CRM

What Is CRM?

Liucija Adomaite
LAST UPDATED
May 21, 2024
READING TIME
7 min.

CRM is one of the most effective strategies in boosting your business revenue through building better relationships with your customers.

This article explains the meaning of CRM, what it does and doesn't, and the benefits it brings to your businesses.

What is CRM?

CRM, or "Customer Relationship Management", is a software system that manages all customer relationships. The goal of CRM is to build and nurture stronger relationships with your leads and clients. Using a CRM system increases work efficiency, enhances sales teams' performance, makes your customers more satisfied, and boosts sales. 

Companies used to keep their contact information in spreadsheets, emails, and business cards. In modern businesses that constantly evolve and scale, these basic contact-keeping strategies aren't sufficient. 

CRM allows businesses to have a centralized database where all customer information, data, and insights are easily accessible.

CRM ensures that all your teams in different departments (marketing, sales, customer service, management, finance and accounting, and HR) are in sync and work towards the same goals. 

All size businesses (small, medium and enterprises) benefit from using CRM software. CRM systems can boost revenue by 41% per sales rep and improve lead conversion rates by over 300%, states Finances Online. CRM generates about $8.71 in revenue for every dollar spent, according to Nucleus research.

The meaning of "Customer Relationship Management"

The term Customer Relationship Management can be understood in three ways:

  1. A Strategy: As a business philosophy, CRM refers to how a company approaches managing interactions with its customers and potential customers. It emphasizes building strong relationships and providing exceptional customer service.
  2. A Process: CRM can refer to the specific actions and methods a business uses to manage customer interactions. It includes things like sales pipeline management, customer service processes, and marketing automation.
  3. A technology: Most often, CRM refers to a type of software system that helps businesses manage customer data and interactions. CRM software centralizes customer information, automates tasks, and provides insights to improve customer relationships.

Overall, CRM is a big-picture strategy and a set of tools to implement that strategy. Through building customer relationships and strengthening the bonds, CRM software drives sales and grows your businesses.

What is NOT a CRM?

While CRM is often all-in-once customer-centric systems, it's important to note that there are many things that CRM software is not designed to do:

  1. CRM is not an accounting software and it cannot handle core accounting tasks. However, some CRM tools integrate accounting software for customer invoicing. 
  2. CRM is not an inventory system, and it cannot manage a business's inventory levels.
  3. CRM is not a customer satisfaction survey and it's not designed to analyze these surveys. Some CRM systems integrate basic survey tools, but you shouldn't expect to see the whole picture.
  4. CRM is not an email marketing tool. While email marketing is critical in communicating with customers, it's a separate function from CRM. CRM focuses on managing customer data and interactions, while email marketing focuses on crafting and sending targeted email campaigns. To get the most out of email marketing campaign, you need to get a separate cold outreach tool like lemlist.

What does a CRM do?

Here are some key functions of a CRM system:

  • Store and manage customer data: This includes contact information, purchase history, communication history, and any other relevant details about your customers.
  • Track customer interactions: Every time a customer interacts with your business, whether it's through a phone call, email, website chat, or social media, that interaction can be logged in the CRM. This gives you a complete picture of your customer journey.
  • Manage sales pipelines: A CRM can help you track leads as they move through the sales process, from initial contact to closing the deal.
  • Automate tasks: CRMs can automate repetitive tasks such as sending follow-up emails, scheduling meetings, and generating reports. This frees up your time to focus on more strategic activities.
  • Improve customer service: CRMs can help you provide better customer service by giving your customer service reps a complete view of each customer's history.
  • Generate reports and insights: CRMs can provide valuable data and reports that can help you understand your customers better, identify trends, and improve your overall business strategy.

What does a CRM not do?

Not everything can be handled by a CRM. It's important to note that CRM tools cannot replace human effort in building customer relationships.

Human connection is crucial in building sales and customer service, and while CRM will help you get on track, it alone will not do the job for you.

In addition, CRM doesn't understand nuanced customer emotions or sentiment behind each communication.

Another important thing to note is that CRM doesn't maintain data by itself. The data you get out from a CRM system depends on the quality of data you put in it.

Thirdly, implementing a CRM is not a magic bullet for sales growth. Businesses need to have proper sales strategies and well-trained staff to use CRM effectively.

Benefits of using CRM

Here are the main benefits of using CRM software: 

  • Improved Sales Pipeline Management: CRMs help visualize and manage the sales pipeline, which is the process of moving leads through different stages toward becoming paying customers. This allows sales reps to focus on the most promising leads and close deals faster.
  • Enhanced Customer Relationships: CRMs store customer data and interaction history, giving sales reps a 360-degree view of each customer. This enables them to personalize their approach, build stronger relationships, and ultimately convert more leads into sales.
  • Automated Tasks and Workflows: CRMs can automate repetitive tasks such as data entry, sending follow-up emails, and scheduling meetings. This frees up valuable time for sales reps to focus on selling.
  • Data-Driven Sales Strategies: CRMs provide valuable data and sales analytics that can be used to identify trends, understand customer behavior, and forecast sales. This data helps sales managers make informed decisions about sales strategies and resource allocation.
  • Improved Collaboration: CRMs foster better communication and collaboration within sales teams. They allow reps to share information about leads, track progress on deals, and get feedback from colleagues.

CRM examples

CRM market is saturated. Here are some of the most popular CRM examples businesses use worldwide:

  • Salesforce: A giant in the CRM space, Salesforce offers a comprehensive CRM platform with a variety of features to support sales, marketing, customer service, and analytics.
  • HubSpot: HubSpot is a popular CRM option for businesses of all sizes, offering a free CRM version alongside paid plans with marketing, sales, service, and content management features.
  • Zoho CRM: Zoho CRM is another well-known CRM platform that offers a variety of features at an affordable price point. It is a good option for businesses looking for a CRM with a strong focus on sales and marketing.
  • Freshworks CRM: Freshworks CRM is a cloud-based CRM platform that offers a variety of features to support sales, marketing, and customer service. It is a good option for businesses looking for a CRM that is easy to use and integrate with other business applications.
  • Microsoft Dynamics 365: Microsoft Dynamics 365 is a suite of business applications that includes a CRM module. Dynamics 365 CRM is a good option for businesses that are already using other Microsoft products, such as Office 365.

Key Takeaways

CRM stands for Customer Relationship Management, a system for managing all customer relationships to nurture stronger connections, leading to increased efficiency, better sales performance, more satisfied customers, and a sales boost.

Traditional methods like spreadsheets for contact information are inadequate for today's evolving and scaling businesses. CRM offers a centralized database for customer info, ensuring all teams are aligned.

Beneficial for all business sizes, CRM systems can notably boost revenue by 41% per sales rep and improve lead conversion rates significantly.

CRM main functions include storing and managing customer data, tracking customer interactions on all channels, managing sales pipelines and lead progression, automating tasks, generating reports, improving customer service. 

While CRM is an all-rounder system, it cannot substitute the human effort in relationship building. Moreover, CRM implementation alone won't guarantee sales growth.

More information about CRM and the best CRM tools for your business can be found in our in-depth CRM guide (up-to-date 2024 edition.)

Frequently Asked Questions

What is CRM in simple words?

Customer Relationship Management (CRM) is a strategy that companies use to manage interactions with customers and potential customers.

What are CRM tools?

CRM tools support marketing, sales, and customer service functions and processes for your business. The purpose of your CRM tool is to organize, record, and enable action with customer data and help track and advance customers along every stage of the buying journey.

Is CRM hard to learn?

The learning curve ranges from one CRM system to another. Powerful multichannel CRMs like Salesforce can take longer to learn than Pipedrive or Zoho CRM, which cater to small and medium-sized businesses. However, most CRMs focus on ease of use and user-friendly customer experience. 

Is CRM really necessary?

No, you don't have to implement a CRM system if you don't want to. But statistics show that virtually all businesses benefit from using CRM software. By intelligently storing and managing your customers' information, a CRM system increases the number of leads coming in, helping your marketing team find new customers faster. Overall, CRM helps you close more deals faster.

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Price
Best for
Standout feature
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$2,999/mo
Large, distributed sales teams
AI evaluation precision, gamified KPIs
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4.6
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Sales operations and finance teams
Powerful configurability
Limited training resources and complex to navigate
4.4
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Mid-market and enterprise businesses
Comprehensive incentive management
Potentially high cost and steep learning curve
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Enterprise: custom price
Complex sales structures and businesses of all sizes
Complex sales structures and businesses of all sizes
Steep learning curve
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Collaborative teams
Connected planning
Complexity and steep learning curve
4.6
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Companies with complex sales structures
Complex incentive compensation management (ICM) with high efficiency and accuracy
Complexity for smaller teams and potentially high costs
4.7
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Not publicly available
Companies who want to automate commission calculations and payouts
Simplicity and ease of use
Lack of features like redirection
4.7
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$30/user/mo
$35/user/mo
Custom: upon request
Businesses that need a comprehensive and user-friendly sales compensation management software
Ease of use and adoption
Lack of ability to configure the product based on user needs
4.8
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Companies with modern sales culture and businesses who want real-time insights
A built-in dispute management and real-time visibility
Users say it works slowly, customer support is slow
4.9
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$30/user/mo
$50/user/mo
Smaller sales teams
Powerful automation
Lesser user base and average user interface
4.7
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Not publicly available
Companies with scalable needs
Automated Commission Calculations
Lack of filtering by date, no mobile app
ERP vs. CRM
ERP
CRM
Summary
Backbone of a business's internal operations.
Backbone of customer-centric interactions and operations.
Goal
To centralize and streamline core business processes in a company.
To increase customer experience, satisfaction and loyalty, and boost sales.
Focus
Internal operations and processes across departments (finance, accounting, inventory, supply chain, HR, and sales).
All interactions with leads and customers.
Manages
Internal business data like financial data, inventory levels, production details, supply chain, HR info.
All customer data like contact info, purchase history, communication history, customer preferences and more.
Users
Finance, accounting, operations, supply chain, and HR departments.
Customer-facing teams like sales, marketing, and customer service.
Benefits
Streamlines operations, improves data accuracy, enhances decision-making, boosts collaboration, increases productivity.
Improves customer relationships, increases sales, strengthens customer service, personalizes marketing campaigns, provides insights.
Price
$150 per user per year on average.
$10 to $30 per user per month on average.
PRM Tool
Rating
Feature
Pro
Con
Mobile App
Integrations
Free Plan
Pricing
4.65
star
star
star
star
star-half
Org-wide alignment
User-friendly layout and database
Suboptimal as a personal CRM
square-check
Lack of tracking system
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Team: $20/month
Business: $45/month
4.7
star
star
star
star
star-half
Social Media Integration
Easy contact data collection
No marketing/sales features
square-check
Lack of tracking system
square-xmark
7-day trial
$12/month
4.75
star
star
star
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star-half
Block Functions
High customization capability
Not a dedicated CRM
square-check
Limited
square-check
Plus: €7.50/month
Business: €14/month
N/A
Open-source
Open-source flexibility
Requires extensive manual input
square-xmark
Limited
square-check
Self-hosted
$9/month or
$90/year
3.1
star
star
star
Simple iOS app
Ideal for non-tech-savvy users
iPhone only
square-check
iOS only
Limited
square-xmark
1-month trial
$1.49/month or
$14.99/month
3.6
star
star
star
star-half
Smart Contact Management
Feature-rich and flexible
Reported bugs
square-check
Rich
square-xmark
7-day trial
Premium: $13.99/month
Teams: $17.99/month
4.4
star
star
star
star
star-half
Customizable Interface
Customizable for teamwork
Pricey for personal use
square-check
Rich
square-xmark
Standard: $24/member
Premium: $39/member
4.7
star
star
star
star
star-half
Integrated Calling
Integrated Calling
Too sales-oriented & pricey
square-check
Rich
square-xmark
14-day trial
Startup: $59/user/month
Professional: $329/user/month
4.8
star
star
star
star
star
Business Card Scanning
Business Card Scanning
Mobile only
square-check
Limited
square-check
$9.99/month
4.45
star
star
star
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star-half
160+ app integrations
Comprehensive integrations
No free app version
square-check
Rich
square-xmark
14-day trial
$29.90/month or
$24.90/month (billed annually)
Capterra Rating
Free Trial
Free Plan
Starting Price (excluding the free plan)
Maximum Price (for the most expensive plan)
Best for
4.5
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14-day
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€15/month/seat billed annually
€792/month/3 seats billed annually + €45/month for each extra seat
Versatility and free plan
4.2
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30-day
square-xmark
But it offers reduced price to authorised nonprofit organisations
€25/user/month
€500/user/month billed annually (includes Einstein AI)
Best overall operational CRM
4.3
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square-xmark
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Limited to 3 users
Comprehensive incentive management
€52/user/month billed annually
Small-medium businesses and automation
4.5
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square-check
14-day
square-xmark
€14/seat/month billed annually
€99/seat/month billed annually
Sales teams and ease of use
4.1
star
star
star
star
square-xmark
square-check
Limited 10 users
$9.99/user/month billed annually
$64.99/user/month billed annually
Free plan for very small teams up to 10
CRM goal
Increase the sales conversion rate for qualified leads from marketing automation campaigns by 10% in the next 6 months.
SMART Breakdown
1. Specific: It targets a specific area (conversion rate) for a defined segment (qualified leads from marketing automation).
2. Measurable: The desired increase (10%) is a clear metric, and the timeframe (6 months) allows for progress tracking.
3. Achievable: A 10% increase is possible based on historical data and potential improvements.
4. Relevant: Boosting sales from marketing efforts aligns with overall business objectives.
5. Time-bound: The 6-month timeframe creates urgency and a clear target date.
Actions
Step 1: Refine lead qualification criteria to ensure high-quality leads are nurtured through marketing automation.
Step 2: Personalize marketing automation campaigns based on lead demographics, interests, and behavior.
Step 3: Develop targeted landing pages with clear calls to action for qualified leads.
Step 4: Implement lead scoring to prioritize high-potential leads for sales follow-up.
Step 5: Track and analyze campaign performance to identify areas for optimization.
Outcomes
Increased sales and revenue
Improved marketing automation ROI
Marketing and sales alignment
Data-driven marketing optimization

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