What Is a CRM and How Does It Work?

Michal Wlosik

Maintaining good relationships with customers is the cornerstone of every successful business, but in decades past, the process of managing and tracking customer relationships within a business was fragmented and time-consuming at best. Companies would store physical customer data in filing cabinets, rolodexes, and spreadsheets.

These methods of customer-data storage not only involved a lot of manual work, but they also meant the information wasn’t properly distributed across the business (between sales and marketing departments, for example), often leading to missed business opportunities.

With the introduction of the Internet came a wave of new marketing-technology (MarTech) platforms to help companies create, manage, and track customer relationships in the form of a customer relationship manager (CRM).

What Is a Customer Relationship Manager (CRM)?

A customer relationship management (CRM) platform is a piece of software companies use to manage interactions with customers, store information about them, and automate a number of processes connected with a customer’s journey through the marketing and sales funnels. A CRM system is an incredibly important tool for every company, helping to foster customer loyalty and forge it into healthy revenue.

What Does a CRM Do?

At the most basic level, CRM software allows marketers and salespeople to manage and analyze relationships with the company’s actual and potential customers. It enables tracking every interaction with the company and collects information about the customer. This way, when speaking to a customer, the marketer always knows who they are and sees their history with the company. This makes the interaction more personalized, increases the chances of conversion, and encourages customer trust and loyalty.

CRMs include functionalities which allow you to track customer/company interactions through various available touchpoints, including those from:

·       Contact forms

·       Search engines

·       Emails

·       Phone calls

·       Social media

The software takes care of certain processes—it can offer automation of marketers’ repetitive tasks, sets reminders for important events, and displays alerts if things really need attention. Some CRMs also offer analytics capabilities, allowing you to track the efficiency of various marketing efforts to generate leads and conversions.

CRM software, in combination with marketing automation, provides sales and marketing teams with a set of tools to manage the entire sales and marketing funnels, from lead qualification to opportunity management, forecasting, and deal closure.

End-to-end management of the sales funnel involves a combination of marketing-automation (top of the funnel) and CRM functionalities (bottom of the funnel) systems. We are witnessing the trend that many popular CRM platforms either acquire or develop their own marketing-automation systems to offer the functionality. HubSpot, for example, offers both, while other CRMs enable easy integration with other marketing-automation systems.

Here’s a list of functionalities typically offered by a CRM platform:

·       Lead management: A CRM tracks the company’s leads, allowing marketing teams to enter new leads into the system (automatically or manually) and to track and analyze data about them.

·       Marketing automation: Some CRMs like HubSpot and Salesforce offer marketing-automation functionalities to automate certain tedious tasks in the funnel. For example, the system can automatically send customers marketing emails at times set by the marketer, or publish social media posts according to a schedule. The goal of marketing automation is to keep sales leads engaged and to help turn them into paying customers.

·       Sales automation: CRMs can track customer interactions and automate selected business functions of the sales cycle that are necessary to follow leads and attract and obtain new customers.

·       Workflow automation: CRM systems help businesses optimize processes by streamlining mundane workloads, which enables employees to focus on creative and more high-level tasks.

·       Analytics: CRM solutions can offer built-in analytics tools that offer insights and help boost customer satisfaction rates. A marketer can analyze the data and create targeted campaigns accordingly. CRM analytics help to track attribution and provide insights into the quality of the customer experience.

·       Artificial intelligence: CRM solutions like Salesforce offer AI capabilities built into their systems to help automatically recognize patterns leading to successful sales, which can help you build more accurate strategies for future marketing efforts.

·       Individualized customer experiences: You can also use a CRM to create personalized and consistent experiences for your potential customers across various marketing channels, which may help increase conversions and boost brand awareness.

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