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.
|Business||CRM Use Case Example|
|Small Retail Store||Manage inventory and supplier relationships|
|Car Showroom||Manage sales process, automate follow-up to maximize sales|
|B2B Sales||Manage contacts at the client organization, manage the long lead-time sales process|
|Restaurant||Manage relationships and orders with suppliers, manage restaurant staff|
|Freelance Graphic Designer||Manage orders, track communication with clients, create invoices|
|Marketing Dept Within a Large Company||Measure engagement with marketing campaigns, collate lists of potential sales opportunities for the sales team|
|Real Estate Agents||Manage sales pipeline, track viewings, and appointments|
|Charitable Organization||Track 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:
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.
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.
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.
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 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.