What is CRM? – 3 Letters That Will Supercharge Your Business

CRM or Customer Relationship Management is a term used to describe the processes, systems, and procedures that businesses use to manage their customer relationships, usually using a CRM tool that allows for easy data analytics, collaboration, and management of the sales pipeline.

In this article, we’re going to cover the basics of CRM as a concept and business strategy and look at some specific CRM tools and systems that can help manage the process.

By the end of this article, you’ll have a complete understanding of what CRM is, what CRM tools can do, and be able to make an informed decision about whether a CRM solution is right for your business.

What is CRM? (CRM Definition)

CRM is a nebulous term that encompasses the general concept of managing customer relationships efficiently and the processes, systems, tools, procedures, and software that facilitate that.

CRM tools started off in the sales world as a way to visualize the sales pipeline, but over time they have evolved to manage and optimize all aspects of how businesses deal with customers, including prospecting, communications, data analysis, workflow management, and collaboration.

What Does CRM Stand For?

CRM is an initialism that stands for Customer Relationship Management. It’s used to refer to the process of managing customer relationships in businesses and other organizations, as well as the software, systems, and procedures in place to manage that process.

What Does CRM Software Stand For?

CRM software stands for Customer Relationship Management software. CRM software provides a centralized platform for managing the entire customer relationship workflow within an organization, covering first contact, sales, analytics and reporting, and collaboration between team members.

Why Is Customer Relationship Management Important?

Customer relationship management is crucial to any business or organization dealing with customers, whether internal, external, B2C or B2B.

CRM is important because, without a robust CRM strategy in place, businesses and organizations can not fully maximize the potential value of their customers, or efficiently manage the customer relationship.

Who Can Benefit From CRM?

Every business has customers, so every business can benefit from a robust CRM strategy and reliable CRM software to manage their customer relationships.

Here are some examples of businesses and an idea of how they might use a CRM tool to help manage their customer workflow.

BusinessCRM Use Case Example
Small Retail StoreManage inventory and supplier relationships
Car ShowroomManage sales process, automate follow-up to maximize sales
B2B SalesManage contacts at the client organization, manage the long lead-time sales process 
RestaurantManage relationships and orders with suppliers, manage restaurant staff
Freelance Graphic DesignerManage orders, track communication with clients, create invoices
Marketing Dept Within a Large CompanyMeasure engagement with marketing campaigns, collate lists of potential sales opportunities for the sales team
Real Estate AgentsManage sales pipeline, track viewings, and appointments
Charitable OrganizationTrack grant applications, record communication with stakeholders

As you can see, a solid CRM strategy is useful for any company, organization, charity, or individual that deals with customers, colleagues, clients, or other stakeholders.

What is a CRM System?

A CRM system is a set of tools, processes, and procedures that work together to manage the customer relationship. CRM systems usually involve at least one CRM software tool, which acts as a central management hub that integrates with other systems within a business.

For example, a CRM platform might integrate with the phone system, the sales system, the marketing team, and the account management team to provide a centralized hub and a logical flow for managing the customer relationship.

CRM software allows businesses to maximize profits and customer experience by carrying out detailed analytics and reporting on each customer, providing a high-level overview of their accounts, and automating processes such as communication.

How Does CRM Software work?

CRM software works by streamlining the entire customer relationship management process, allowing different teams and software to integrate seamlessly to provide a smooth experience for the customer and to make use of synergies between different data sources and teams.

Most CRM software has a central dashboard that can be heavily customized, allowing for a high-level overview of every customer’s journey from start to finish, detailed analytics, and easy collaboration between teams.

What Does CRM Software Do?

CRM software handles every aspect of how businesses deal with customers centrally, allowing the business to maximize employee efficiency, customer satisfaction, and profits.

Let’s look at some of these features more closely:

Workflow Management

CRM software allows you to take a complex workflow with several moving parts and stakeholders and manage it collaboratively all from a single hub, seamlessly integrated with external systems and business processes.


CRM software eliminates inefficiencies in your customer management process by pulling all required info into one simple, easy-to-use dashboard.

This means different colleagues and teams can work together, share data, and always have a full picture of what stage the customer relationship is at.

Customer Experience

Most CRMs can integrate with customer contact systems such as mailing lists, website chatbots, and account management tools, allowing the customer to request a callback, or make some change to their account by themselves and have the CRM schedule some further action based on the customer’s actions.

CRM automation and integration help improve the customer experience, reduce customer frustration and waiting times, and ultimately improve customer retention and increase the average lifetime sales value of your customers.

Analytics and Reporting

One of the biggest selling points of a CRM is that it helps businesses extract valuable insights from existing business data.

CRMs can carry out reports on large volumes of customer data to identify sales opportunities, help manage customer accounts, and increase customer satisfaction automatically, bringing immense value to any customer-oriented business.

Benefits of CRM Software

CRM software can help organizations improve the customer experience by reducing inefficient processes, streamlining their customer contact and marketing strategies, and identifying potential sales opportunities automatically using reporting and analytics.

Let’s look at a few benefits of CRM software in more detail, and find out how the software works.

Improve Sales

CRM software allows businesses to improve their sales process by streamlining the sales workflow from start to finish.

CRM software can collect inbound leads, track open rate and engagement with marketing campaigns automatically to identify potential customers, fully automate follow-up and retargeting, and create a central hub to ensure the maximum possible customer experience.

With big-data analytics and reporting, CRMs can predict sales and identify potential prospects, using AI technology to conduct automated marketing and targeting campaigns to your most likely customers. The result is an increase in sales beyond what even the most skilled salespeople could achieve on their own.

Improve Customer Service

Many CRM solutions offer functionality solely designed to increase customer satisfaction. 

For example, most CRMs can integrate with your website chatbot to schedule callbacks, arrange meetings, or simply provide customers information about their accounts.

Most CRMs can be integrated with 3rd party enterprise software using Zapier or similar integration platforms.

CRMs create efficiencies within your organization too, ensuring every colleague knows what’s happening with a particular account and preventing the frustration of the customer having to explain themselves to multiple people.

The result of increased customer satisfaction is an increase in your overall customer lifecycle, reduced churn, and improved customer retention.

Maximize Profits

The end result of increasing efficiency within your organization, improving sales and conversions, collecting more prospects and warm leads, and creating a smooth, logical workflow managing the customer relationship from start to finish is a drastic increase in profitability.

CRMs improve profitability by reducing waste, creating an efficient process for your employees, identifying potential leads through AI and data analytics, maximizing the customer experience to improve customer retention, and increasing sales.

On-Premise vs Cloud-Based CRM Solutions

There are two types of CRM solutions, on-premise CRM and cloud-based CRM. The difference is simply how the software is served, and where the data is stored.

Let’s take a look at each type and explore the differences, advantages, and disadvantages of each.

On-Premise CRM Solutions

An on-premise CRM tool is a CRM system that’s entirely contained within an organization. Typically, this means that the CRM is licensed to the organization and the organization employs its own software engineers to manage the system.

This type of solution works best for extremely large organizations like banks or healthcare providers with complex customer data and strict regulatory requirements that prohibit the transferring of sensitive customer information to 3rd parties.

Advantages of On-Premise CRMs

  • Can integrate with in-house software
  • Data stored on-site
  • May work out cheaper for large organizations

Disadvantages of On-Premise CRMs

  • High installation costs
  • Ongoing expense to maintain
  • More complex solution than off-the-shelf options
  • Need to be manually updated
  • Less support
  • Have to employ engineers to maintain

Cloud-based CRM Solutions

Cloud-based CRMs are the usual method of delivering CRM software nowadays. Cloud-based CRMs deliver software through the cloud, usually on a web app or portal.

There are some major advantages to this type of service. Since the entire software is being run by the software provider, the business doesn’t need to hire its own software engineers to look after the system.

Cloud-based CRM solutions ensure every user is using up-to-date data, and there are even options in some advanced CRMs like Pipedrive to store any customer data locally, instead of uploading it to the cloud. This is particularly important for regulated businesses like finance and medicine.

Cloud-based CRMs Pros and Cons:

Advantages of Cloud-based CRMs:

  • Ensures up-to-date data used at all times
  • Not reliant on local network infrastructure
  • No requirements to hire engineers for maintenance
  • Better support
  • No requirements to manually update

Disadvantages of Cloud-based CRMs:

  • Single point of failure
  • Data security / regulatory implications
  • Limited integrations with in-house software
  • Can be extremely expensive in large organizations

Popular Cloud-based and On-premise CRM providers

CRM ProviderOn-premiseCloud-based
Oracle SiebelYESYES

CRM Examples in Different Industries

CRM is important in every industry, from fortune 500 global conglomerates to mom and pop retail stores.

Without a proper CRM strategy, you are leaving money on the table, losing out on sales opportunities, and allowing inefficiencies to creep into your business.

Let’s look at some examples of what a CRM solution might look like in different industries:

CRM in Sales

CRM software is an evolution of a previous, more limited class of tool called sales force management, which was specifically designed to visualize and optimize the sales pipeline.

Over time, CRM software has evolved to include additional customer relationship management tools such as data analytics, automatic follow-up, automatic lead generation, integration with inbound sales systems, etc.

According to SalesForce, simply adopting a CRM can boost sales by 29%.

CRM in Banking

Banks are extremely complex businesses, in their service offering, the structure of the business, and the overall size of the business.

CRM software is most useful in banking for pulling data from multiple sources, improving the customer experience, and ensuring regulatory compliance by eradicating insecure, uncoordinated systems and processes.

CRM in Banking Example

Imagine a standard, mid-sized bank. There’s a marketing team, and underwriting team, a new business team, an account management team, a local bank branch manager all with their own processes, systems, and points of contact.

Using a centralized CRM, every team can use the data collected by other parts of the business to identify new opportunities and manage the customer accounts more efficiently.

All this adds up to a much leaner, more efficient process within the organization, vastly improves the customer experience, and gets rid of clunky and outdated spreadsheets and custom tools that pose a data and security risk to the bank.

CRM in Marketing

Marketing thrives on data. CRM tools provide a way for marketing teams to collect, collate, and analyze data from multiple sources in one central hub, and to be able to get actionable data and insights to provide to the rest of the organization.

CRM in Marketing Example

Let’s say a marketing campaign was launching a new digital marketing campaign to expand their customer base.

A CRM tool would integrate seamlessly with their email provider and analytics tools, allowing them to combine customer information with ad engagement data to track how well their campaign is doing and to create a list of prospects to retarget.

Are CRM Tools Useful for B2B?

CRM tools (often called CRMs) are just as crucial to success for B2B operations as they are for B2C. Effective management of customer relationships is a necessary aspect of every business, especially if your customers are other companies with lots of moving parts.

CRM software can help track communications and contacts between different departments, aggregate data from several sources to find more opportunities for collaboration, help streamline communications between your business and your business customers.

Are CRMs Useful for Small Businesses?

Although much of the benefits of CRMs come from collaboration and workflow management, small businesses with simpler customer journeys can still massively benefit from the analytics and integration tools available in most modern CRM software.

For example, small businesses can use CRM tools to separate their customers into groups, conduct targeted marketing campaigns based on customer demographics and measure their results, keep track of customer communications, sales, and orders, and allow customers to schedule appointments or manage their accounts without the need for an employee to be there manning the phone 24/7.

Conclusion – Why You Need a CRM

Every business needs a CRM strategy, and for most organizations, a specialist CRM software platform will vastly improve their ability to manage customer relationships effectively.

If CRM isn’t a focus in your organization, you’re leaving the door open for inefficiencies to creep into your customer journey, with duplicated or out-of-date information leading to lost opportunities, poor record-keeping leading to wasted hours of work, and a lack of analytics resulting in reduced marketing reach and fewer opportunities to connect with customers.

Using CRM software is the best way to ensure a smooth, efficient, and maximally profitable customers journey from start to finish.


If your business deals with customers on a regular basis, CRM software is worth its weight in gold. 

Being able to pull data from every corner of your organization into one central hub where you can conduct analytics and reports and manage every aspect of the customer relationship in one place will save you time and money and make your business more profitable.

Research by Nucleus Group found that for every $1 spent on a CRM solution, the business generated $8.71.

If you’re struggling to justify the cost, try a CRM with a full-featured free trial like monday.com or Pipedrive

If the additional sales, profits, and customer satisfaction aren’t worth it, you can simply switch it off and go back to using your old system.

The concept of Customer Relationship Management (CRM) is crucial to every business that deals with customers, clients, or internal or external stakeholders.

While it’s absolutely necessary to build a robust CRM strategy within your business, it’s possible to put a system in place that doesn’t use specialized CRM software.

The downside to this is that it’s not always possible to integrate different data sources as well as a CRM tool can, resulting in inefficiencies and lost opportunities.

ERP stands for Enterprise Resource Planning. It’s a similar type of tool as a CRM tool, but it’s more focused on collaboration and data sharing than customer relationships.

For example, an energy company might use an ERP tool to allow municipalities and power grid controllers to communicate with power generation facilities in real-time to manage the energy supply, using the tool to calculate and predict future demand.

Although all CRMs essentially perform the same functions, they are built with different audiences in mind.

If you’re working with a team and need a CRM to manage your workflow, a collaborative, workflow-based CRM like monday.com or asana will suit you best.

If you’re in a sales environment, a sales-based CRM like Pipedrive will probably be more suited to your needs.

Check out our CRM guides for more information.

Many CRM software tools offer a free trial or a free plan with limited features. monday.com offers a completely free plan which is perfect for individuals, and free trial options if you want to test out one of their paid plans.

CRMs with Free Trial/Free Plan Options:

ToolHas Free Plan?Has Free Trial?

*Salesforce and Streak require you to request a free trial, it’s not offered freely.

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