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:
- 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.
- 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.
- 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:
- CRM is not an accounting software and it cannot handle core accounting tasks. However, some CRM tools integrate accounting software for customer invoicing.
- CRM is not an inventory system, and it cannot manage a business's inventory levels.
- 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.
- 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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