Hosted CRM is an arrangement in which a company outsources some or all of its customer relationship management functions to an application service provider (ASP). The hosted CRM model is said to increase return on investment by decreasing costs and allowing a company to focus more resources on its main business areas. In-house CRM, on the other hand, while more expensive, is also said to allow more customization.
Experts advise how to use new technologies to improve customer relations, increase profits, and keep up with consumers.
The hosted CRM model is most prevalent in small-to-medium size companies, especially those who don't already have well-established CRM processes. According to a study from Nucleus Research, over 80% of companies that outsourced CRM achieved a positive ROI. The study reported that problems with the traditional in-house CRM model include high software and consulting costs, ineffective user adoption, and poor management. However, because in-house CRM can be tailored more specifically to the particular needs of an organization, most larger companies opt for the traditional model.