Customer relationship management (CRM) refers to the practices and strategies that companies use to manage customer interactions. CRM helps to develop customer service relationships, improve customer retention, drive sales growth, and increase profitability.
CRM system definition
In simple terms, a CRM system helps companies to manage customer data. It assists with the understanding of customers’ needs and preferences by managing, organising, tracking, and storing all customer interactions. This can then be used to effectively develop customer relationships.
CRM systems are valuable to businesses due to the amount of customer data that is collected every day. Each time a customer conversation takes place or a salesperson meets with a potential customer, extra important information is gathered.
Before CRM systems, data was stored on unconnected media, written in notebooks or just kept in people’s heads. This led to details being lost or forgotten, customers not receiving follow-ups as promised, and leads being prioritised based on intuition rather than data. As a result, the accuracy and efficiency of customer relationship management could be compromised and the reputation of businesses impacted. CRM systems have been able to resolve many of these issues, turning customer data into actionable insights.
Main features of a CRM system
As well as being a central place where customer and prospect data can be stored, a CRM system also tracks customer interactions. This allows businesses to manage relationships and achieve their growth potential.
The key features of a CRM system are:
- Contact management – Up to date customer information in an easily accessible format.
- Lead management – Tracking of leads from prospect through to conversion.
- Sales forecasting – Pipeline activity can be monitored to more accurately forecast sales and individual targets.
- Employee messaging – Instant messaging allows colleagues to ask and answer each other’s questions to support a sales conversation happening in real-time.
- Analytics – Data can be presented in an informative and intuitive way through the use of visual dashboards.
Businesses can also choose between three types of CRM system: desktop, server, and cloud. All offer different functionality depending on the needs of the business. Cloud-based systems are considered to be the most effective as they can be assessed anywhere via a connected device.
CRM definition marketing
People are overwhelmed with marketing messages every day. The sheer number of promotional content that is constantly viewed has almost desensitised consumers who rarely pay attention to, let alone read, the marketing messages they receive.
At least 347 blog posts are published every minute on WordPress alone. This deluge of information has made a marketer’s job very tough. In order for marketing messages to stand out from the crowd and have their desired effect, they have to appeal to an increasingly discerning consumer. This customer knows what they want and demand that marketers come up with personalised and innovative ways to promote their products and services.
Gone are the days of ‘one size fits all’ with generic content or advertisements more likely to frustrate consumers rather than entice them to buy what’s being sold. Instead, marketers have to take an individualised marketing approach. But what’s the best way to accomplish this?
In order to produce relevant content, marketers must rely on data and technology, which can be achieved with a CRM system. Being able to include information from prospective customers’ social media activity such as their likes and dislikes, enables marketers to produce compelling marketing messages.
>> Read more: How to promote your business.
How CRM benefits businesses
CRM software can benefit businesses hugely by helping to improve marketing campaigns in four ways:
1. More accurate targeting
Data is the key to marketers sending out messages that appeal to the consumer. Thankfully CRM software does the hard work of looking through the data on behalf of marketers so that prospective customers can be targeted based on their behaviour and preferences.
2. Effective segmentation
Segmentation has become more sophisticated as consumers demand increased personalisation. CRM software not only segments based on demographics but can also use email replies, product purchases, and social media activity to create a more comprehensive customer profile.
3. Customised content
Once the target customer has been decided and the database has been segmented it’s time to personalise the experience. With a CRM system, customers can receive marketing messages addressing them by name and referencing other information about them along with relevant and attention-grabbing content. Research has shown that the more personalised content is, the higher the response rates and the return on investment.
4. No need to reinvent the wheel
When you’ve created a marketing campaign that works you can reuse the templates for contacts and audiences so that you can replicate the success time and time again. This helps to reduce marketing costs whilst improving lead conversions at the same time.
How to choose the best CRM system for your business
The right CRM system will give you the information to grow your business, increase your sales and improve your customer engagement. The wrong one will overwhelm you with dashboards that mean nothing to you. So, how do you find the ideal CRM system?
When considering your options, be sure the ask the following questions before investing in a CRM system:
1. How will the system help your business to achieve its goals?
Ensure that you discuss what you want to achieve as a business with your CRM provider. As the experts, they can advise you on which software will help you to achieve your goals.
2. Will the system integrate with other business software?
Most CRM systems integrate with other programmes including Office and Outlook, which makes business operations more efficient. However, if you have a particular software programme that you’d like CRM to integrate with make sure you ask if it’s possible before you buy.
3. How much does it cost?
You can either pay for CRM software on a monthly or annual basis. As with most subscriptions, if you have the money to pay for the annual fee it can work out cheaper than the monthly option. Also, make sure to ask if pricing will go up after the first year. Once you’ve invested time and effort into a CRM system it can be a hassle to change, so review the long-term pricing structure before you sign up.
It’s also important that you work out your budget and stick to this when researching the best CRM system for your business. It can be easy to get carried away with impressive functionality and end up purchasing software that you don’t really need and can’t afford. Shop around and you’ll find the best deal with suits the requirements of your business.
4. What ongoing support is offered?
You may have found a good deal for your CRM system and then realise that there is no aftercare support included in the price. This can make integrating the system with your business a daunting task without the help and advice of a customer support team. When reviewing the cost of different CRM systems remember to factor in how valuable the ongoing support will be.
Free CRM systems
If you’d like to ‘try before you buy’, there are free CRM systems available. These come as either free with limited functionality or open source systems.
Free versions tend to restrict the number of users or storage but will help to give you an idea of how a CRM system could benefit your business. The open source option is likely to be unrestricted but rely on a technically minded person or team to install and configure the system. If you have neither of these then the free version may be better suited to your needs than open source.
CRM systems enable businesses to engage with prospects and customers on a more personal level. Data can provide insights into what customers want allowing marketers to surprise them by knowing this information.
CRM software hugely benefits businesses by supplying a centralised contact database, which can produce meaningful insights to shape the perfect target groups that respond to highly personalised messages.
It should be remembered though that a CRM system is only really valuable for a business if the data is organised and can be easily accessed. Otherwise, it can just become an expensive place to store customer information.