What Is CRM?

Customer relationship management (CRM) is the practice of using tools, technology, and processes to gather and analyze customer data and then using that information to create a better customer experience. Essentially, CRM is the combination of data and action, brought together to create stronger relationships with customers and ultimately to improve business performance.

Knowing who your customers are, what they want, what your interactions with them have been in the past, and what they will be in the future is what CRM is all about. Your ultimate CRM goal is to develop strong, productive, and loyal relationships with customers through informed and superior customer experiences at every stage of the customer journey.

And though it may be technology-based and technology-enabled, at its heart, CRM is a strategy.

Key Findings From the Gartner Customer Experience Survey

Gartner reports that by 2020, 81% of companies expect to be competing mostly or completely on the basis of customer experience. CRM can help you stay ahead of the competition.


Why Does CRM Matter?

The customer experience (CX) is now the leading competitive differentiator, as businesses compete in the new Experience Economy. With a well-thought-out CRM strategy, your company can create superior customer experiences that increase customer loyalty, bring in new customers, and keep your company ahead of the competition.

CRM and the Experience Economy

In the Experience Economy, companies that intend to lead must be immediately responsive to customers’ wants and needs.


The customer relationship is the foundation of your company’s success. How you manage that relationship to create a stellar CX at every step of the customer journey is heavily dependent on your CRM efforts. You must have access to deep customer knowledge and apply that knowledge all along the way. CRM allows you to do that. CRM collects and manages information about each of your customers in a way that enables you to turn the customer journey into a seamless process from end to end.

In today’s highly commoditized market, where differentiation on product features and capabilities is very slight, customers are now making choices about brands based on their experience with the brand and the company.

Take a look at a couple of scenarios from a customer’s perspective.

You need service on a product you’ve purchased from a brand you’ve done business with before. You’ve even registered your product. When you call the customer support line, the representative has no idea who you are or what you’ve purchased, or when. You now have to go through the tedious process of supplying information that should be readily available to the representative, like model and serial number (which can be inconvenient for customers to access). Not only are you using up your valuable time providing this information to a company that should have it on hand, you’re left with the feeling that you’re not very important to them and that they know very little about you. The next time you think about purchasing from that company, you think twice.

Now consider an alternate scenario. You make that support call, and by simply taking your name and verifying who you are, the representative has your entire purchase and service history available and treats you like a valued customer. Even with a product issue, this type of personal treatment can keep you coming back.

CRM enables this type of CX. Every interaction based on CRM creates an opportunity for your customer to have a more personal, compelling experience and is an opportunity for you to build brand equity and improve business performance. That’s how you create customer loyalty and increase revenue.

What Does a CRM System Do?

A CRM system is a technology solution that gathers, links, and analyzes all the data about a specific customer’s journey (including customer information, interactions with company representatives, purchases, service requests, assets, and proposals). The system then provides an interface that allows every company business user to access that data and understand each touchpoint. This provides the basis for a solid customer relationship.

Customer data can also be aggregated to inform commission modeling, sales forecasting, territory segmentation, campaign design, product innovation, and other sales, marketing, and service activities—all of which can help optimize customer acquisition, retention, and revenue generation efforts.

CRM software and tools help you streamline the customer engagement process, establish strong relationships with your customers, build customer loyalty, and ultimately increase sales and profits.

CRM Isn’t Just for the Sales Team

CRM systems have traditionally been associated almost solely with sales teams as part of the sales funnel. Often the funnel was both the starting and the ending place. Over time, CRM has extended its reach to become important to the marketing, commerce, and service functions, and beyond. CRM is used by companies to track customer information that can open the door to numerous opportunities to better meet customers’ needs, create a superior CX, and drive product innovations.

CRM isn’t a static entity. It’s a continually evolving process of gathering customer data, analyzing that data, and using that knowledge to take action that deepens relationships with customers and improves business results. It allows anyone in your organization at any stage of the customer journey to convey to your customer, “We know you and we value you.”

Understanding your customers beyond the sales process is crucial to business performance. With knowledge of a customer’s journey.

  • Marketing teams can offer that customer the right products at the right time in the right way.
  • Service teams can resolve issues more quickly.
  • Development teams can create better products and services.

All of these efforts contribute to an improved CX, individually and in aggregate. The basis for successful CRM is what you know about your customers and how effectively you use that information.

Why Is It Important to Have a CRM Strategy?

Tools are merely tools. It’s your purpose in using them that gives them value. A CRM strategy ensures that you are using the data and analytics processed by your CRM system to achieve your objectives. Your strategy will influence your choice of which tools to use, where to host your CRM system, and what to measure to make sure you’re getting the benefits you expect.

The ultimate goal of a CRM program is to improve customer acquisition and retention. This is the core around which the specifics of your CRM strategy will be wrapped. Improving customer acquisition and retention is accomplished in great part by providing experiences that keep your customers coming back. CRM as a strategy—and a tool—informs those experiences.

What Should You Look for in a CRM System?

Your choice in a CRM system will depend on your specific strategic and functionality needs. There are many options and vendors to choose from. However, there are a few general qualities you should look for with any system. It must be easy to use (or people won’t use it) and affordable, and it must integrate well with your other systems, so users can get their work done in the most efficient way.

When it comes to technology capabilities, we believe the best CRM systems offer robust analytics coupled with artificial intelligence (AI) and machine learning. These types of systems not only tell you what has happened in the past, they also guide you toward the next best actions and product configurations—specific to each customer opportunity. A good CRM system should also offer usage analytics to give you a complete view into how your teams are using the tools your company has invested in.

How Do You Know Your CRM System Is Effective?

Since the ultimate purpose of your CRM system is to help you attract and retain customers, it’s a business investment that has a measurable return. There are several metrics you can track that will help you understand whether your CRM system is effective at giving you the return you hope for.

Today’s CRM systems extend across the customer journey. The measures you’ll want to look at will be broad in scope and cover sales, marketing, service, and beyond. Whether you use a balanced scorecard or some other form or model for tracking and assessing performance, look at metrics that cover specific areas such as customer retention, increased sales (including cross-sell and up-sell), increase in revenue, referrals, and so on. You should also track measures that evaluate organizational processes and performance, customer behavior, and strategic alignment.

Ultimately, the metrics you choose will be grounded in your strategic goals and objectives.

Should Your CRM Be On Premises, in the Cloud, or a Combination of the Two?

As with any other business application, the decision to host your CRM system on premises, in the cloud, or in a hybrid model depends on your business needs.

On-premises CRM systems give you complete, autonomous control over your CRM system. On-premises systems must be purchased, installed and deployed, monitored, maintained, and upgraded. They can be costly, involve time-intensive installations and upgrades, and require in-house IT resources for ongoing maintenance.

Cloud-based CRM and software-as-a-service (SaaS) options offer simple interfaces that are easy to use and require less IT involvement and investment than on-premises systems. Field and page updates can be made by any business user. Because upgrades are pushed through the cloud, you can get the latest version without a significant IT effort. Cloud-based CRM also offers the convenience of anytime, anywhere access.

Hybrid CRM models require tradeoffs in all the areas mentioned above but can also deliver the best of both worlds. However, it’s important to recognize that technology is increasingly cloud-based. Companies that remain heavily invested in on-premises CRM risk being left behind as competitors advance to the cloud. Also, the most sophisticated AI technology around features such as chatbots and mobility will be cloud-driven. These are significant enablers of CRM.

The right CRM model for your business is the one that best aligns with your needs and resources―and that allows you to interact with your customers in meaningful ways that drive exceptional customer experiences and improve your business results.

Using Data to Deliver a Unified Customer Experience

Oracle is leveraging built-in AI and machine learning to deliver timely customer intelligence that helps you optimize your brand experience across marketing, sales, and service.

The Future of CRM Is CX

In the early days of CRM, companies would capture and hold data but not know what to do with it. Now, CRM technology with integrated AI acquires and connects data and then interprets and predicts what that data means. As this valuable capability evolves, CX will continue to improve—and in turn, customer expectations will continue to increase.

Your company will need to have a deep understanding of its customers and their journey so it cannot just meet their growing expectations, but can serve them in unique and compelling ways. This is the future of CX, and it should serve as your guide to selecting a CRM solution.

Customer data is the starting point. Quickly evolving AI capabilities as well as configure, price, and quote (CPQ) solutions will play a pivotal role in using this comprehensive view of the customer to initiate their sales journey and then expand that journey into new avenues and capabilities. The endpoints are infinite.