What is a CRM?
Customer relationship management (CRM) encompasses the practices, principles, and systems businesses follow to manage and prioritize customer interactions. Companies need to track relevant customer data and conversation history to provide the highest level of service.
Tools like customer relationship management (CRM) software make it easy for businesses to track interactions with prospects and customers to paint the full view of their history, activity, and preferences.
Types of CRMs
Businesses should identify the type of CRM that fits their business objectives and internal needs. The three main types of CRM systems are analytical, collaborative, and operational.
- Analytical CRM: The primary function of an analytical CRM is to collect and analyze customer data to develop ways of boosting customer satisfaction and retention. Analytical CRMs give businesses insight into the customer journey to understand and address customer pain points. In addition, companies can influence the customer journey by gathering data about customer patterns and behaviors.
- Collaborative CRM: Organizations use collaborative CRMs to break down silos and provide all customer-facing teams with the information they need to provide the best customer experience. With a collaborative CRM tool, any team member who needs to access customer information can offer seamless service based on up-to-date data.
- Operational CRM: Companies use operational CRMs to manage their day-to-day activities and processes across marketing, sales, and customer service teams. When used properly, these tools simplify operations for better customer relationships and automate functionality to optimize functional efficiencies.
Basic elements of the CRM cycle
The CRM cycle closely aligns with the customer lifecycle. It involves sales, marketing, and customer service teams and activities. The five critical elements of the CRM cycle are:
- Brand awareness and reach. The first step of the CRM cycle includes acquiring new customers and introducing them to the business and its services and products. Marketing teams can target prospects by introducing buyer personas. CRM software helps reveal patterns in types of leads and customers, so marketing teams can personalize campaigns.
- Lead acquisition. Both sales and marketing teams may contribute to acquiring leads. Some CRM tools come equipped with specific lead functionality, which allows staff to collect customer data and tailor outreach.
- Lead conversion. Not all leads become customers, so salespeople need to understand where they should spend their time. Salespeople can use CRM historical data to create a lead-scoring system to prioritize prospects.
- Top-notch customer service. Businesses must focus on retaining customers for the long haul once a prospect converts to a customer. CRM tools help teams provide good customer service since members can easily access customer history. This is particularly beneficial for customer service teams that need to resolve issues quickly.
- Upsells and referrals. Finally, existing customers can provide more value and revenue when the sales team finds ways to upsell and generate referrals. Using CRM data, employees can sort customer data and send custom promotional emails for upsell opportunities. Additionally, teams can set reminders with a CRM platform, so they know when to check in on customers and ask for feedback about their journey.
Benefits of a CRM
Effective CRM tools provide benefits to many types of roles within a company. Some of these benefits include:
- Better organization. CRM software offers a centralized location for team members to house customer-related notes and documentation. Adding this structure prevents information from getting lost and ensures everyone can access the most up-to-date information.
- Meaningful communication. Not only do CRM tools improve communication between businesses and prospective customers, but they also help teams communicate better. CRM databases equip team members with the background information needed to drive productive conversations with prospects and customers.
- Improved customer service. With customer conversations and background at the ready, anyone can quickly jump in to provide helpful solutions. This is particularly beneficial for organizations where customers interface with individuals across various teams.
- Efficient use of time. Customer-facing teams can look to automation functionality to avoid wasting time on repetitive manual tasks. Instead of managing data by hand, teams focus on managing and enhancing customer relationships.
CRM best practices
To receive the most value from a CRM tool, organizations have to implement:
- Clear standards and practices for data collection. CRMs are only as effective as the data that’s in the system. Businesses should outline protocol for data collection to ensure consistency and prevent confusion. This might include outlining naming conventions and listing some fields as mandatory to complete.
- Training to ensure adoption. Onboarding and adopting new software tools is challenging. Businesses should prioritize ongoing training opportunities to ensure adoption and offer team members the knowledge and information they need to succeed. Organizations can do this by hosting demos, creating accessible documentation, and offering one-on-one support.
- Automation. CRM software tools can automate repetitive data entry tasks. Automating processes and integrating their chosen CRM with other tools they already use lead to a more seamless experience.
CRM vs. ERP
CRMs and enterprise resource planning (ERP) tools automate core business processes and centralize important information. The types of data these tools house are different.
A CRM helps businesses manage their relationship with customers and stores information about interactions with the customer. In comparison, manufacturing and distribution companies use ERPs to handle business processes related to accounting, human resources, and financial management.
Keep customers returning for the long haul with a solid retention marketing plan.
Alyssa Towns
Alyssa Towns works in communications and change management and is a freelance writer for G2. She mainly writes SaaS, productivity, and career-adjacent content. In her spare time, Alyssa is either enjoying a new restaurant with her husband, playing with her Bengal cats Yeti and Yowie, adventuring outdoors, or reading a book from her TBR list.
