What is a CRM? Definition, tools, types and examples

What is a CRM?

CRM, in English Custormer relationship management, is a term that refers to the practices, strategies and systems that companies use to manage and analyze interactions with customers and the data that is generated. The goal is to improve service relationships, build loyalty and boost sales.

The  CRM systems collect data from customers through different channels such as the website of the company, phone, chat, email and social networks. They can also provide the customer service department with detailed information about users: their purchase history, their preferences and their concerns.

What is a CRM for (Infographic)

At the most basic level, CRM software consolidates customer information and documents into a single database. So users can access and manage it more easily.

Over time, many additional functions have been added to make them more useful. Some of these functions include the recording of customer interactions through email, telephone, social networks or other channels; automation of workflows, such as tasks, calendars and alerts; and give administrators the ability to track performance and productivity based on information recorded in the system.

In the following Infographic, we tell you in a simple way our definition of CRM and what it is for

CRM tools

Once we are clear about what a CRM is, we will see the tools.

Marketing automation

CRM tools can perform repetitive tasks to improve the work of the marketing department. For example, as registrations occur in the system, promotional material about the company can be sent, usually via email or social media. The goal should always be to turn a potential customer into a portfolio customer.

Automation of the sales force

The tools keep track of customer interactions. They also automate certain business functions of the sales cycle that are necessary to track leads.

Contact Center Automation

Designed to reduce the tedious aspects of a telemarketing agent’s job. Includes prerecorded audio to help solve customer problems and provide information. Various enterprise software tools that integrate with the programs installed on the agent’s desktop can handle customer requests to reduce call time and simplify customer service processes.

Geolocation technology or location-based services

Some CRM systems include technology that can create geolocated marketing campaigns. They are sometimes integrated with popular location-based GPS applications. Geolocation technology can also be used as a contact management tool to track sales at a certain location.

Workflow automation

CRM systems help companies optimize processes by taking care of the simplest functions. This allows employees to focus on higher-level and creative tasks.

Lead management

Potential customers can be tracked through a CRM. Salespeople can track and analyze lead data on one screen.

Human resource management in a CRM

CRM systems help keep track of employee information. Examples: contact information, performance reviews, and the benefits you bring to the company. All this allows the human resources department to manage the company’s staff more effectively.

Analysis

Analyzing the data and creating effective marketing campaigns increases customer satisfaction rates.

Artificial intelligence

Artificial intelligence technologies have been incorporated into CRM platforms. They automate repetitive tasks, identify customer buying patterns to predict future behaviour, and much more.

Types of CRM

If we look at its functionalities and objectives, we can say that there are three types of CRM on the market. Before implementing one in your company, it is worth knowing what they offer and how they differ.

What are the three types of CRM? Operational, Analytical and Collaborative.

Operative

Streamlines business procedures through automation of sales, marketing and services. The main objective is to generate leads, convert them into contacts, record all the necessary details and provide service throughout the customer life cycle.

Analytical

Collaborate with managers, marketing, sales and support establishing the best way to serve clients. The main function of this type of CRM is data analysis. Analyze customer data from different sources to get a reliable picture of business health. It allows management to make better decisions, marketing to understand the effectiveness of campaigns, sales to increase profits, and support staff to improve service and build a solid relationship with the customer.

Collaborative

Share customer information with various areas of the company such as the sales, marketing, technical team and support. The CRM collects the work of the different business units to achieve one goal: use all the information to improve the quality of customer service, build customer loyalty, and attract new customers to increase sales.

CRM on-premises and in the Cloud

If we look at the installation method, we find that CRM systems are installed locally or in the cloud. Although until recently the installations were carried out mainly on company servers, in recent years the almost unanimous trend is to hire cloud services.

What is a local CRM?

This system leaves the control of the administration, security, maintenance of the database and information, in the hands of the company that uses the software. The company buys licenses for life instead of buying annual or monthly subscriptions from a cloud CRM provider. The business software resides on the company’s own servers and the user bears the cost of any updates. It also often requires a complex installation process to integrate with company data. Companies with very specific needs could benefit from local implementation.

What is a cloud-based CRM?

In a cloud-based CRM, also known as SaaS (software as a service), data is stored on an external and remote network that employees can access anytime, anywhere with an internet connection, sometimes with a third-party service provider who oversees installation and maintenance. The deployment capabilities of a cloud solution appeal to companies with limited technical knowledge or resources.

Businesses could consider a cloud solution as a more cost-effective option as there is no high upfront fee as is the case for local installation.

Data security is a critical concern for companies using cloud-based systems, as the company does not physically control the storage and maintenance of its data. If the supplier goes out of business or is acquired by another company, the data may be compromised or lost. Compatibility issues can also arise when data is initially migrated from a company’s internal system to the cloud.

Open Source and Private CRM

A proprietary CRM is one that presents any type of technological or legal restriction that prevents its modification or distribution without the prior authorization of its owner. The source code is owned by a company responsible for its exploitation for commercial purposes.

An Open Source CRM system makes the source code available to users, allowing them to make modifications at no cost to the company that uses the system. Open-source systems also allow adding and customizing data logging on social media channels.

Open source platforms such as OroCRM, SuiteCRM, and SugarCRM offer alternatives to payment platforms.

The adoption of any of these implementation methods depends on the needs, resources and business objectives of the company since each has different associated costs.

CRM examples

We tell you some examples of CRM in practice so that you better understand what a CRM is.

Contact Center

Traditionally, data entry into a CRM system has been the responsibility of the sales and marketing departments, as well as call centre agents. Sales and marketing teams find leads and update the system with customer information. For their part, customer service centres collect data and review customer history records through calls received by service and technical support interactions.

Social CRM

Another example is found in social networks. They create business opportunities through platforms such as Facebook, Twitter and LinkedIn. Social networks represent an open forum for customers to share experiences with a brand, whether by issuing complaints or promoting products.

To add value to customer interactions, companies use various Social CRM tools. They monitor conversations on social media, from brand-specific mentions to the keywords used. This is how they determine their target audience and the social platforms they use. Other business software tools are designed to analyze feedback in networks and address customer inquiries and issues.

Companies are interested in capturing customer sentiments, such as how likely they are to recommend products and the overall satisfaction they show, to develop marketing and service strategies. Companies try to cross the data obtained through Social CRM with others collected by the sales or marketing departments to obtain a single view of the customer.

Mobile CRM Systems

Applications created for smartphones and tablets have become a necessity for salespeople and marketing professionals. They allow them to access customer information and perform tasks when they are not physically in their offices. Mobile CRM applications take advantage of unique mobile device features, such as GPS and voice recognition capabilities, to give sales and marketing employees access to customer information from anywhere.

Business-to-business (B2B) practices

CRM systems in the B2B market help to generate greater visibility of potential customers and thus increase efficiency throughout the sales process.

CRM challenges

Any advance in CRM technology is not useful if it is only used as a database. The data obtained must be connected, distributed and organized so that users can easily access the information they need.

Companies will not have a complete picture of the customer if the data is not organized in a single interface. Challenges also arise when systems contain duplicate customer data or outdated information. These issues can lead to a reduction in the quality of the customer experience due to long wait times during phone calls, inadequate case management through technical support, and other issues.

The  CRM systems work best when companies take time to “clean up ” customer data. This eliminates duplicate and incomplete records before integrating it with other types of software.