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What is CRM?

CRM stands for customer relationship management and is the tools, technology, and processes that manage and analyze customer relationships and your interactions with past, current, and potential future customers. CRM is all about using that customer data to understand your customers and to respond quickly to their shifting wants and needs.

Who uses a CRM system?

CRM systems are almost always associated with sales teams. Over time, CRM has extended its reach and become integral to marketing, commerce, and service functions, to name a few.

CRM evolves by constantly gathering customer data, analyzing that data, and using the knowledge gained to deepen relationships and improve business results. It allows any customer-facing employee (or those who support customer-facing employees) to convey, “We know you, and we value you.”

A CRM system supports you beyond the sales process, which is crucial to business performance. With the in-depth knowledge of the customer

  • New, add-on products can be offered and sold at the right time in the right way at the right price
  • Service teams can resolve issues more quickly
  • Development teams can create better products and services

Why use a CRM?

You may be wondering what the importance is of customer relationship management. Actually, there’s very little difference—in terms of product features and capabilities—between competing products. So many customers are now making purchasing decisions based on their experience with your business.

To provide a great customer experience (CX), you need a complete view of your customer (and the right data to put that view together). CRM systems combine customer data from various sources, including email, websites, physical stores, call centers, mobile sales, and marketing and advertising efforts.

Knowing who your customers are, what they want, what interactions you’ve had with them, and what future interactions will look like is what CRM is all about.

The goal of CRM

The goal of CRM is to support strong, productive, and loyal relationships with customers through informed and superior customer experiences at every stage of the customer journey. Why? To improve customer acquisition and retention. This central idea is wrapped around your CRM strategy. Improving customer acquisition and retention is accomplished in large part by providing experiences that keep your customers coming back. CRM as both a strategy and a tool informs those experiences.

What does a CRM system do?

A CRM system 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 lets users access that data and understand each touchpoint. It is through this understanding that the basis for a solid customer relationship is built.

Customer data can also be aggregated to populate 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.

What are some examples of CRM?

Let’s take a look at two scenarios from a customer’s perspective.

You need service on a product you’ve purchased from a business you’ve used before. You even registered the product. When you call the customer support line, the representative has no idea who you are, what you’ve purchased, or when the purchase took place. You now have to go through the tedious process of supplying information that should be readily available to the representative, such as a model or serial number that’s often difficult to find or access. Not only are you wasting valuable time providing this information to a company that should have it on hand, you feel that you’re not very important to them since they seem to know nothing about you. Even though you did receive the service needed, you look hard at the competition the next time you think about purchasing from that company.

Now consider another scenario. You make that support call. By merely taking down your name and verifying who you are, the representative has your entire purchase and service history available and treats you like the valued customer you are. Even with product issues, this type of personal treatment will keep you coming back.

CRM supports the second type of customer experience. Every interaction based on CRM creates an opportunity for your customer to have a more personal, compelling experience. It’s also a chance for you to build brand equity, improve satisfaction, and make more sales. And that’s how you create customer loyalty and increase revenue.

What does CRM mean to you?

What does CRM mean to you?

CRM is a commonly used, yet misunderstood, acronym. Some definitions are silly, such as “costs ridiculous money” or “can’t remember much.” And some can cause confusion—“customer relationship marketing” or “contact relationship management.”

Sales teams typically think of CRM as an account and contact solution, while marketing tends to think of it as a campaign, lead, or loyalty solution. Some even consider CRM to be a way to collect tribal knowledge and reduce headcount, or an administrative tool that provides no value. Clearly, the term means different things to different people, so it’s no surprise companies have struggled to embrace the true value of a CRM solution.

What is B2B CRM?

Not every CRM system is made equal. Typically, a B2B sales environment is more complex, with multiple buyers involved. A sale can take up to 12 months to close, involve more steps in the process, the deals are larger, and there are fewer purchases. There are fewer leads because B2B products are not universally needed. Many people like Coca-Cola, but not everyone needs the tire assembly for an off-the-road earth mover. Given the level of complexity, you need a CRM solution that fits your unique B2B needs, one that provides

  • Automated workflows to help sales reps manage their workloads and keep track of everything
  • Forecasting capabilities to accurately predict customer behavior and project financial outcomes
  • Greater visibility into what stage of the sales funnel the prospect or lead is in
  • CPQ applications to sell complex, highly configurable equipment that in many cases are found in a self-service environment
  • Quote management to generate quotes and provide a level of detail to prevent order mistakes

What is B2C CRM?

As mentioned above, not every CRM system is created equal. A B2C sales environment is typically less complicated than B2B. Sales take days—not months or years—and usually require fewer touchpoints. Deals are smaller, but there are more products per purchase. Given the need to focus on a broad audience to make quick and easy sales at massive scale, you need a CRM solution that fits your unique B2C needs. You need a B2C CRM solution that provides

  • Real-time capabilities in the areas of customer data, service notifications, and more
  • Robust email marketing that’s capable of sending out blasts to large lists while maintaining a personal touch
  • Automated workflows that support marketing to an extensive database of contacts, selling to that large number of contacts, and providing service that can keep up with customer demand
  • Integrated call center and customer service capabilities that can handle more requests through an integrated ticketing platform and a variety of chat tools
  • Social media integration to try to bring disengaged customers back into the fold and all promote other buying choices for all customers

CRM features and benefits

There are many options and CRM 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. It must fit within your budget and it must integrate well with your other systems. You need accurate, consistent data for that all-important 360-degree view of your customers, and if you don’t trust the integration, you can’t trust the data.

When it comes to technology capabilities, the best CRM systems offer robust analytics coupled with artificial intelligence (AI) and machine learning. These systems not only tell you what’s happened in the past, they also guide you toward next-best actions and product configurations that are specific to each customer opportunity. A good CRM system should also offer usage analytics to provide a complete view into how various teams use the tools.

Sales planning, quota and territory management, forecasting, and incentive compensation

Depending on the vendor, CRM software can support sales planning, quota and territory management, forecasting, and incentive compensation. With these additional capabilities, less high-value deals go unnoticed, and you get a full picture of what deals are going to close and who on the sales team will meet quota. Knowing projected sales will help you plan marketing campaigns and manage resources spread out among different sales territories more effectively. You can see what efforts you’ve put in, if those efforts produced a return, and where or if you should reallocate your resources.

Data and its importance in CRM

The most important part of a CRM system is the data that’s put into it. The basis for a successful CRM strategy hinges on what you know about your customers and how effectively you use that information.

Bad CRM data can come from several places, including:

  • Fraudulently entered data, for example, customers who enter "Mickey Mouse" or key in a fake phone number to try and get a customer perk or avoid having to register their purchase
  • Keystroke errors when entering data
  • Duplicate customer information due to a slight misspelling or from the fact that different people can enter information about an account
  • The natural moves and changes that take place in business every year: people leave jobs, people get promoted, companies are bought out

No matter the source, the effects of having bad data can snowball and quickly degrade the economic value of your CRM. The cost alone of having to go in and clean up invalid or incorrect customer records can be substantial, along with the concomitant costs of human intervention as a result of invalid or incorrect customer records.

Your customers’ voice is contained in the CRM data, and it forms the basis for strategic planning, sales growth, service quality, and more. Keeping CRM accurate and complete maintains its economic value today and in the future.

Using CRM to manage subscriptions and renewals

If you’re looking to support recurring billing and subscription management, you need a CRM solution that can automate the majority of the subscription and renewal management process. This could include automatically sending out renewal notifications to those customers with soon-to-be-expired contracts or instead sending out reminders to the sales team to prompt them to reach out to their customers in a timely manner about renewals.

Artificial Intelligence in CRM

When it comes to technology capabilities, the best CRM systems offer robust analytics coupled with AI and machine learning. AI is the future of CRM, not only tell you what has happened in the past but also guiding users toward the next best actions and product configurations—specific to each customer opportunity. AI also delivers timely customer intelligence that helps you optimize your brand experience across marketing, sales, and service. Finally, a good CRM system should also offer usage analytics that provides a 360-degree view into how teams use the tools.

How do you know your CRM system is effective?

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

Whether you use a balanced scorecard or some other model to track and assess performance, look at metrics such as customer acquisition cost, customer lifetime value, length of the sales cycle, customer retention, upsell rate, net new revenue, and time to recoup customer acquisition costs. This is not necessarily a definitive list. Track measures that evaluate organizational processes and performance, customer perception (Net Promoter Score, or NPS), and strategic alignment. Ultimately, the metrics you choose will be grounded in your strategic goals and objectives.

The difference between CRM and marketing

Both CRM and marketing automation systems are about data. More precisely, they’re about the storing and use of data.

But marketing automation systems focus on communicating with potential customers and customers with the end goal of gathering leads (that is, enough customer data points to show intent) and then hand them off to the sales team.

CRM picks up from there by working to generate leads and convert them into contacts, defined as leads who’ve expressed interest in buying your product or service or have purchased in the past and will hopefully buy again in the future.

How CRM improves customer service

Traditionally, CRM was viewed primarily as a sales tool. Not anymore. While CRM helps sales teams organize their leads, automate follow-ups, and manage their opportunities and pipeline, it does a lot more for the other departments within your organization.

Since CRM holds the important information about every lead and customer, this gives all customer-facing teams much greater insight into who they are, their motivations, what they might want, and what type of relationship they’ve had with your brand in the past.

This information gives your customer service reps context for when the time comes that they interact with those customers. The more your CSRs know about who they’re working with, the better they can serve them.

How CRM improves customer experience

A complete customer view is necessary for business success and growth. Without a CRM system, you’ll struggle to develop that much-needed 360-degree view of the customer that you need to

  • Personalize customer interactions
  • Automate business processes (with appropriate cloud CX integrations)
  • Track all customer interactions

The future of CRM is CX

When CRM first arrived on the scene, businesses would capture and hold data but not know what to do with it, other than as a glorified Rolodex. Now, CRM integrated with AI acquires and connects data and then interprets and predicts what that data means. 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 a complete, accurate, 360-degree view of customers to start them on their sales journeys and then expand those sales journeys onto new paths and product areas. The endpoints are infinite.

As this AI-enhanced CRM continues to evolve, CX will continue to improve—and in turn, customer expectations will continue to increase.

Your business will need to have a deep understanding of its customers and their journeys to not only meet their growing expectations but to serve them in unique and compelling ways. This is the future of CX, and it’s the future of CX that should serve as your guide to selecting a CRM solution.

Why is it important to have a CRM strategy?

Tools are merely tools. It’s how you use those tools 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 CRM 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 CRM 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 by providing experiences that keep your customers coming back. CRM as a strategy—and a tool—makes up the foundation of those experiences.

Should your CRM be on premise, 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 as a hybrid model depends on your business needs.

  • On-premises CRM gives you complete control over your CRM system. But there’s a cost. 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. Any business user can make updates. Because upgrades are pushed through automatically, you always have the most up-to-date functionality without significant IT effort. Cloud CRM also offers the convenience of anytime, anywhere access.
  • Hybrid CRM models require tradeoffs in all the areas mentioned above, but they can also deliver the best of both worlds. However, it’s important to recognize that technology is increasingly moving to the cloud. Companies that remain heavily invested in on-premises CRM risk being left behind as competitors advance to the cloud. Mobility (anytime, anywhere) will be limited. Access to new functionality can be a long, drawn-out process. Also, the most sophisticated AI-based technology—technology that supports virtual assistants, chatbots, next-best recommendations, and predictive analytics—will not be available.

Given all these choices, it remains true that 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 to drive exceptional customer experiences and improve your business results.

Do you really need a CRM?

There’s a right time to invest in a CRM system. If you don’t have an accurate view of who your customers are and what their needs or desires are or will be at any given stage in their purchasing lifecycle, or if you’re losing customers to a competitor, that's a clear indication that you need a CRM system.