What is a CRM system?

For many businesses, growth depends on customer relationships. Having an organized, accessible way to store customer information can help maintain and grow those relationships over time.

CRM stands for customer relationship management, and a CRM system refers to software a business can use to organize customer data, track interactions and manage ongoing relationships. The software creates a central place for customer information, so it’s not spread across different systems and platforms.

Depending on the system, it may store customer details, such as contact information and purchase histories. It may also document customers’ interactions with the business through sales calls, live chats or other channels. Some systems may integrate with other business tools, such as e-commerce platforms, to connect customer information.

Businesses may use the systems in different ways across departments. For example, a marketing department may use the software to create targeted ad campaigns for specific customer segments. Other departments may use it to forecast sales or follow up with prospective customers. A centralized CRM database can make it easier for employees to access the same customer information across the company.

For some organizations, adopting the software may be part of a broader digital transformation of everyday workflows. It can help businesses replace outdated or manual processes for collecting and storing customer information.

Some CRM platforms have broad capabilities; others focus on a specific part of the customer relationship. The different types of software can include:

• Operational CRM: Focuses on operations related to marketing, sales or service. It may automate some tasks, such as sending follow-up emails to leads, or manage service processes, like call routing.
• Analytical CRM: Reviews customer data to generate insights and predict future trends. Business leaders can use those reports to understand customer behavior, which can help them make informed decisions.
• Collaborative CRM: Shares customer records to promote cross-team communication. Employees can use the software to keep consistent records of their interactions with customers.

The decision about what system to use depends on an organization’s needs. An operational system may make sense if a business wants to reduce manual processes in sales, marketing or service. Companies with many customers may use an analytical system to identify trends or patterns among large amounts of data. When multiple departments need access to customer information, a collaborative system may make it easier for employees to share information.

CRM systems may also serve needs beyond operational, analytical and collaborative. For example, some systems are targeted toward small businesses, which may have less need for advanced analysis or collaborative tools. Other software may focus on a specific area, such as marketing or sales.

When businesses know what they need the technology to do, they can begin to compare features among various software. CRM tools can have a wide range of features, which may include:

• Contact and account management: This feature stores customer profiles, which may include contact details, order history and interactions. Businesses can use the feature to make customer data accessible to employees who need it.
• Activity and task tracking: Some systems may link sales tasks or reminders to customer profiles. Such task management features can help sales teams track follow-up needs and divide responsibilities.
• Automation: Businesses can automate some repetitive or recurring tasks, such as logging customer interactions. The feature can help reduce manual workflows and keep processes consistent.
• Reporting and dashboards: Reporting tools can organize customer data, tasks and activities into charts or dashboards. Those reports can help businesses review customer activity and make decisions based on data.
• Custom fields and integrations: Some software allows businesses to create custom fields for information they want to track, such as customers’ preferred contact method. Businesses may also be able to connect the software to other tools, like email and phone systems, to keep information organized.
• Mobile access: This can help employees access information and update records from mobile devices. The feature may be helpful for businesses with employees who work remotely or in the field.

Some CRM systems may include additional tools, such as pipeline management, lead scoring and forecasting. Pipeline management can help businesses group prospective customers by stage or where they are in the sales process. Lead scoring tools can rank sales leads based on customer activity or level of interest. Forecasting uses customer data to predict future activity, such as expected revenue or sales performance.

Some businesses may prefer software with advanced features. Others may only need a streamlined system for storing and organizing customer information. When comparing options, businesses can consider various factors, including size, industry, current workflows and business priorities.

Implementing the software for the first time or transitioning to a new system can be a big undertaking. It involves planning what information to store in the system and deciding how employees will use the software.

Depending on the organization, CRM implementation may involve these steps:

1.      Define standards: Before implementation, businesses can create standards for entering, accessing and updating customer information. They can document those processes, so employees understand how to use the system.

2.      Plan data migration: Businesses may need to move existing customer data from spreadsheets or other databases into the new software. Planning the transfer process before implementation can help keep the new system more organized.

3.      Configure processes: During setup, businesses can configure workflows, which may include pipelines, automation, custom fields and integrations with other technology. Some users may test those processes to make sure they work as expected before rolling out the software more widely.

4.      Train users: Companies may offer training sessions, tutorials or resources to help employees learn how to use the system. Employees may have the opportunity to ask questions and learn what processes are changing.

5.      Monitor performance: After implementation, businesses can monitor how employees use the software and how well processes work. They can make adjustments or improvements as needed.

After the software is implemented, ongoing governance can include maintenance, performance monitoring and continuous improvement. Businesses may need to update standards as processes change or priorities shift. They can also review how well the software supports business needs to determine whether workflows or settings may need to change.

Knowing how CRM systems work can help you understand how businesses build and maintain customer relationships through modern technology. If you’re interested in learning more about customer management and organizational processes, University of Phoenix offers business programs, including:

• Bachelor of Science in Business with a Marketing Certificate
• Bachelor of Science in Business with a Small Business Management and Entrepreneurship Certificate
• Marketing Certificate (Undergraduate)
• Small Business Management and Entrepreneurship Certificate

For more information, contact University of Phoenix.