Customer Relationship Management (CRM) is all about making use of data to understand your customers and help boost your sales.

CRM definition

Customer Relationship Management (CRM) is a method of managing your company’s interaction with your current and potential customers, and also storing and analyzing data about their past interactions. According to a management consulting company, Bain, CRM is “a process companies use to understand their customer groups and respond quickly—and at times, instantly—to shifting customer desires.” 

CRM software

According to the leading CRM provider, Salesforce, CRM software grew out of the contact management software of the 1980s, which was meant to give a digital version of the rolodexes that was very important to sales professionals. At first, CRM software lived on individual computers; later, it migrated to servers where it could provide services to a whole organization, at which point people begin to use the phrase CRM system.

One of the most important things to keep in mind about CRM system is that it is less important than the data you put into it. That’s one reason to think of CRM as a set of practices for recording your customer’s data.

What is CRM software used for?

CRM is a strategic process that helps you understand your customer’s needs and how will you meet those needs and enhance your bottom line. CRM systems link up information about customers from different sources such as email, websites, mobile sales, etc. CRM data flows between operational systems and analytical systems that sort through CRM data for patterns.

If you don’t have a correct view of who your customers are and what their needs or desires are or will be at any given stage in their lives, or if you are losing your customers to a competitor, that only means that you need a CRM system.

Thinking about CRM in technological terms is a mistake. Instead, it should be viewed as a strategic process to understand and meet your customer’s needs. A successful CRM strategy depends on putting together pieces of information about your customers and market trends so that you can effectively market and sell your products and services.

With an effective CRM strategy, a business can increase revenues by:

• providing the exact services and products that your customers want
• Providing better customer service
• Effective cross selling products 
• helping your sales staff to close deals faster
• Keeping existing customers and discovering new ones

These revenue gains don’t happen by just buying a CRM software and installing it. For CRM to be truly effective, you first need to understand who your customers are, their value, needs and how will you meet those needs. For instance, many financial institutions keep track of their customer’s life in order to market the exact banking products like mortgages or IRAs to them.