CRM is an abbreviation that stands for customer relationship management. In a broader context, it is an umbrella term that covers any approach, strategy or technology that is aimed at building and maintaining strong relationships with a company’s clientele.
In practice, when people talk about, the term “CRM” is mostly used in a narrower sense to describe the software that companies use to compile, analyze and manage customer data and interactions throughout the customer lifecycle. From this point of view, it’s a whole sector of the software industry with its own specific jargon and terminology.
Customer relationship management is, in fact, the briefest and most accurate explanation of what CRM software does. Yet, these three words don’t define the ins and outs of CRMs or show why they are so widespread and how businesses benefit from using them. So, let’s dive deeper into the details.
How does CRM work?
Basically, a CRM system is a database that is used to collect, store and analyze customer data. It incorporates and organizes the information about current customers, leads, business partners, suppliers, employees, and other people that are important to a business.
CRM software accumulates an enormous amount of information from a range of sources, including the company’s website, calls, emails, meetings, marketing campaigns, social media, etc. It is an invaluable data repository that stores a detailed history of business interactions, customer purchases, their needs and buying preferences.
Besides simply gathering and analyzing contact data, CRM software gives sales, marketing and support teams a range of tools to manage marketing initiatives, sales pipelines and support inquiries. Equipped with CRM data, sales teams gain the opportunity to enhance their understanding of customers, personalize sales offers, and, as a result, increase sales rates. At the same time, marketing teams can analyze this information to accurately define buyer persona and reach their target audience with the relevant campaigns. Support teams, for their part, have the background data that allows them to identify solutions to customer requests more quickly and automate replies to common support issues.
In short, CRM helps your business see your customers in a whole new light and brings transparency into business activities. By focusing on the customer base, the software helps make interactions with a brand memorable, special and personalized. As a result, the company builds strong and lasting relationships with clientele, delivers a positive customer experience, and thereby increases sales performance and profits.
Top 10 facts about CRM systems
- CRM significantly improves conversion rates
First of all, the right CRM solution streamlines lead nurturing tactics and automates a myriad of routine operations. It frees up a substantial amount of time and resources that can otherwise be devoted to building relationships, developing loyalty and learning the needs of each potential customer. All of that combines to provide the ability to personalize the customer journey and increase lead conversion. - CRM boosts customer satisfaction and retention
Satisfied customers are more loyal and, in fact, come back to make repeat purchases more frequently. Numerous polls and findings show that a good CRM solution is one of the primary tools that help businesses increase retention rates and improve customer satisfaction. The software allows businesses to gain a deeper knowledge of their customers, which helps deliver more personalized and meaningful experiences. - CRM has a substantial impact on data accessibility
A solid customer relationship system provides the ability to centralize and properly organize a substantial amount of customer data. With all business-related information stored in one location, employees will spend less time searching for information and stay focused on building customer trust and closing deals faster. - CRM adoption increases productivity
High-quality CRM systems encompass a wide range of features aimed at automating many important business processes. It allows employees to concentrate their efforts on tasks that require human interactions instead of getting bogged down in routine, repetitive operations. As a result, the employees become more productive and can focus more on building relationships with customers. - CRM implementation means sales and revenue growth
CRM software is, above all, a tool for sales management. It provides a complete and detailed view of customers and the sales cycle of a company. By using and analyzing all this information, the sales team can better understand customer behavior, make more personalized sales offers, and apparently close more deals. - CRM provides insights into the sales and marketing performance
The CRM reporting tools can assess the efficiency of the sales, support, and marketing strategies of a company. Using these analytical insights, businesses can determine current market trends, analyze customer behavior, plan wisely for the future, and make more informed business decisions. - CRM can help cut down the silos in customer data
The implementation of CRM technology centralizes data and organizes the work of different teams within one place. By integrating CRM platforms with other business applications, companies manage to reduce data silos and increase collaboration among different departments. - CRM ensures greater customer service
Along with product quality and price, customer experience is one of the main factors influencing purchase decisions. As you know, happy customers are repeat customers. Also, according to various surveys, many customers are willing to pay more if they have good experience with the brand’s customer service. CRM systems provide employees with complete customer profiles that can help them serve customers better and create more personalized experiences. - Cloud CRM solutions are becoming more popular
More and more companies prefer implementing cloud-hosted CRM solutions and for a good reason. Cloud solutions make it easier to organize the work and communication of remote teams and provide constant and quick access to data. - CRM software is a necessity, not a “nice-to-have” tool
As business grows, it’s close to impossible to stay competitive in the market without implementing CRM software. It helps to streamline and automate a range of routine, manual processes, improves alignment among various teams, allows for the proper data organization, and helps build strong and loyal relationships with customers.
Who is CRM software for?
No matter the size of a company or industry it is in, if a company deals with customers or needs to organize business data, it will definitely benefit from using CRM software. The right CRM platform provides the opportunity to streamline every aspect of both B2B and B2C organizations – from sales and marketing to customer service and business process automation.
For a startup, a CRM platform will help to organize data and manage all business processes. Startups that implement a CRM solution can plan wisely for the future, determine and improve the pain points in their business strategies, and consequently grow their business faster. With perfectly organized business processes from the onset, it is a lot easier to scale a business and increase its performance.
Meanwhile, small and medium-sized businesses with a larger customer database and a more complex sales pipeline can enjoy CRM benefits as well. With CRM functionality, they can automate their sales management process, attract new customers with efficient marketing campaigns, and increase customer retention with superior customer service.
At the same time, operating a large organization is almost inconceivable without centralized CRM solutions. For these businesses, a CRM serves as a bond that unites a great number of employees, teams and departments that often work separately. This software brings transparency and clarity to all business processes, keeps all data in one centralized location, and provides the ability to organize effective interdepartmental collaboration.
Types of CRM software
Over the years, the CRM market has evolved to offer a wide range of solutions in various formats. These solutions differ not only in pricing but also in features, focus, and deployment methods. Based on these primary characteristics, experts differentiate three main classifications of CRM systems:
- Operational vs. Analytical vs. Collaborative;
- On-premise vs. Cloud-based;
- Industry-specific vs. All-in-one.
For a better understanding of the nature of CRM systems, let’s take a closer look at these classifications and determine how these types of CRM platforms differ from each other.
Operational vs. Analytical vs. Collaborative
Operational CRM systems
Operational CRM software is primarily focused on streamlining and automating business processes to deliver a positive customer experience. It provides functionality to visualize and facilitate efficient management of the entire customer journey – from the first interest in the product or service to after-sale follow-ups.
As a rule, operational CRM systems incorporate the tools to automate routine operations in three core business areas – sales, marketing, and customer service. It lets businesses set up complex workflows that streamline the entire sequences of time-consuming operations, such as lead capture and distribution, manual data entry, sending invoices, handling customer support issues, etc.
So, what’s the result? These systems enable companies to keep critical business data organized and free up time for activities that require personalized human interaction. Operational CRM systems are a great option for businesses with a heavy focus on customers and building loyal relationships with them.
Analytical CRM systems
Data is the key to strong customer relationships and analytical CRMs can help you to use it effectively. These platforms are geared towards analyzing collected customer data to provide deep insights into the current state of a company. Their main goal is to capture, interpret and process large amounts of information to identify current trends and patterns in customer preferences and buying behavior. These insights help to make sound, data-driven decisions, see the pain points of business processes, and determine the sales strategies that produce the best results.
On the whole, an analytical CRM is a great choice for companies that already have tons of data that can and should be analyzed. Its implementation allows them to learn more about their customers and use this knowledge to improve customer retention rates and increase sales.
Collaborative CRM systems
If you struggle to organize the work of separate departments, it’s likely that you need a collaborative CRM. This software is aimed at ensuring smooth data exchange and efficient communication across all departments in a company. By improving information flow, these systems help break down data silos and provide each department with a complete, holistic view of customers, their needs, interests and requirements. In this case, even independent sales, support and marketing teams have access to up-to-date and detailed customer profiles. This enables them to make customer interactions more personal and address issues quicker, without missing something or repeating themselves.
By and large, a collaborative CRM system is a perfect choice for businesses that greatly depend on cross-department collaboration, regardless of whether the company is a large, decentralized organization or a small-sized brand. This software ensures that everyone in the company is on the same page, makes interactions with customers data-driven, and thereby improves customer satisfaction and loyalty.
On-premise vs. Cloud-based
On-premise CRM systems
On-premise (or self-hosted) CRM solutions are installed and hosted on the company’s own servers. These systems put the burden of software support, maintenance, security and upgrades on the company that uses this software.
As a rule, on-premise CRM platforms are often a preferred choice for businesses with strict security policies. Yet, it goes without saying that their implementation and maintenance will require a higher initial investment, more time and additional IT resources.
Cloud-based CRM systems
Cloud-based CRM solutions are deployed on the CRM vendor’s server. These systems can be accessed at any time, from any place and any device if there’s an internet connection. Businesses only pay subscription fees for using the application, while the CRM vendors take care of the system’s maintenance, updates and smooth operation.
In general, a cloud-based system is considered to be easier to install, more accessible, scalable and cost-effective. It is a good choice for companies that want to have the software up and running quickly, without a high upfront investment.
Industry-specific vs. All-in-one
Industry-specific CRM systems
Industry-specific CRM software is equipped with niche-specific features and designed to completely meet the requirements of a certain industry. These systems are also called vertical CRMs, as they are focused on serving vertical markets such as real estate, construction, insurance, healthcare, hospitality, etc. Industry-specific CRMs offer a predefined set of workflows and tools for the targeted industry, therefore they typically require little to no integrations and customization.
All-in-one CRM systems
All-in-one (or general-purpose) CRM solutions offer a universal set of tools and functionality that can be used by companies in any industry to manage sales, marketing and customer service. Due to their ability to serve a wide range of industries, these systems are often called horizontal CRMs. They generally provide a vast array of integrations with third-party business applications and can be easily customized to meet the needs of virtually any business.
What are the benefits of CRM software?
CRM software provides numerous benefits for companies in a variety of ways. While these benefits may differ for different teams and different industries, there are a number of advantages that are positively affected almost in any organization:
Improved customer experience
One of the primary advantages of CRM software for any business is improved customer experience. Any CRM system is geared towards gathering crucial information about customers — what they like, how they buy, and their preferred methods of communication. With fast and easy access to this information, users gain a unified view of customers. This allows them to make each interaction between a company and its clientele more personalized and individual. All of that enhances customer satisfaction, increases customer loyalty, and keeps customers coming back to make repeat purchases.
Increased collaboration
In addition to improving interactions between companies and their customers, CRM provides crucial functionality to facilitate internal communication and collaboration among various departments as well as among their employees. The software makes it easier for marketing, sales, and support teams to see the same info, update each other in real-time, and leave notes and send messages. So, no more “he-said-she-said” confusion. With a CRM platform, it is possible to monitor the performance of each team and use the full history of previous interactions with customers to maintain a unified brand voice across all departments.
Better data organization
CRMs allow businesses to store and organize all the business-related information in one centralized database. It is especially beneficial for organizations where sales, marketing and support departments are loosely connected and work as separate units. Serving as a unified and shared source of truth about a business, CRM systems ensure that everyone in the company is on the same page. The software prevents and solves data silos issues, shortens the amount of time that employees usually spend to find relevant information, and makes the whole organization better prepared to provide a superior customer experience.
Enhanced revenue
Sales revenue is the main factor driving the growth of any business. All CRM systems are equipped with a wide range of sales features. They provide sales teams with the ability to track the progress of deals, identify promising sales opportunities, and adjust sales pipelines to business needs. In addition, advanced reporting tools allow businesses to analyze their sales cycle, estimate future income, and see what sales tactics work better for their business. All of these features and insights can be effectively used to increase sales, which consequently enhances revenue and facilitates business growth.
Higher productivity and efficiency
Automation of routine operations and business processes is another benefit that CRMs offer. With their help, companies can automate lead capture and conversion, streamline sending of marketing campaigns and sales follow-ups, and set up auto-responses for frequent support requests. Ultimately, the overall automation of routine operations and tasks allows marketing, sales and support teams to focus their attention on managing interactions with their customers.
What are the key features of CRM software?
As a rule, CRM solutions come with different sets of functionality and tools that can take over a large amount of workload and allow any organization to run more efficiently. However, this variety of options makes it even more challenging to find the right solution that fully meets the company’s requirements. Here, we share a list of must-have features that any business is likely to need:
Unified customer view
First and foremost, CRM software is a tool that provides the ability to collect all information concerning customers, partners, and leads in one place. So, no more scattered information across multiple business apps or Excel spreadsheets. By centralizing all this data, it serves as a ready-to-use toolkit for sales, marketing and support teams that helps analyze and learn more about their customer base. The software opens up an opportunity to personalize communication with customers, segment and categorize customers to move them more effectively through the sales pipeline.
Sales management
Effective sales management is another core functionality of any CRM system. The software incorporates a wide range of tools that help optimize the sales pipeline, monitor and evaluate the status of sales opportunities, automate sending quotes and invoices, and keep track of available products and services.
Marketing automation
Aside from sales-related functions, CRM software provides a host of marketing automation tools. These features are focused on optimizing marketing campaigns, segmenting the target audience, and personalizing templates for marketing initiatives. In addition, marketing tools allow businesses to monitor the performance of marketing campaigns, including open rates, the number of sent emails, leads that opted in/out, etc. It allows to easily see what’s working and what’s not and use this information to optimize your marketing strategy.
Customer service management
CRM platforms assist in retaining and acquiring clientele by enabling support teams to deliver a positive customer experience. The software provides features to automatically track customer cases and inquiries, send customers auto-replies concerning case statuses, log issues and communication history with customers, and create an extensive knowledge base with solutions to frequent issues. All of that allows businesses to significantly automate the workload of support teams and keep employees focused on tasks that need human involvement.
Email management
Email is one of the primary ways of communicating with customers for many companies. With a constantly growing customer base, email management may become challenging and confusing. By integrating CRM software with email service providers, managing a business-related inbox becomes an organized and less time-consuming process. CRMs can automatically associate emails with relevant contact and lead records, filter and categorize incoming emails, ignore irrelevant ones, and automate sending of follow-ups and anniversary greetings.
Analytics
Data is particularly valuable when a business can turn it into actionable insights. CRM tools for reporting and analytics allow companies to analyze data and monitor a wide range of sales, marketing and customer service metrics. By using these statistics, it is easy to track business profitability, customer retention rates, average sales close ratios, and the effectiveness of different departments. This analysis can reveal efficient sales and marketing tactics, which can be further used to make informed and clear business decisions based on solid statistics.
Workflow automation
Automation of business workflows can significantly improve company performance and make employees’ lives easier as well. CRM platforms allow organizations to set up workflows to automate routine, repetitive tasks. This frees up a great amount of employee time that can be used to complete more important operations and give more attention to customers.
Integrations with other platforms
The ability to integrate CRM software with other platforms is crucial, especially for companies using more than one business application. It helps companies sync data across all software packages they use in their operations. In this way, businesses gain the opportunity to exchange up-to-date information across different applications and extend the functionality of the CRM software.
Privacy and Security
When it comes to storing and processing personal customer information, privacy and security cannot be ignored or taken lightly. CRM software collects a wide variety of personal information about a company’s current and potential customers. The personal data that’s collected by a CRM may encompass things like name, email, address, phone number, etc. Some companies can store even such highly sensitive data as bank account details, credit card details, insurance details, medical information, etc.
Final thoughts
Customers are, basically, the fuel that helps drive business growth. Building strong relationships between a company and its customers has always been the key to success, regardless of the size and type of business. Now, CRMs are the ideal solutions to accomplish this mission. By capturing interactions with customers across all channels, these platforms provide brands with a single customer view and ensure delivering a smooth, personalized and positive customer experience.
In any case, CRM software is more than just a tool to store and manage customer data. It is an indispensable solution that offers everything needed to support the work of sales, marketing and customer service teams. Its capability to organize data and streamline business processes frees up employees’ time and saves resources. All of that allows companies to put relationships with customers at the heart of their business and create an ideal environment where all teams can collaborate efficiently.
All in all, with the right CRM system in place, it is easier to stay focused on building strong and loyal connections with customers, increasing business performance and profits.