Customer relationship management (CRM)— what it is, how it works, and why it’s important

In this post you’ll find out everything you need to know about customer relationship management (CRM) systems. The purpose of a CRM is to use the database of customer interactions to improve customer experiences and relationships — and ultimately to drive revenue growth for your business.

• What is CRM?
• Why your business needs a CRM
• What does a CRM do?
• CRM features
• Benefits of CRM
• CRM examples

What is CRM?

Customer relationship management (CRM) is a database software for keeping track of all your business’s interactions and ongoing communications with your current and potential customers.

While CRMs are typically associated with the functions of the sales and marketing teams, many teams within a business may use a CRM regularly. Let’s look at how different business functions and teams work with CRM systems.

• Sales teams. Sales teams use CRMs to keep track of interactions with potential customers throughout the sales process. It helps sales keep track of leads, manage pipelines, schedule calls, track communication, and monitor sales analytics.
• Marketing departments. Marketing departments use CRMs to manage customer data, segment audience groups, and track targeted campaigns. A CRM is helpful for tracking customer preferences, engagement history, and past purchases — and using this data to create personalized marketing campaigns.
• Customer service. Representatives can view CRM customer records and access previous interactions to provide personalized assistance. CRMs help customer service teams manage support tickets, track issue resolution, and stay up to date on customers’ full journey.
• Small business owners. Business owners can use CRMs for lead tracking, contact management, and sales analytics — to drive better decision-making.

Why your business needs a CRM

Without a CRM system, you could be leaving potential opportunities untapped. A CRM solution uplevels the customer experience — improving sales and retention. These are also valuable tools for helping your company become more customer-focused, find and convert new leads, retain existing customers, and improve the overall buyer experience.

If you’re unable to make sense of all your customer data, your customer experience will suffer, and as a result you’ll lose revenue. When you rely on a CRM, you empower your business to deliver more personalized customer experiences — keeping fewer leads from dropping out of your sales funnel.

Another way CRMs can help is keeping your customers engaged is through lead nurturing. In fact, companies that excel at lead nurturing can generate more leads than those companies still struggling to implement lead nurturing campaigns.

According to a HubSpot study, effective marketers are 46% more likely to use automation in their roles. So if you’re struggling to make sense of your customer data or meet the demands of engaging with your customers, you may need to start with a CRM system that can help you speed up your workflow to deliver a massive ROI.

What does a CRM do?

A CRM system, at its core, is a contacts database. It helps your businesses collect, store, and manage all of the data you collect from leads, customers, and business partners. It’s essentially like a glorified Rolodex or spreadsheet, but can quickly organize huge amounts of data and display it in a simple format — with customer profiles — on a central dashboard so it’s easy to understand.

A CRM also acts as a superpowered phone and operator. It can keep track of all your different channels of communication with your clients and associates, including phone calls, texts, emails, live chat, direct mail, and social media. Additionally, A CRM can enable you to manage each customer's journey and communicate with them every step of the way.

Finally, a CRM has the ability to integrate with your other software, like your customer service, billing, accounting, surveys, document signing, and other important business functions. It thereby acts as a central hub for all your sales and marketing activities.

While a CRM is largely known as a sales and marketing tool, you can also use it for human resources, project management, supply chain, and virtually any other line of work.

Example of CRM in use

Let’s say a retail store wants to use a CRM to its fullest potential. The store can use its CRM as a centralized database of customer information. Using this data, the store could use contact info and past purchase data to send personalized marketing campaigns to individuals using the contact method the customer prefers and promoting products related to things each customer has already purchased.

Because the store’s order system is integrated with the CRM, they can reach out to customers that haven’t made a purchase in a while to encourage them to come back to the store or make an online purchase. Because the CRM gives the store a clear view of past orders, the store can avoid annoying customers who are still frequently shopping at the store, while still engaging customers who haven’t been in for too long.

CRM features

To get the most out of your CRM for your sales and marketing teams, you need a feature-rich tool to empower you to maximize the impact your customer data has. Here are some key features that make a CRM valuable for your business.

• Dashboards and analytics. CRM systems offer easy-to-digest dashboards and analytics to monitor the health of the business from a high level.
• Contact and accounts management. Businesses can use CRMs to store all of their contacts — and update account status or customer journey stage within the tool.
• Lead management. CRMs help businesses track their leads through the sales pipeline. This allows them to prioritize certain leads, assign them to sales reps, and monitor their progress. CRMs make sure that leads are properly nurtured and aren’t allowed to fall out of the funnel.
• Marketing automation. Many CRMs will integrate with marketing automation tools so leads can be nurtured automatically after taking certain actions — or like opening an email or clicking an ad for a specific offer.
• Sales force automation. CRMs can collect and track customer data, but to get the most out of that information they need to be able to act on the insights found in that data. Sales force automation saves your sales team time by automating otherwise time-consuming tasks within the sales process.
• Workflow automation. Beyond marketing automation CRMs can also help automate other functions to save time. For example, companies can use CRM systems to automate some customer service interactions to avoid answering the same questions over and over again.
• Artificial intelligence (AI) and machine learning. CRMs powered by AI and machine learning can analyze and draw insights from your customer data to provide recommendations and intelligent predictions about a customer or lead.

Benefits of CRM

Operating without a CRM is like putting on a blindfold before working your way through an obstacle course. A CRM takes your customer data and uses it to paint a clear picture of your customers and what they are looking for. Here are some of the biggest benefits to using a CRM for your business.

• Centralized data

A CRM can act as a centralized database for storing all your customer information. Having everything in one place helps businesses understand who your customers are and what they care about — so you can provide better interactions and personalized experiences. Using a CRM means you won’t have to rely on scattered or fragmented customer data stored in various systems or spreadsheets.

• Audience segmentation for targeted leads

CRM systems make it simple to break down audiences into smaller segments so you can target them more effectively based on their preferences, behaviors, and past interactions. Doing this manually would be time consuming and could lead to segmentation based on the wrong characteristics.

• Clear prioritization

Without a CRM, all of your leads can start to run together — leaving you unsure of where to place your time and resources. When you use a CRM, you’ll be able to quickly tell which leads you should focus on, and which aren’t quite ready for a sale.

• Better data insights

The power of a CRM — especially one powered by AI and machine learning — lets you harness the data you’ve collected and analyzed to identify the biggest opportunities for acquiring leads and customers for your business.

• Greater customer personalization

A CRM is essentially a supercharged engine for making personalized customer experiences work. Developing personalized experiences at scale requires a centralized and connected data foundation. And with the right CRM your system will be future-proof, allowing you to continuously evolve to provide the experiences your customers want.

• Time-saving automation

CRM programs offer various tools for automation, such as a calendar reminder system, data capture across platforms, response-triggered email funnels, internal chat integration, and customer interaction — especially with calls made from within the system. There are also capabilities for lead capture and management and marketing automation.

• Better follow-up with customers

A CRM helps marketing and sales teams follow up with potential customers more effectively. When your teams are equipped with the data they need, a clear picture of who they’re talking to, and an accurate assessment of where a lead is on their journey it’s easier to reach each customer with the most effective messaging and timing. In this way, CRMs can help keep leads in your sales funnel and prevent you from reaching out too soon or letting a lead go cold.

CRM examples

When a customer engages with a business, there is valuable data held within that interaction. The products you promote, the messaging you use, and the experiences you create can all be personalized based on the data you have collected about a certain customer and their behavior.

Here are a few more ways that CRMs can help businesses engage and connect with their customers.

Getting started with a CRM

A CRM is an indispensable way to stay on top of your sales, marketing, customer service, and many other aspects of your business.

If you’re looking for the right CRM solution for your business, choose a cloud-based CRM that is robust enough to handle everything you need it for — and can easily scale as your grow your business. Adobe Experience Manager helps deliver personalized experiences no matter how many customers you’re serving — powered by ever-updating, singular customer profiles.

Adobe Experience Platform has all the tools you need for a seamless CRM strategy. Adobe’s enterprise business solutions help you overcome today’s biggest competitive challenges. From real-time personalization to comprehensive content management our digital business solutions help you deliver better customer experiences.

When you’re ready to get started with Adobe Experience Cloud, request a demo to learn how it integrates with your CRM solution.