What Is a CRM (Customer Relationship Management)?

Effective CRM leads to efficient problem-solving and positive interactions with customers. This makes the customer feel valued and well-served. These feelings foster long-term trust, which directly translates to customer retention, repeat business, and widespread positive word of mouth. Learning more about CRM and why these results are important can help you achieve greater business success.

What Is a CRM and What Does It Do?

The purpose of a CRM system is to store, manage, and evaluate customer relation data. This data may come from transactions, interactions, surveys, or other sources related to the customer. Business leaders can use the CRM system to generate actionable insights and make informed sales decisions.

All of this happens through the power of connections. There are various CRM tools you might already use every day, such as emails, invoices, and other documents, which the CRM system connects to seamlessly. A sophisticated CRM draws meaningful data from these tools, stores it, and keeps it ready for decision-makers to utilize effectively. 

Any modern CRM will also feature social media integration. Business social media accounts are hubs of marketing, customer interactions, and valuable consumer insight. Not only should your CRM system connect to your social media pages, but you should also consider weighting the insights drawn from those sources particularly heavily.

What Is a CRM Used For?

Customer relationship management systems are multi-purpose tools that aggregate many types of data that you can use for myriad purposes. That is why it can be easy to lose sight of what CRM tools are truly used for.

The primary objectives of using a CRM system are:

• Improving customer service

• Boosting sales

• Expanding your business reach

• Increasing operational efficiency

• Maintaining high customer retention

Data is a powerful asset, especially in the modern data-driven world. The insights that are possible through CRM data can lead to record-breaking profits, but there is a balance that business leaders must maintain. As the name implies, customer relationship management systems focus on customer-centric results, even at the risk of short-term profits.

Rather than those short-term bursts of revenue, CRM focuses on long-term growth. It does this by providing centralized control over customer interaction management. By unifying relationship insights at one location, decision-makers can expand business operations outward and control interactions in a positive way, all from an informed position.

Why Is Using a CRM Important for Your Business?

Evolving technology makes business highly competitive. Having an online presence means you can reach customers all over the country, or even all over the world. In other words, you are competing for attention with the entire global market for your particular business sector. You need every advantage you can get, and since other companies are leveraging the capabilities of CRM, you must do so as well.

Digital tools also make modern businesses highly scalable. You can use social media to amplify marketing, build an e-commerce site to sell products worldwide, and use cloud computing to boost all manner of online endeavors. Growth can become unsustainable, though, if you do not have a way to manage ever-increasing amounts of customer data. CRM is a necessary scalability solution.

In addition to helping you stay competitive and scalable, other benefits of using a CRM include:

• Higher sales productivity

• More actionable analytics

• Automated business processes

• Greater opportunities for collaboration

Key Features of a CRM

CRM systems are feature-rich — it is certainly difficult to argue against a CRM solution that has more features than competing software. More features equals more options, more data, and potentially greater diversity in sales strategies. With so many options to choose from, though, it is important to mitigate decision paralysis by understanding which features are most crucial.

Some common features that are essential for any CRM system are:

• Customer service

• External software integration

• Employee performance tracking

• Analytics and reporting

However, the key features that truly set an effective CRM apart from other business tools are contact management and automation. At the core, CRMs are all about connecting to customers and streamlining business. The right CRM system will put these features front and center, prioritizing the functionality of the processes that matter most to business leaders.

When defining how these features help in managing customer relationships, it all comes down to communication. Understanding the customer leads to meaningful communication. Automation leads to more frequent communication. Analytics, monitoring, and integration all lead to more informed communication. The end result is a better customer experience.

Types of CRM

While customer relationship management systems are themselves a specific type of software, it is necessary to further categorize them into subtypes based on the broader goals they help you achieve.

Operational CRM focuses on enhancing business operations in the context of customer relations. The defining feature of an operational CRM is automation. Marketing teams, sales teams, and customer service representatives use this type of software to streamline processes such as customer outreach and problem-solving chat.

Analytical CRM prioritizes the processing of data to inform customer-centric decisions. A company’s sales department values the insights provided by analytical CRM because it helps in the creation of strategies that capitalize on spending habits and buying patterns. 

Collaborative CRM is all about connecting teams. You can ideally use collaborative CRM not only to improve communication between your own internal teams but also to facilitate cooperation with third-party partners as well. Interaction management is at the heart of collaborative CRM, keeping relevant information up to date so that all parties involved will interact with customers in a positive and consistent way.

CRM Benefits

The first and foremost benefit of using a CRM comes in the form of an improved customer experience. Using a CRM system helps a business serve customers better and more thoughtfully. This, in turn, results in customer retention, quicker troubleshooting, and a better corporate reputation.

On an internal note, CRMs also boost sales team productivity. The departments responsible for promoting and releasing products can achieve faster time to market when they have access to insights that inform them on audience interests, buying patterns, and price tolerance.

The best CRM systems of today also help you reap the benefits of collaboration. You can choose to share access to your CRM with anyone, including external teams when the situation calls for it, to allow everyone to work from the same shared record. Consider taking cooperation to the next level with evolving generative AI features.

In one of many prominent examples of a major company benefitting from CRM systems, Wells Fargo relies on this type of software to sync banking, mortgages, investments, and other high-stakes services. This major FinServ company asserts that their CRM use saves hundreds of hours and helps reduce technical debt.

CRM Examples

Salesforce is a cloud-based CRM solution and the one that comes likely comes to mind first when many people think of customer relationship management. Users appreciate that Salesforce has a wide range of features while remaining highly customizable. The reach of Salesforce also makes it compatible with many third-party services and ensures that there is a large user community from which you can draw support when needed.

HubSpot stands out as a free-to-use CRM that emphasizes inbound marketing. This means using HubSpot is likely to align with your goals if you prefer to draw customers in by creating meaningful content. Other marketing solutions might prioritize outbound marketing instead, but HubSpot offers tools like a brand kit generator and educational resources to specifically help with inbound marketing efforts.

Zoho is a multi-faceted technology company that also offers a popular CRM solution. The Zoho CRM is naturally compatible with other Zoho tools such as its Office Suite, email service, and accounting software. Business leaders who are seeking not only a CRM solution but an entire SaaS ecosystem would do well to consider Zoho.

Monday CRM is a leadership-oriented platform that doubles as an effective project management tool. It is also highly customizable, with an interface that users can organize based on dates, project status, and other important data types. Monday is worth considering for teams needing a versatile workspace in addition to a functional CRM system.

How To Choose a CRM

There are several great CRM choices that could significantly boost your business, each with their own unique features. The first step in choosing the right CRM for your company is evaluating your budget. Compare pricing models, or opt for a free CRM platform with premium features you can scale up to in the future.

You should also consider your overall marketing goals. If you follow the principles of outbound marketing, consider a platform like Salesforce that helps you reach out to potential customers. If inbound marketing suits your brand identity more, choose a CRM like HubSpot that comes with sophisticated content creation tools.

Seeking recommendations is also an important tactic when choosing a CRM. Research the CRMs used by other businesses within your niche, as these are likely to satisfy your needs as well. Keep in mind also that CRM systems are often hubs of collaboration between companies — in other words, it is worth your while to use the same CRM as other businesses with which you might collaborate in the future.

When you narrow down your CRM candidates to just a few choices, do not hesitate to try a free trial. Any of the leading CRM options will allow you to try the platform risk-free for a week or more. This can be the best way to truly determine if the software will meet your day-to-day needs.

When To Choose a Custom-Made CRM

Opting for an existing CRM system, like Salesforce, can save your organization time and money by providing an in-the-box solution that you can use as soon as today. If you choose to acquire a custom-made CRM, on the other hand, you will have a personalized set of tools that perfectly addresses your company’s unique needs.

Experts explain that customizing a CRM allows your software to mirror the business’s unique workflow and style. if you have a complex marketing strategy, such as one with many simultaneous initiatives and a diverse variety of target customer personas, then it can be worthwhile to invest in a custom development choice.

Any well-built CRM system can be a productivity enhancer, but a custom-made CRM comes with the benefit of specifically enhancing your organization’s in-house processes. When you hire a CRM developer, they can build the software around your particular workflows, enabling a much more seamless transition toward automated CRM.

Even for a large-scale project like CRM development, it is often more economical to find a freelance designer for the job rather than onboarding a permanent full-time software engineer. Carefully vetted talent websites like Toptal make it easy to hire the best freelance CRM designers and developers with minimum effort on your part.

Implementing a CRM

After choosing an existing CRM system or having one made by a professional designer, the next obstacle is implementing it for use. Not only does this require specific technical talent for integrating the CRM with your existing technology ecosystem, but it also requires leadership action on your part to implement it in your company’s workflow.

It is important to choose the right developer when implementing your CRM. Specialized professionals can ensure a seamless transition for your sales teams by providing them with an accessible interface with which to interact with the CRM system. Doing so will soften the learning curve and mitigate any disruption to business operations.

From there, the key steps to follow when implementing a new CRM are:

• Setting goals to achieve with the CRM

• Training staff on effective CRM use

• Onboarding any additional talent needed for managing the CRM

• Integrating the CRM with other sales systems, such as analytics software

Ensuring that you get the most out of your CRM system means constantly optimizing your processes, both during implementation and in the months and years to follow. This means never ceasing to pursue promising sales leads and always taking action to boost sales prospects so your business can grow successfully.