What is CRM?

Strong customer relationships are critical for any growing business. But as a company expands, it becomes more challenging to keep track of information about clients and prospects. That data is often scattered across financial systems, spreadsheets, emails and even handwritten notes, making it hard to get a complete picture of critical metrics from churn to customer acquisition cost to lifetime value.

Customer relationship management (CRM) technology is designed to solve that problem. It provides a single source of information that helps salespeople, marketers and customer service groups drive more revenue, increase productivity, keep track of the health of the business and, most importantly, build lasting customer relationships.

What is CRM?

Customer relationship management (CRM) technology helps companies get maximum value from client interactions, regardless of which employee is reaching out. A CRM system takes information about your customers and plugs it into a shared platform that helps sales, marketing and customer service teams conduct business more effectively and, crucially, avoid the dreaded “please repeat your account number, last order and what you called about yesterday” drill.

CRM systems collect the minutia of customer accounts, such as billing, orders and service requests, and keep records of “touches” to track sales productivity and ensure a client isn’t being neglected. Automation, data analysis, reporting and trend identification features help companies learn more about their clientele, including support needs.

Video: What is CRM?

Key Takeaways

• CRM systems centralize customer information, aiding in automating and optimizing sales, marketing, and customer service processes, thus enhancing productivity and fostering lasting customer relationships.
• Modern CRM technology encompasses operational, analytical, and collaborative functionalities, enabling precise customer behavior analysis, effective communication among teams, and streamlined operations.
• The shift to cloud-based CRM solutions has not only lowered costs through subscription models but also enriched feature sets, providing flexibility, and facilitating integration with other business systems.
• Investing in a CRM system can significantly boost a company's profitability by enabling better customer insights, shorter sales cycles, improved collaboration, and enhanced customer satisfaction.
• Future CRM trends are inclined towards leveraging machine learning and artificial intelligence for hyper-personalization, enhanced customer self-service, mobile CRM, and fostering a seamless customer experience across departments.

History of CRM

Before CRM, companies used surveys and front-line workers to understand and document customer behaviors and needs, relying on spreadsheets to store information. But as statistical methods for analyzing and gathering data became the norm, digital Rolodexes and early versions of contact management services displaced manual processes.

In the 1990s, the first CRM systems came to market. Shortly after, leaders in the ERP industry added CRM modules to their products to compete and broaden service capabilities.

While CRM began as on-premises software, today’s product landscape includes cloud-based applications. The transition from on-premises to cloud allows for richer feature sets, more flexibility for users and lower pricing. Companies can pay on a subscription basis versus a large capital outlay.

Today’s CRM systems are purchased either as standalone software or in conjunction with leading ERP platforms. Both versions integrate with other business intelligence systems. And trends like deeper and broader integration, mobile applications, social media listening, machine learning, chatbots and industry-specific features are available and affordable for today’s CRM buyer.

CRM vs. ERP

Asking whether you need CRM versus ERP is like asking whether you need marketing versus finance. A CRM system helps businesses improve sales, marketing and customer service operations. Enterprise resource planning (ERP) is complementary technology used to help companies improve other essential business functions, such as finance, HR, supply chain, inventory and more. CRM focuses on the customer, increasing satisfaction and sales, while ERP platforms focus on internal operations, driving efficiencies to attain peak levels of business performance.

Many ERP systems contain CRM modules or functionality, and there are also standalone CRM systems. While a business might adopt one or the other, when both are in place, the two should be integrated, with a common database. The combination of CRM and ERP allows, for example, the operations team to preview which customers are requesting an on-site visit, while finance can see pending deals and just how likely it is that a purchase order is imminent based on the account exec’s interactions and historical data.

Types of CRM Systems

CRM systems fall into three broad categories: operational CRM, analytical CRM and collaborative CRM.

Operational CRM focuses on automating sales, marketing and service processes to create efficiencies at the operational level. Operational CRM includes functionality such as contact management, sales pipeline tracking and marketing automation for customers at different stages of the buying cycle.

Analytical CRM leverages data analysis to identify patterns in customer behavior. Analytical CRM uses data mining to tailor marketing campaigns, build customer personas, improve sales outreach and forecasting and enhance customer service interactions.

Collaborative CRM takes all customer information and organizes it in a shared database for stakeholders. Collaborative CRM gives customer-facing roles—such as sales, support, marketing and customer service—access to a log of all customer touchpoints, which helps inform new sales material, customer needs analysis and development of marketing objectives.

Although there is some crossover among CRM system types, each offers slightly different functionality.

What Does a CRM System Do?

Modern CRMs may have hundreds of functions. But at a fundamental level, CRM systems rely on several standardized components to integrate and automate sales, marketing, customer support, ecommerce and partner relationships.

All CRM systems have a shared database containing information on a company’s customers. Employees use this information to review each account’s current status and see critical details such as contact person, revenue, existing contracts, sales notes and other related documents.

A CRM system offers a holistic view of the sales pipeline, giving teams actionable steps and recommendations through data analysis, reporting and forecasting. CRM systems also help identify and track key metrics on sales data, customer service activities and customer behavior.

How Does CRM Work?

A CRM system gathers and organizes all data related to customers, such as contact information, sales history, service records and more. After collating and analyzing this data, the CRM system provides insights about customers, automates crucial business processes and builds better customer relationships. A CRM system shares vital information with stakeholders through a database tailored to suit a company’s needs.

CRM software relies on a variety of processes and functionality, such as contact management, lead scoring, sales team automation, marketing automation, data mining, sales forecasting, analytics and relationship management to accomplish these tasks.

Benefits of CRM

Adopting a CRM system delivers several compelling benefits, including:

• Centralized, accessible storage of all customer data: CRM systems provide stakeholders with quick access to real-time data on customers, informing daily interactions and improving critical sales and marketing processes.
• Automation of sales, marketing and customer service processes: CRM automates sales duties, such as invoicing and lead management; enhances marketing through automated email campaigns and customer categorization; and supports customer service teams by tracking all customer touchpoints, suggesting solutions and personalizing the customer experience.
• Better customer insights, trendspotting and forecasting: Analyzing data across a wide range of touchpoints delivers a better view of customer behavior and patterns, a deeper understanding of sales patterns and insights about where customer service could improve.
• Increased profitability: CRM systems give teams the information needed to better serve customers, develop more efficient and effective sales outreach, improve marketing campaigns and thus reach higher levels of profitability.
• Scalability: CRM systems scale as companies grow, enabling them to manage an ever-increasing number of customers—critical to long-term success.

How Do Businesses Use CRM?

A CRM system is valuable for almost any business that has grown to the point where the owner doesn’t know everything about every customer. The CRM tracks and retains client data even as employees come and go — if your top salesperson leaves, for example, you don’t also lose information about their hottest prospects and pending deals. The CRM also improves efficiency by automating key tasks and eliminating the need to switch between multiple applications to view customer data.

Sales, marketing and customer service groups are the primary CRM users. But many others within the organization, including finance and ecommerce teams, also benefit.

Marketing:

CRM helps marketers create and track campaigns that deliver relevant information to new leads and current customers. A CRM system typically provides tools, such as customizable email templates, that help automate campaign generation. Some CRMs provide the ability to segment customers based on their preferences and previous buying behavior, so you can create targeted campaigns. For example, you could search for people who have bought a specific product and target them with an email campaign offering discounts for useful add-on items.

A CRM system also helps marketers better track and compare the performance of different campaigns. They can compare key metrics, such as response rates and costs for email, phone and online outreach channels, from within a single platform. CRMs that are integrated with ERP or financial applications offer the key additional benefit of enabling companies to directly measure the revenue generated by each campaign based on sales data managed by the ERP system.

Sales:

For many companies, sales force automation (SFA) is the most pressing reason for implementing a CRM, and it provides the biggest immediate payback. The CRM tracks opportunities at every step of the pipeline, from lead to quote to completed sale, and records customer interactions at each stage. It helps sales specialists capitalize on opportunities, organize their time via reminders about meetings and upcoming tasks and monitor progress toward sales quotas. Especially when integrated with an ERP system, the CRM can help sales representatives gain a fuller picture of each customer by examining their previous orders, whether they pay promptly and any service issues.

Sales managers can use the CRM to track the performance of individual team members and the sales team overall. CRM systems help companies produce more-accurate sales forecasts based on the current pipeline and other factors, such as the estimated probability and value of each sale. Leading CRM systems also automate time-consuming and complex tasks, such as calculating compensation and commissions for the company’s salespeople and for partners that facilitate sales activities.

Customer support:

Superb service can be a decisive factor in building long-lasting, positive client relationships. With a CRM system, all customer service agents have access to each customer's full history. They don’t need to go through the painful process of repeatedly gathering the same information each time the customer contacts the company, and they can immediately view any pending cases as well as previous service requests and orders. A CRM automates the creation, assignment and tracking of cases in response to service requests received via different channels, such as phone and email.

Some CRM systems also provide self-service capabilities, such as customer portals that let customers submit requests online, track the progress of cases and view their order histories. These capabilities can reduce the customer service team’s workload and improve the experience for customers who prefer to interact with the company online.

Ecommerce:

Integration between ecommerce platforms and CRM systems benefits the ecommerce team — and the rest of the company. Many businesses sell through third-party ecommerce websites and cloud-based platforms, but that often means the company needs to manage inventory in multiple unconnected systems.

An additional problem is that other groups within the business may not have visibility into customers’ purchases on those platforms. Because people may buy and interact via multiple channels, including ecommerce, phone, and in store, a lack of visibility into ecommerce sales can prevent companies from gaining a full understanding of customer activity.

CRM systems that integrate with ecommerce platforms can simplify inventory management and increase accuracy by updating inventory in real time across all sales channels. This integration also provides sales, marketing and customer service with a full picture of customer activity, including online purchases and returns.

Finance:

The company’s leaders and top financial managers may not directly use most of the capabilities of the CRM system on a day-to-day basis. But the information in the CRM is critical to helping them understand and predict business performance. Combining data from financial and CRM applications into easy-to-digest reports helps finance and the CEO analyze key business metrics, including the return on investment (ROI) from the company’s marketing and sales efforts.

Notably, finance can use the sales forecasts produced by leading CRMs to generate accurate revenue forecasts more quickly and easily.

CRM Challenges

It’s possible to avoid most CRM challenges with proper planning, goal setting and the right implementation team. Still, it’s essential to understand the common problems you might run into when adopting CRM.

• Cost: A full-featured CRM system comes at a cost, typically a monthly subscription fee. Additional fees for CRM implementation, integration, support and ongoing maintenance also apply.
• Implementation and adoption timeline: It takes time to implement a new CRM system and get internal staff comfortable using the new technology.
• Proper setup: A CRM system must be set up effectively from the beginning, so choose modules and functionality geared to support your customers’ needs, able to integrate with other major systems and designed with your business goals in mind. Otherwise, it may be difficult to see positive results.
• Internal pushback: Don’t be surprised to receive pushback from management or employees, especially when switching systems. Make sure everyone understands the reasons for the change, get buy-in from each department and provide proper training.

CRM Examples

CRM systems can help companies from any industry build better customer relationships and scale more effectively. The examples below show how CRM is a powerful, sector-agnostic technology that helps organizations reach their goals.

• Alton Lane (opens in a new tab): Bespoke suit designer Alton Lane is known for personalization and superior customer service. As an omnichannel retailer, in-store and online experiences need to reflect the quality- and customer-centric aesthetic across many different touchpoints. CRM helps Alton Lane deliver that experience — employees know a customer’s size, fabric preferences and favorite drink at showrooms from New York to Dallas, and online, where customers can track the intricate suit design and construction process .
• NoaNet: Nonprofit telecommunications provider NoaNet’s mission is to bring quality, affordable Internet to underserved communities in Washington state. The company relies on its CRM system to expand its reach and build partnerships with the public utilities, phone companies and state agencies necessary to serve its 260,000 customers. CRM has been essential in the process, halving the time needed to issue quotes for B2B partners, reducing invoice and billing time and increasing customer satisfaction.

Choosing the Right CRM

A CRM system will play an integral role in your business, so it’s important to find one that meets the needs of all groups that will use it. It needs to fit within your budget, too. Key considerations when choosing a CRM include:

• Buy-in from key stakeholders. Bring together representatives from the groups that will benefit from the CRM system so that you get a clear idea of the features you’ll need. The list typically includes the heads of sales, marketing and customer service; top-performing salespeople; the CFO; an IT representative or your service provider; and an operations expert.
• A comprehensive requirements list. Based on input from stakeholders, create a list of must-have requirements. Stay focused on these requirements as you evaluate vendors’ offerings; CRMs can include a bewildering variety of features, and it's easy to get sidetracked into discussions of capabilities that your business doesn't really need.

Most CRMs include basic features for sales force and marketing automation, but if you sell via partners or joint ventures, you may also benefit from a system that automatically manages partner relationships , including joint marketing, lead management and partner commissions.

• How you interact with customers. If a top priority is to ensure sales reps don’t miss follow-up calls or appointments while on the road, strong SFA capabilities including mobile access are important. If you’re fielding a large volume of support requests via phone and email, customer support capabilities are critical.
• Your future needs. Your CRM should grow with your business. Think about your expansion plans. Will you need to support global sales, ecommerce, international partner relationships and/or multiple currencies?
• Evaluating implementation cost and effort. CRM systems can be cloud-based or on-premises. Cloud-based CRM systems involve less implementation and maintenance effort and have a lower initial cost. You access the software over the internet and pay for it with a monthly subscription. With on-premises systems, you'll need to buy hardware and software licenses, and you’ll need IT expertise to install and manage the system. In addition to implementation concerns, you should also consider security and maintenance for on-premises tools. All CRMs will require some user training.
• Integration Think about how the CRM needs to mesh with your business's other software. NetSuite CRM is part of an integrated suite of ERP applications, which means employees using the CRM have a complete picture of all business information related to the customer, including sales orders and payments. NetSuite software also integrates closely with widely used ecommerce platforms, simplifying inventory management and enabling companies to track customers' activity across all channels.

A CRM system is an important tool for remaining competitive in almost any industry. It helps companies build strong customer relationships that ultimately drive increased sales and profitability. A CRM system also helps sales, marketing and customer service better track customer-related activities, automate time-consuming tasks, increase overall productivity and create superb customer experiences.

The ROI of CRM

A CRM can deliver ROI in many different ways, from helping to boost revenue to reducing costs by enabling sales, marketing and customer service to work more efficiently.

Here are a few of the most common benefits.

• Increased revenue and profit: Over time, a CRM system can help generate greater sales for your company, resulting in higher profits. Companies that don’t have CRM technology in place typically lack visibility into the sales pipeline across the business — and if you don’t have complete visibility into your pipeline, you’re losing sales you don’t even know about. A CRM helps ensure the sales team tracks and follows up on every promising lead. Automation also makes sales teams more productive, so they can pursue more opportunities. And, the insights into customer behavior provided by a CRM enable more cross-selling and upselling.
• Shorter sales cycles: A CRM can shorten the time between initially contacting a customer and closing the deal, eliminating delays and bottlenecks in the sales process through better collaboration and greater automation.
• Increased productivity through automation: Automation of time-consuming sales, marketing and customer service processes is also key to increasing daily productivity. For sales teams, CRMs automatically track opportunities at each stage in the pipeline and prompt account reps when action is needed. CRMs help marketers automate campaign generation and analyze the success of phone, email and multichannel campaigns within a single system. They can automatically generate cases in response to customer service requests and help companies track them to resolution.
• Better collaboration: By providing a single, comprehensive source of customer information that everyone can use, a CRM system facilitates better collaboration among departments and individuals. Leads are passed more efficiently from marketing to sales, sales teams can better assign leads and collaborate and customer service can cross-sell when customers contact the company with service requests.
• Improved customer satisfaction: Excellent support is a key element in improving the overall customer experience. With a CRM system, service representatives can respond more quickly and intelligently to customer requests because they can view at a glance each customer's entire history, including current and past issues, sales orders and other information. The system tracks cases from creation to resolution, helping ensure that no customer issue is overlooked or left hanging.
• Better analytics and accountability: CRM systems support detailed performance tracking and analytics. Sales team members can measure performance against their goals, while sales managers can analyze team performance in detail. The CRM can track key marketing metrics, such as lead generation and conversion, as well as cost and revenue per lead. The company can monitor key customer service metrics, such as call volumes, resolution times and customer satisfaction.

CRM Trends

Several trends define the future of CRM.

• Customer experience is critical: Highly competitive marketplaces require that companies stand out in terms of customer experience. CRM helps companies acquire new clients; retain existing ones; and make sales, service and support processes a pleasurable, customer-centric experience. Companies rely on cutting-edge CRM systems to stand out in the marketplace and reach new customer experience levels.
• Machine learning and eventually artificial intelligence: Machine learning and AI continue to integrate into CRM, assisting teams in customer segmentation, advertising and personalization. ML/AI will also bring more automation to managing customer relationships, assist in customer communications via text and voice chatbots and bring deeper insights to forecasting with predictive analysis and data intelligence.
• Hyper-personalization: Enhanced CRM capabilities lead to highly focused marketing, sales, support and customer service interactions. Modern CRMs can chart a unique customer journey through access to a wide range of data, including social information, demographics, life events, relationships, conversation styles and more.
• Self-service across the customer journey: Automation and ML/AI allow customers to move unassisted through more elements of the customer journey. Self-educating becomes the norm, minimizing expensive agent-assisted engagements.
• Mobile CRM: Mobile clients continue to gain in popularity as offsite and remote workers demand more intuitive mobile CRM interfaces, better integration across platforms and the freedom to access customer data from anywhere. Voice-enabled mobile apps will assist salespeople by cutting down on administrative tasks like email, updating customer logs, competitive research and setting reminders for follow-up meetings.
• Customer integration across departments: Sharing customer data across the organization becomes more critical as customers demand consistency in interactions and IT leaders work to break down information silos. The goal: A seamless customer experience.

Manage NetSuite CRM

NetSuite’s Customer Relationship Management (CRM) software is the only cloud solution offering a real-time, holistic customer view across the entire customer lifecycle—from lead generation through opportunity, sales, fulfillment, renewal, cross-sell and support. Generate a single view of your prospects, customers, partners and vendors and give sales, marketing and support teams the real-time data they need to deliver exceptional customer experiences and drive sales with NetSuite.