What Is Customer Relationship Management (CRM)? Tools, Types, Strategy, Benefits & Features

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Customer Relationship Management (CRM) is often referred to as a process, strategy, or software/technology that enables organizations to manage relationships with their customers, vendors, and suppliers.

The buyer’s journey has evolved through the years and running a business today has become more complex than ever. Business owners and salespeople must keep in touch with their customers, follow-up with prospects, identify upselling and cross-selling opportunities, and initiate customer retention programs while ensuring that the company revenue continues to increase.

CRM enables business owners and salespeople by helping them streamline the sales process, improve interdepartmental collaboration, and maintain business relationships.

In this article, we will look at the concept of CRM, different tools and types of CRM software, and the basic terminology used in CRM. We will also discuss essential CRM features, benefits, steps to create a strategy and how to go about choosing the right CRM for your organization.

Table of Contents

What Is Customer Relationship Management (CRM)?

Customer Relationship Management (CRM) is often referred to as a process, strategy, or software/technology that enables organizations to manage relationships with their customers, vendors, and suppliers.

In this article, we will look at CRM as a technology that helps businesses maintain customer dataOpens a new window , track customer interactions, and improve customer relationships.

A CRM software system performs the following activities:

  1. Collects customer data from multiple sources and applications and stores it in a centralized location
  2. Automates repetitive sales, marketing, and customer service processes
  3. Tracks prospects and customers through their purchase journey
  4. Identifies upselling and cross-selling opportunities
  5. Promotes interdepartmental collaboration
     

What Are the Types of CRM Software?

 

Representation of the Types of CRM Software

Holistically, we can segregate CRM tools in two categories, viz.

  1. Based on installation/implementation
  2. Based on functionality
     

Let’s look at each of them in brief:

1. CRM Software Based on the Type of Installation
 

We can further segregate this type of category into two types:

  1. On-premise CRM Software: Companies that handle sensitive customer information such as financial or healthcare institutions prefer on-premise CRM software. These systems incur a hefty upfront investment as it includes infrastructure as well as software development costs.
    These CRM systems are rigid in terms of functionality as adding a new feature is often expensive. Further, the organization itself must take care of data maintenance, security, and disaster recovery plans. Organizations can outsource these services to a third-party vendor, but they incur additional costs depending on your requirements.
  2. Cloud-based CRM Software: A business can use web-based/cloud CRM at a monthly recurring cost.
    Compared to on-premise CRMs, cloud CRMs are more flexible and budget-friendly as these CRMs are device-agnostic, and the service provider offers maintenance and data security.
    These CRMs take a one-size-fits-all approach. Therefore, customizations may not always be possible. And since your data is stored at the vendor’s servers, you are at the mercy of the vendor in case of a server outage.
     

2. CRM Software Based on Functionality
 

There are three types of CRM tools based on their functionality:

  1. Operational CRM: These CRMs help businesses run their routine sales, marketing, and customer service operations. An operational CRM system enables you to track the customer journey through activities such as contact management, lead generation, lead scoring, and marketing automationOpens a new window .
  2. Analytical CRM: Analytical CRMs collect and analyze heaps of customer data and help businesses make data-driven decisions. These CRMs offer data management, customer acquisition, and retention activities through data mining, sales forecasting, conversion attribution, etc.
  3. Collaborative CRM: Collaborative/strategic CRM software enables organizations to share customer data across internal departments and external stakeholders (vendors, partners, etc.) to enhance Customer Experience (CX). While operational and analytical CRMs are also capable of information sharing, collaborative CRMs emphasize, particularly on the CX aspect.
     

Learn More: 

How To Improve Customer Experience (CX): Top 7 Tips for 2020Opens a new window

The Essential CRM Glossary

Before we delve further into CRM, let’s understand the meaning of commonly used terms in the CRM realm. You may not come across all the terms mentioned here in this article, but it’s worth to know these terms as you continue to learn about CRM:

  1. 360-degree Customer View: This is an exhaustive view of a customer, including their contact details, past communication, campaign history, and other pertinent information.
  2. Automation: Sales and marketing activities such as email campaigns, contact management, activity tracking, etc. that can be constantly monitored by the system.
  3. Contact: An entry that stores an entity’s name, email address, phone number, physical address, and other information. The entity could be a customer, prospect, company, partner, or a vendor.
  4. Contact Management: It refers to organizing, updating and storing contact information in the CRM software.
  5. Dashboard: It’s the landing page when a user logs into the CRM software. The dashboard displays crucial analytics information and sales data and navigation options.
  6. Deal: Also known as an opportunity, a deal is a potential sale that has moved to the last stage of the sales funnel.
  7. Integrations: This is a feature that lets you connect the CRM software with other software applications in your MarTech stack to enable seamless data import and export. For example, you can integrate your CRM system with a Marketing Automation Platform (MAP)Opens a new window , social media management tool, etc. to get a holistic picture of the customer.
  8. Lead: A lead has expressed their interest in your offerings. Leads are generally at the first stage of the sales funnel.
  9. Lead Conversion: Lead conversion signifies the conversion of a lead into a customer
  10. Lead Management: Lead management/nurturing activities help users stay in touch with leads to ensure that they don’t drop-off from the sales funnel.
  11. Pipeline: Sometimes referred to as a funnel, a pipeline shows various stages of the purchase journey. A pipeline is generally divided into four stages, viz. lead generation, qualification, proposal, and sale.
  12. Prospect: A prospect is a sales-ready lead that is interested in your product and can purchase it.
     

8 Essential CRM Features

Choosing a CRM system can be confusing because not all CRMs are the same, and each offers vastly different features compared to its contemporaries. So, if you’re looking to buy a CRM, but can’t decide, this section will help you understand the eight essential features you need in a CRM software.

Representation of the Essential CRM Features

1. Contact Management
 

All the essential information related to a lead/customer’s contact such as their name, email address, phone number, work details, past communications, etc. should be easily accessible and modifiable.

2. Lead Management
 

Keeping track of leads can often be tedious if you’re still relying on spreadsheets or other incompatible tools. The lead management Opens a new window feature gives you an overview of your leads with their status, lead score, etc. By clicking on an entry, you can view their profile, recent activities on your website, prior communication, complaints, and so on.

3. Pipeline Management
 

The pipeline management feature gives you a visual representation of your current leads and deals. The deals are segregated according to the stage of the sales pipeline. This makes it easy for salespeople to understand the status of each lead and helps them decide which leads to pursue.

4. Sales Automation
 

The sales department is possibly already taxed with too much work. The addition of repetitive administrative tasks such as sending invoices or following-up with a cold lead can negatively impact their productivity.

With the sales automation feature, salespeople can automate repetitive tasks so that they can focus on hitting the sales target. Automation workflows are initialized based on triggers or rules. For example, if a lead hasn’t replied after three days, the follow-up workflow will be activated wherein a reminder email will be automatically sent to the contact.

5. Sales Forecasting
 

A CRM tool processes tons of data daily. The sales forecasting feature uses this data to predict future sales. This way, salespeople can get an approximate understanding of their pipeline and how efficiently they can push sales. Salespeople can effectively use this information and convert hot leads.

6. File Storage and Sharing
 

Rather than relying on external file storage applications, salespeople can store important and frequently required files such as quotes, feature sheets, sales scripts, etc. in a centralized repository and share them with co-workers instantly.

7. Email Management
 

You can integrate your email with CRM so that you don’t have to jump between multiple tabs to send an email. With the email management feature, you can send emails right from the CRM interface, mark the status of the lead, mention a remark, and prioritize emails. This way, you won’t miss out on connecting with any of your leads.

8. Reporting and Analytics
 

This feature summarizes sales performance in a single dashboard. You can customize or create new types of reports based on your requirements and export them in different formats.

3 CRM Best Practices to Consider
 

1. Is Your CRM Tool Device-Agnostic (Mobile CRM)?
 

In this age, the CRM needs to device agnostic. Entrepreneurs and salespeople are no longer desk-bound, and therefore, mobile CRM is the need of the hour. Mobile CRM enables users to access customer data from mobile or tablet devices if they have an internet connection.

Mobile CRM allows salespeople to manage downtime efficiently and provides a boost in productivity.

2. Does Your CRM Tool Offer Social CRM Capabilities?
 

As businesses go omnichannel, the MarTech stack needs to go omnichannel as well. Social CRM allows organizations to get a complete view of their customers and their interactions in a single window.

Social CRM provides organizations with a 360-degree view of their customers by collecting customer data from different sources. Along with social media management and social selling features, social CRM also empowers customer-facing departments with sentiment analysis and social listening features to know more about the brand and its customers.

3.Complexity and Scalability
 

If you’re a solopreneur, sales is not the only task you perform during your workday. Therefore, make sure that the CRM you choose brings efficiency rather than complexity.

Similarly, if you’re a thriving startup, see the scalability aspect of the CRM of your choice. Also, ensure that the cost is in proportion of the growth; otherwise, you may overspend your marketing budget.

5 of the Best CRM Tools for Your Business

Implementing a CRM tool that fits perfectly in your business framework is challenging. CRM software helps you manage customer interactions and becomes a central node for other departments to collaborate with sales. Therefore, it’s imperative to ensure that the CRM tool of your choice satisfies all these criteria.

In this section, we will look at five top CRM software that you can evaluate and adopt.

Note: Since most of the following tools offer the basic features such as email, calls, SMS, social CRM, reports, etc., we are focusing on the other tools here.

1. HubSpot CRMOpens a new window
 

HubSpot’s free CRM is a top-notch system for startups or anyone looking to get acquainted with CRM tools.

HubSpot CRM helps you manage your sales pipeline, create automated email sequences for your leads, communicate with your prospects via live chat or emails, and track customer interactions across email, social media, or calls.

HubSpot CRM is free for contacts up to 1,000,000. As your company grows, you can upgrade to other marketing, sales, and customer service packages, or you can integrate other third-party products with the tool.

2. Zoho CRMOpens a new window
 

Zoho CRM is one of the products from Zoho’s exhaustive business suite. Zoho CRM offers features that are suitable for both SMBs and large-scale organizations. The CRM application comes with sales automation, pipeline management, marketing automation, and process management features. You can connect with your leads across different platforms through a single interface.

Zia – Zoho’s AI bot helps businesses with identifying trends, predicting sales, and data enrichment activities.

Companies can get started with Zoho CRM for as low as $18/month and upgrade as they move along.

3. FreshsalesOpens a new window
 

Freshsales is a sales CRM by Freshdesk. Features such as event tracking, phone, emails, workflows, etc. enable you to track your leads and deals across their purchase journey.

Like HubSpot and Zoho CRM, Freshsales offers mobile CRM and a range of products for business, making it easy to build a comprehensive MarTech stack.

Freshsales is perfect for SMBs and mid-market enterprises, and you can get started with the tool for $18/month.

4. Salesforce Sales CloudOpens a new window
 

Salesforce Sales Cloud is a CRM tool offered by Salesforce. The CRM tool covers the entire purchase journey and includes features such as account and contact management, opportunity management, lead management, intuitive workflows, file sharing, and sales forecasting.

Business owners and salespeople can manage their sales activities on the go through mobile CRM.

Beginners can opt for the Salesforce Essential plan at $25/user/month (paid annually). Users can avail add-ons such as Sales Cloud Einstein (Salesforce’s AI tool) and Pardot (Salesforce’s marketing automation platform) at an additional subscription fee.

5. MailchimpOpens a new window
 

Mailchimp is primarily a MAP that also offers specific CRM capabilities. Mailchimp is perfect for freelancers, startups, and SMBs as it provides the ideal blend of features that are useful for both sales and marketing departments.

Mailchimp has a free plan for a list size up to 2000 contacts with bare essential CRM features and paid plans starting $9.99/month.

Mailchimp is widely used among startups and SMBs because of its capability to integrate with other enterprise CRMs such as Salesforce.

Creating a CRM Strategy in 5 Steps

Having a CRM strategy in place ensures smooth operations of your CRM efforts. Here is a 5-step framework to create a successful CRM strategy for your organization.

Step 1: Know Your Business Goals
 

It is essential to decide on your goals to optimally use the CRM application as a business enabler. Knowing business objectives will make it easy for you to craft a CRM strategy. For instance, if your business objective is to boost annual revenue by 10% through new customer acquisition and by 25% through customer retention, you can plan the activities to be executed to reach the objectives.

When you map these activities with sales objectives, you can identify how CRM can facilitate achieving the goals.

Step 2: Involve Your Employees
 

There are two aspects to this step.

First, you need to communicate with your employees on how the CRM implementation is going to benefit them and actively involve them right from the beginning. This is particularly helpful as people working on the grassroots level can immensely help in the tactical area.

Second, as CRM is not restricted exclusively to the sales department, you need to promote interdepartmental collaboration between the customer-facing departments and break down the proverbial silos.

Step 3: Revisit the Buyer’s Journey
 

Start by evaluating the customer data stored in your current systems. This step will give you an understanding of what data you’re collecting and the additional data points you need to gather through the CRM.

Revisit the buyer’s journey to visualize how a lead converts into a customer. Each stage of the buyer’s journey should be connected to its equivalent stage in the sales pipeline. Knowing this will help you to understand the activities that lead to deal closure.

Step 4: Pick the Right CRM

Understand the features you need in a CRM software and gain clarity on choosing the right CRM tools. Ideally, try the five CRM tools mentioned in this article to find the right fit. Simultaneously, identify their top competitors and pilot test the ones that suit your requirements.

Remember, don’t rush into buying a solution just yet. Use the trial period of each CRM provider to evaluate them thoroughly, and finalize a tool based on the features compatible with your existing ecosystem, one that suits your requirements, is easy to use, and has integration capabilities.

Step 5: Keep Improving Your CRM Practices
 

It’s unlikely that you’ll hit the sweet spot in the first go, especially when it comes to implementing a CRM or a MAP. You might run into challenges initially but keep tweaking the process until everything is streamlined. You can also reduce the trial and error step by hiring a CRM consultant from the initial stages of implementation.

5 Benefits of a CRM

Here are the five benefits of implementing CRM software at your organization.

Representation of the Benefits of CRM

1. De-silos Customer Facing Departments
 

An organization can be customer-centric when its customer facing departments work together. As you can integrate your MAP and customer support software with CRM, it promotes interdepartmental collaboration and allows organizations to serve their customers better.

2. Improves Communication with Customers
 

As you track each lead through the different stages of the sales pipeline, you can deliver the right message at the right time.

3. Brings Efficiency Through Automation
 

From the time a lead fills-in a form to following-up with them, everything is automated. Also, since the data is fetched automatically from multiple sources, there’s no need to invest time manually entering data. Salespeople can focus on what matters the most — closing more deals.

4. Helps Make Data-driven Decisions
 

As all customer data is centralized in one place along with sales analytics, the sales team can accurately identify their prospects’ needs and understand what is working and what’s not. Armed with this knowledge, sales teams can make decisions backed by actionable data.

5. Boosts Revenue
 

A 360-degree view of customers enables organizations to understand their requirements. Using this information, organizations can introduce upselling, cross-selling, and customer retention programs.

How to Choose a CRM for Your Organization?

Now that you know the essentials of the CRM software let’s look at how to go about selecting a CRM system for your business. The CRM market has products for different categories, ranging right from freelancers or solopreneurs to large corporations.

In this section, we will guide you with specific pointers that will allow you to choose a CRM that works perfectly for your organization.

1. Who Will Use the CRM System?
 

In a solo venture, there will be only one person using the CRM system, whereas, in a startup, people from sales and marketing departments might use the CRM. At a large corporation, the CRM might be used exclusively by salespeople, while marketers use a MAP.

You will be able to identify what you need in a CRM by understanding who will use it and benefit from it.

2. What Are the Current Sales Use Cases?
 

What is your current sales strategy and/or process? Knowing how you approach your potential customers and how they find you will help you enlist the activities you perform to bring new customers on board. Another way to do this is to identify the various sales and marketing channels you are using to reach out to your target audience.

After taking stock of these two aspects, you’ll have some clarity on the sales activities and their corresponding features to look for in the CRM.

3. What Are the Integration Capabilities of the CRM?
 

You will need to check whether the CRM system you’ve selected offers integrations for the existing tools in your martech stack. This is particularly crucial as you’d be connecting with the same customer across multiple touchpoints.

If it doesn’t offer integration with a particular tool, then either see if the CRM provides a similar feature or look for alternatives.

A simple way to avoid integration difficulties is to check brands that offer multiple products under the same umbrella. For example, HubSpot, Zoho, Freshworks, etc. provide numerous products under their brand name. So, you can choose the tools that you need and integrate more products as your company grows.

4. What Is the Cost?
 

CRM has multifaceted utility, so the costs of CRM systems might seem to be off the charts when you see them in the absolute sense. Therefore, consider the cost aspect after you’ve answered the above three questions so that you can see the payoff to the investment you’re making.

Of course, CRM incurs not just monetary investment but also of the time and all the changes you must make in the existing environment.

Tip: Start with the free plan to gauge its compatibility. If the free plan doesn’t cater to your requirements, opt for the trial period offered by most of the cloud-based CRMs.

Who Needs CRM Software?

A CRM software is adopted across B2B and B2C organizations of different sizes, serving different sectors and industries. Here is how a CRM solution helps three types of organizations:

1. SMBs

Small and medium scale businesses’ sales departments have precise requirements and may not need audacious features. CRMs for SMBs are aware of this and hence offer features that let SMBs automate repetitive tasks so that stakeholders can focus on increasing revenue.

2. Startups

Startups are chaotic in their rapid growth stage. CRMs tame this chaos, bring order to sales and marketing departments, and offer intuitive integration and reporting features. This allows startups to measure their progress without having them spend too much time on learning the tool.

3. Enterprises
 

Enterprises always look to go big, and they require a robust number cruncher with cross-functional collaboration capabilities minus any complexities. Analytical and collaborative CRMs help enterprises achieve just that.

Who Uses CRM Software?

Marketers, salespeople, and customer service professionals require different utilities of a CRM system. Let’s look at how CRM is useful to each one of them:

1. Marketers
 

Marketers collect customer data from multiple sources, such as lead generation forms, surveys, social media, etc. By integrating the CRM system with a MAP, marketers can supercharge marketing efforts through drip marketing campaigns, social media ad campaigns, and so on.

2. Salespeople
 

Salespeople are always on their toes needing to communicate with every prospect and customer on a 1-on-1 basis. A CRM tool provides a central repository where they can get to know their customers at greater depth, profile them as hot/warm/cold leads and create real-time sales reports that give them a quick overview of the sales performance.

3. Customer Service Professionals
 

By integrating the customer support application with the CRM, you get a composite view of your customers and enables customer service executives proactively solve customer queries. The use of social CRM allows them to communicate with customers via social media, calls, text, chat, etc.

Next Steps

To gain a deeper understanding of CRM as a strategy, a process, or technology, we would recommend that you read some more about CRM technology. We’ve created a CRM Buyer’s Guide to introduce you to the different CRM solutions present in the market today and the features they offer.

If you have any questions about CRM technology, ask us on LinkedInOpens a new window , FacebookOpens a new window , or TwitterOpens a new window .

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