increased customer knowledge and better employee morale, among others. To achieve this, governments often use call centers and web-based interactions, called citizen self service, similar to online retail offerings.

Different:  Customer Base

In the private sector, service delivery levels are often based upon the customers’ current or future financial value to the company. This often means that CRM strategy is used by industry to ensure that high value customers get the highest service, while as many transactions as possible are automated when addressing lower value customer needs. With firms, CRM systems are used to manage a large number of clients, using as small a number of processes as possible, to maximize a high number of products and services. Efficiency and customer segmentation drive operating margins and profitability.

In the public sector, each customer must be valued equally. Government’s goal is to provide each constituent with a service customized to their needs. CRM facilitates easier citizen transactions with governments so that the customer’s needs are understood and agencies can deliver the best services to address them. In the public sector, government CRM software addresses a very large number of constituents, using a small number of processes, to maximize a growing number of products and services. Efficiency in processes reduces costs.

Another key difference with regard to clients is that governments cannot choose their own customer base for most services. Priority users of some services are often the most disadvantaged and the least able to be active in the relationship. Meanwhile, commercial organizations can choose to simply ignore a section of populace if they wish. In other words, the private sector concentrates on the customers who buy actively and deliver most profit while government's focus on the section of society that is most needy, often least wealthy, and least active.

Different: Customer Communications

Due to the nature of its constituency, to be effective government must offer channels that have universal reach and affordability. Public sector CRM systems typically offer and accommodate multi-channel communication, or in other words, customer contacts through email, postal mail, Internet, telephone, facsimile or in-person. This differs from the private sector, which has more control in dictating which CRM channels shall be used for varying types of customer and designated contacts.

Different: Customer Loyalty

While business CRM strategies aim toward client relationship building and recurring sales, public sector CRM strategy focuses on constituents and service delivery. Business clients are extremely fluid so capitalizing on the relationship and reducing client churn is a commercial requirement. Constituents are a more captive audience as they cannot shop elsewhere for government services, so brand loyalty is not a factor.

Different: Technology Restrictions

Notwithstanding Sarbanes Oxley compliance, the private sector has few restrictions on operational aspects of information technology, while governments are often faced with statutory requirements involving security, legal, and accessibility issues. Such constraints include preserving audit trails, assuring privacy, adapting to changing regulations, meeting section 508 certification for disabled persons, and security certifications.

Different:  Implementation

In the public sector, one of the toughest issues with CRM software implementation is the internal resistance that management and technicians face. Some government workers have more freedom to resist change for personal, bureaucratic, personnel, or political reasons than do private sector employees, who are more responsive to management and tend to embrace technology as a necessary force for profitability and success.

While it is clear that there are significant differences in the CRM issues and environments faced by the public and private sectors, and that businesses should have an easier time in applying CRM systems, the underlying strategic value for government is clear. With constituents demanding more service and accessibility from Administrators, public sector CRM software technologies such as one-stop databases, call centers, multi-channel communication channels, and citizen self-service are the best solution for achieving process and cost objectives. With results which go far beyond improved service delivery and include sustained cost reductions, increased customer knowledge and better employee morale, CRM software implementation and post product environments offer great upside value. Although there are material differences in public and private sector use of CRM strategy, they share at least one glaring similarity – they both have much to gain from proven CRM software technology.

 Government Customer Relationship Management Software