What is a CRM?

In simple words, as the name itself implies, Customer Relationship Management (CRM) is the combination of technologies, tools, strategies, and practices to manage relationships with your customers.

But, managing what kind of relationships?
Long-lasting profitable relationships!

The software/tool which helps in implementing this management of customer relationships is the CRM tool or software.

Usually when someone is talking about CRM, he or she actually means the CRM software which helps in the implementation of CRM process.

Right from the first interaction with the customer till the customer makes the purchase and post-purchase services, the customer goes through various touchpoints in this digital ecosystem. This is the customer lifecycle.

A CRM helps in leveraging the various stages of this customer lifecycle by helping companies interact with customers in an effective, smooth, and much more contextual manner. CRM helps in enhancing the customer lifetime value (CLV).

Too technical to understand?

Let us understand CRM in simple layman’s language.

Understanding CRM

Customer is the king. A business is nothing without it’s customers.

Every business interacts with its customers in a different manner. But there are certain things that are common to all businesses.

Like, most of the businesses collect the customer data.

Remember the good old days when you used to buy something & the shopkeeper used to write down your details in his register.

If you would be the regular customer to that shop, they would even give you gifts on Diwali or New Year.

Those were the days when everything used to happen with the help of pen and paper.

The bills/invoices were written and not printed then.

I don’t even know if you are aware of that era. Maybe ask your parents or grandparents. They would tell you about those days or maybe dig the past on the internet.

Relationships with the customers mattered then too & even today.

Then what changed?
A lot of things!

As technology evolved, businesses started shifting to computers. They started using spreadsheets, digital invoicing and much more.

The data which the shopkeeper collected then used to remain just in records. But the data that is stored digitally is not analyzed by organizations to understand several insights about the customers.

Also the quantity of data which brands collect now is much more then it used to happen in the good old days.

The data is stored at multiple places & in silos. Imagine the data with sales team, the data with the CEO or the senior management, the data with your customer support team and so on.

Now imagine, one sales person calling the customer for a product. The customer already has purchased the product from another sales person of the same company. This will look so bad.

I usually face this issue with the cold calls done for selling credit cards. I am pretty sure you would have also faced such instances.

Another scenario can be there is an escalation to the CEO, the support team is working on it & the sales team is unaware of it. The sales team is making a sales call to the client while the client is already frustrated due to the issue and has complained to the CEO.

All this mess can occur due to lack of sync in data & proper communication.

Redundancy in data, inconsistency in data, handling customers personal information, etc are a few challenges that are faced by businesses in this digital world.

And a simple solution to this is CRM.

It is a one-stop solution.

CRM consists of all the customer data in one place which can be accessed by all the relevant stakeholders of the organization. Both the internal communication and collaboration & the communication with the customer becomes easier with the help of a CRM.

Godfather of CRM, Paul Greenberg defines Customer Relationship Management as:

‘A technology & system that sustains sales, marketing & customer service activities. It is designed to capture & interpret customer data, both structured & unstructured, & to sustain the management of the business side of customer-related operations.

CRM technology automates processes & workflows and helps organize & interpret data to support a company in engaging its customers more effectively.’

Benefits of using a CRM for your business

#1. Helps you in maintaining a centralized database

Data which is scattered at various places is difficult to manage & also is not efficient to generate powerful insights.

A CRM helps in maintaining a centralized database. A centralized database helps you in maintaining a single source of data across the organization, reduces data redundancy & helps in generating quick reports.

#2. Gives a complete picture of your customer

A CRM software empowers you to have a 360-degree view of your customers. Unless you know who your customers are, you are just trying to play darts in dark.

A CRM provides you with your customer profile, purchase history, real-time data & many more attributes. This complete picture of a customer helps organizations in segmenting and targeting them in a much more precise manner.

#3. Seamlessly manage multiple sales channels

We live in an age where a customer might browse for the products on his tablet, add them to the cart from his mobile, and make the payment from his laptop.

The same customer might make his next purchase from the store which might be far away from his hometown.

Here, it becomes very important to give a seamless experience to the customers irrespective of the channel they use to interact with the brand.

#4. Build and maintain relationships

A CRM helps in managing the prospects, improving the contextual communication with them & thereby helps in building new long-lasting relationships.

At the same time, the CRM tool also helps you in maintaining relationships with your existing customer base by helping you serve them in a better and quicker manner.

#5. Create insightful reports

CRM provides powerful sales reports which can enable the sales team to manage their pipelines in a streamlined and automated manner.

Various types of reports can be generated which can be used by executives, top level management, CxOs, etc for making business decisions.

#6. Automation that reduces efforts, saves time and increases efficiency

Automation is not about replacing humans with machines, it’s about helping humans do business in a better way with the help of machines.

CRM helps you automate the business processes right from thanking people who made a purchase or signed up for a newsletter to sending personalized emails to your customers.

#7. Follow-up Reminders

Follow-up reminders are important in sales and pre-sales. As discussed in the previous point, automation leverages the business processes; it streamlines the follow-up process too.

With the help of a CRM tool, you can send automated personalized follow-up reminders on the date and time of your choice.

#8. Leveraging cross-selling and up-selling

With the help of CRM, as you get a 360-degree overview of your customer & access to all the data at a single location, it becomes easier for your sales team to sell related, supplementary products or service-based products.

Also, the process of cross-selling and up-selling can be automated to an extent with the help of automated email campaigns and chatbots.

#9. Reducing customer churn and attrition rate

CRM helps in maintaining an engaging relationship with your consumers. CRM not just helps you in keeping you connected with your customers but also helps in providing them good service, understanding their behavior & thereby reducing the customer churn rate.

Also, you can track the existing churn and attrition rates & figure out the reasons for the churn using the data provided by the CRM.

#10. Enhancing team collaboration

CRM enables seamless flow of data within the organization too & this helps cross-functional teams to collaborate easily.

As the data is located at once place, there is a lot of transparency & all the stakeholders get the updated information just by making a few clicks.

#11. Sales forecasting

For any organization, the ultimate thing that matters is the revenue and where does the revenue comes from? SALES!

CRM not only helps in analyzing the past & current sales but also helps in generating sales forecasts.

Types of CRM

There are 3 types of CRM:

Operational CRM
Analytical CRM
Collaborative CRM

Operational CRM

An Operational CRM, as the name implies facilitates the day-to-day operations of the business. This the most common and widely used type of CRM.

Operational CRM helps in streamlining the activities and mainly helps the sales, marketing and customer service teams to deliver a great customer experience.

Analytical CRM

Analytical CRM helps in making smart insights from the customer data. We live in the age of data and data becomes more valuable when analyzed properly.

An Analytical CRM helps in understanding the prospects, the existing customer and the past customer data. This means you know why is someone interested in your product, what is the happiness quotient of your customers, chances of up-selling and cross-selling, and several such critical metrics.

Collaborative CRM

A Collaborative CRM enhances the communication between your teams, various stakeholders and the customers.

These CRMs help in sharing the customer data with the relevant stakeholders like the suppliers, vendors, etc. It ensures that all your teams are on the same page & have access to the most updated and correct information.

To deliver excellent customer experience, communication & collaboration not only play a key role when interacting with customers but also internally within your cross-functional teams.

Conclusion

This was an overview about CRM in simple words. Most of the businesses use a CRM software these days.

If you are a business owner or decision maker and thinking of adapting a CRM tool, then do a thorough research about which CRM would be the best for your business.

Are you already using a CRM tool?
Let me know in the comments below.

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