CRM, or Customer Relationship Management, is a system that integrates practices and technologies to analyze interactions across the customer lifecycle. The aim of CRM is to enhance business relationships and increase efficiency, all while driving growth.
Customer relationship management (CRM) is software for organizing, maintaining, and retrieving relevant customer information in real time. CRM gives marketers and sales professionals an up-to-date, holistic view of each individual customer. However, it focuses primarily on generating sales, sometimes neglecting the more-service oriented responsibilities businesses have to their customers. Businesses that rely exclusively on CRM may find themselves losing out on essential customer-service opportunities.
Here, we explore CRM—what it is, what it can do, and most importantly, how your organization can go further to deliver a truly exceptional customer experience.
When choosing a third-party CRM, organizations have the option to choose between open-source and proprietary options.
Open-source CRM gives organizations increased flexibility and adaptability, by making the source code available to users. It costs less than proprietary options and allows businesses to operate free from commitments or restrictions imposed by CRM vendors. On the other hand, open-source CRM offers little-to-no official support, and usually only offers the most basic out-of-the-box functionality.
Proprietary CRM usually costs more than open-source options, and users cannot modify or debug proprietary CRM without vendor assistance. Vendor lock-in makes it difficult and expensive to switch from a specific proprietary product to something else. Conversely, proprietary CRM usually provides improved security, and out-of-the-box functionality is normally more comprehensive than open-source CRM options.
Organizations who are interested in CRM generally have three deployment options: cloud-based, on-premises, or hybrid. And while cloud CRM is undeniably the most popular choice for businesses worldwide, on-premises and hybrid solutions offer their own, unique benefits.
- Cloud-based
Today, many software-as-a-service (SaaS) technologies operate exclusively in the cloud. This means that rather than storing programs and relevant data on on-site hardware (such as a server in a company’s data center), the software and information exists on off-site, third-party servers. Organizations use cloud services to access their data by way of the internet.
Cloud CRM allows businesses to manage customer-related sales and marketing efforts without the added costs and ongoing maintenance of on-premises deployment. Additionally, users can access cloud-based CRM and essential data from anywhere in the world, provided only that they have secure internet access. Off-site solutions outside of the geographic region have the added benefit of remaining unaffected in case of local disasters or office emergencies, such as fire, floods, earthquakes, etc.
- On-premise
While the cloud provides many clear advantages in terms of CRM deployment, some organizations prefer an on-premises approach. As the name suggests, on-premises CRM maintains all related programs and data on site in company computers and servers. The business deploys and maintains the CRM.
Some would argue that on-premises CRM entails greater cost and effort on the part of the company. However, for organizations with the right resources and IT experience, on-premises solutions may allow for greater control over sensitive data.
Hybrid
Hybrid CRM offers a mix of cloud-based and on-premises CRM, allowing organizations to switch between the two options. They can maintain most data and programs in the cloud, while keeping critical information on site. For businesses with strict regulatory requirements for data handling and storage, hybrid cloud may allow them to enjoy the online infrastructure of cloud CRM while still ensuring regulatory compliance.
There are three main categories of CRM systems, each suitable for a different need. Managing interactions with current and potential customers can be done with a combination of collaborative, operational, and analytical CRM systems.
- Collaborative CRM systems
Collaborative systems focus on enhancing communication and data sharing across different departments. The goal is to eliminate the barriers that typically divide teams such as marketing, sales, and customer service. By providing a unified platform for accessing real-time customer data, collaborative CRMs ensure that every team member has the complete information they need to deliver a consistent—even seamless—customer experience.
- Operational CRM systems
As the name suggests, operational CRM systems are designed to streamline the customer journey by automating certain operations. They support the entire lifecycle of customer interaction, from the initial contact on a company’s website to the final stages of a sale. Operational CRMs automate routine tasks in each department, freeing up employees to focus on more personalized activities. This not only improves efficiency, but also helps businesses scale their customer service efforts more effectively.
- Analytical CRM systems
On the other hand, analytical CRM systems are centered on data analysis with the goal of identifying actionable insights. With the capability to process and interpret large volumes of customer data, analytical CRMs help businesses understand consumer behavior patterns and trends. This information is essential for making informed decisions that optimize sales strategies and enhance customer retention.
At its heart, CRM is primarily an organizational tool. It allows businesses to track and record customer interactions, including leads and opportunities. The main focus of CRM is sales and marketing. Many businesses also rely on CRM for customer service, though this may create potential issues.
A CRM system is simply a tool to help businesses organize all interactions with customers in a single platform. This makes it easier for businesses to manage customer relationships—and identify areas for improvement within the customer experience. With a CRM, companies can keep detailed records of customer purchases and preferences, which helps them tailor sales and marketing efforts to meet individual needs.
It can also support teamwork by allowing employees to access and update customer information, which means everyone is up-to-date and can collaborate efficiently. Automating routine tasks and providing analytics leads to more efficient operations overall and improved customer service.
Unfortunately, a CRM system is not a one-stop solution for all your business operations. It does not handle backend operations, including things like production, inventory management, shipping logistics, engineering, or financial accounting. These areas require specialized systems and processes that are outside the scope of CRM functionalities.
Choosing the right CRM system involves understanding the key components that will drive the most value for your business. These components should align with your operational needs, strategic goals, and customer engagement strategies. Here is what to consider:
The backbone of an efficient CRM system is contact management, which centralizes and organizes customer information. This includes details of interactions, transactions, and feedback. Contact management provides a comprehensive customer view, enabling businesses to tailor their approach based on individual preferences and history.
SFA streamlines sales processes by automating repetitive tasks so that sales teams can concentrate on building relationships with customers and closing deals. It boosts sales efficiency and provides consistent sales activity. This leads to better forecasting and, in turn, strategic planning.
This feature automates key marketing tasks such as customer segmentation and campaign management. This allows for targeted marketing efforts and effective campaign tracking. And that means better lead generation and nurturing processes.
The customer service and support functions manage post-sale interactions, including issue resolution and feedback collection. Advanced support analytics contribute to data-driven strategies, fostering customer loyalty and increasing satisfaction.
If a company needs deeper insights into sales and marketing, they can turn to analytics and reporting. This element is essential for understanding market trends and customer needs, which leads to more personalized and effective business strategies in general.
Integrating social media allows businesses to monitor and engage with customers across various platforms for a holistic view of customer sentiment and online behavior. These insights aid in proactive service and reputation management.
Mobile accessibility ensures that CRM tools are available on the go, enhancing team collaboration and enabling timely customer interactions from anywhere, which boosts productivity and decision-making efficiency.
Workflow automation reduces manual effort and errors by streamlining repetitive tasks. This leads to greater operational efficiency since it allows staff to focus on more strategic initiatives.
CRM systems enhance functionality and data coherence through third-party integrations with other software applications. These third-party integrations facilitate seamless data flow and comprehensive analytics, which improve operational efficiency and decision accuracy.
Customization allows businesses to tailor their CRM system to their specific needs and objectives, enhancing its relevance and effectiveness in achieving strategic goals and maintaining a competitive edge.
CRM is not just a tool for a handful of departments, but a versatile platform used across various teams. It acts as a centralized repository for all customer-related data and activities to support better management of external interactions.
Using CRM for sales and marketing gives companies a single customer view for both functions. CRM dashboards generally offer a unique page for each individual customer, detailing specifics related to the relationship between the customer and the business. These details may include customer sales histories, previous marketing efforts, client data, and other relevant information.
Once a sale is made, customer or account information is available to customer service agents, enabling them to better engage with customers for service. Where it becomes challenging is when expertise outside customer service is needed. Sharing customer and case information with those who are not support agents—and facilitating a seamless customer-service experience in the process—demands a product like Customer Service Management (CSM).
CRM tools are also valuable for business development and recruiting. They help track potential client or partnership opportunities. CRM can even manage recruitment processes by storing candidate information and making communication a breeze.
Beyond these, CRM is utilized in various departments, such as finance and human resources. These areas benefit from CRM’s ability to provide detailed customer insights and improve internal communication, all while streamlining processes. For example, finance teams can use CRM data for billing and forecasting, while HR can leverage it for managing employee-client interactions.
CRM systems harness customer data to create personalized experiences, including tailoring communications and offers to individual preferences and behaviors. For instance, customers might receive special offers on their birthdays or suggestions for products related to their past purchases. This is an effective way to enhance their engagement and loyalty.
CRM tools analyze detailed data on customer interactions, purchases, and preferences. This analysis helps businesses understand customer behavior patterns so that they can refine marketing strategies. It also helps improve product offerings and customer service, fostering stronger customer relationships.
CRMs provide a wealth of data that can be used for strategic decision-making. By identifying trends and issues early, businesses can proactively manage operations to address potential problems and seize opportunities to improve their product offerings. This often leads to sustained business growth.
Understanding and managing customer churn is crucial for long-term success. CRMs track the rate at which customers discontinue their business, helping companies identify underlying causes and implement strategies to improve customer retention and satisfaction.
CRM systems can even be used to track competitive dynamics, providing insights into how a business performs against competitors and why customers might prefer one provider over another. This information can guide strategic planning and help in crafting targeted marketing and sales strategies to win back lost prospects—or sway new ones to your company.
Efficient client onboarding is streamlined by CRM systems since they can automate the necessary steps to welcome new customers and set up their accounts. CRM can also ensure that clients are engaged with the right products or services from the beginning, leading to higher satisfaction and retention.
CRMs allow businesses to accurately identify stages that may cause delays or bottlenecks by tracking and analyzing the sales process. This analysis helps streamline sales operations and reduce cycle times for more effective sales strategies overall.
With real-time data and performance analytics, CRM systems help sales managers monitor and improve the performance of their teams. They can set and track sales targets, as well as evaluate individual and team performance. This helps teams provide targeted coaching and support where it’s needed most.
CRMs enable businesses to define, implement, and monitor sales processes tailored to different markets or customer segments. They facilitate process automation and lead assignments for a consistent and effective sales approach.
One of the main features of CRMs is their ability to automate and track activities, including sales outreach. Doing so helps businesses personalize interactions based on customer history and preferences. They can schedule communications and log responses, which improves the ability to adjust strategies based on customer engagement. All of this helps boost the effectiveness of sales efforts.
By automating data entry and other preliminary steps, CRM tools streamline the process of identifying and managing sales prospects. They can capture and organize prospect information from various sources, which enables targeted marketing campaigns and efficient lead management.
Although there are plenty of benefits, implementing a CRM system is not without challenges. One of the biggest hindrances is ensuring that the CRM acts as more than just another database—it must facilitate easy access to organized customer data. Companies often struggle to achieve a unified customer view if their data is fragmented or poorly integrated across different platforms.
Another potential challenge is duplicate entries and outdated information, which lead to inefficiencies and a potential decline in the customer experience. For example, service teams might face long wait times during customer calls or mishandle support cases if they rely on incorrect or incomplete data.
To maximize the value of a CRM system, companies need to prioritize data cleanliness and management. This involves regularly updating customer records, removing duplicates, and ensuring that all data is complete and accurate.
CRM may be an effective solution for managing sales and marketing. In a pinch, it might even help your agents provide better customer service. But despite what many businesses may assume, CRM is not a complete customer service platform.
CRM is designed to engage with customers reactively. It tracks cases and provides sales and marketers with relevant customer information. It also provides actionable analysis into the effectiveness of marketing tactics and offers insights into possible future opportunities. What traditional CRM cannot do is connect with other departments within an organization to provide a complete, end-to-end solution. And it does not prioritize solving customer problems. As an answer to these problems, more and more businesses are turning to Customer Service Management.
Customer Service Management picks up where CRM leaves off, leveraging and supplementing powerful CRM capabilities to offer a truly unified view of customer relationships across an entire organization. Customer Service Management integrates customer engagement with customer operations and service delivery. Where CRM unites sales and marketing and ensures easy tracking of customer data and interactions, Customer Service Management brings together every relevant team.
At the most basic level, CSM fills the gaps in CRM, and makes customer relationship management an actual customer-focused solution. Here are four key advantages of integrating CSM with your existing CRM product:
Although aligned with traditional CRM, CSM emphasizes the word service. And given that 86% of consumers are willing to pay more for better service, this customer-centric approach puts organizations on the fast track to achieving business revenue goals.
Happy customers lead to growth, and happy employees mean reduced costs and improved productivity. CSM helps improve experiences both inside your organization and out; employees enjoy automated workflows and improved interdepartmental coordination, and customers receive a more personalized, cohesive support experience that delivers faster resolutions.
When employees do not have to devote their time and energy to routine tasks, they are free to innovate. CSM handles the details, while allowing businesses to keep their creative and strategic juices flowing.
A key factor of CSM is its agility. As conditions in your industry change, CSM helps you and your business adapt along with them. CSM can help future-proof your business.
Adopting a CRM system involves several critical factors that businesses must consider to ensure its successful implementation and utilization. These factors not only influence the system's effectiveness but also its ability to meet the company's customer relationship management goals.
For a CRM system to be effective, it must be user-friendly and encourage user adoption. Businesses should provide comprehensive training and incentives to promote active engagement with the system. Regular feedback mechanisms can help identify user challenges and areas for improvement. Effective change management strategies are crucial to facilitate smooth transition and integration of the CRM system into daily operations.
Protecting sensitive customer data should be a top priority in CRM systems to maintain trust and ensure privacy. Implementing strong security measures, such as regular security audits and data encryption, is an essential part of protecting data integrity—as well as complying with regulatory standards. These practices help prevent data breaches and protect against cyber threats.
The effectiveness of a CRM system—like any other system—heavily relies on the quality of data it contains. High-quality, relevant, and accurate data supports informed decisions and customer relationship management. Regular data quality checks, along with data cleaning and validation processes, are necessary to maintain the integrity and reliability of CRM data. Establishing clear data quality metrics and governance policies ensures consistent data management and quality.
CRM systems should aid in managing and tracking sales activities to optimize revenue and provide accurate sales forecasting. They are instrumental in customer segmentation, helping identify high-value customers for targeted marketing, cross-selling, and up-selling efforts. These capabilities are vital for developing sales strategies that enhance profitability and drive business growth.
Maintaining high customer retention rates is a primary objective of CRM systems. Tracking customer interactions and analyzing retention data allow businesses to identify potential retention risks and develop strategies to address them. Utilizing customer feedback for continuous improvement can lead to better service offerings and foster long-term customer relationships.
A CRM system is pivotal for businesses aiming to stay competitive and customer-centric in their market. By centralizing customer information into one accessible platform, CRM provides a comprehensive overview of customer interactions, history, order status, and service issues, enabling businesses to tailor their strategies to meet customer needs effectively.
CRM's ability to integrate data from various sources, like sales, customer service, marketing, and social media, into a unified dashboard simplifies and enhances the process of converting data into actionable insights.
Beyond sales and marketing, CRM's utility spans across the entire organization, embedding a customer-focused approach in all business functions. This holistic integration ensures that customer-centricity is at the heart of business operations and innovation, promoting a unified effort to deliver superior customer experiences.
ServiceNow Customer Service Management brings front, middle, and back offices together, to proactively solve customer issues. At the same time, by incorporating digital workflows, businesses can effectively automate common requests. This helps ensure fast resolutions to customer problems while still allowing customer service and other departments to focus on more intensive projects.
But when it comes to the question of CRM vs. CSM, organizations don’t have to take a one-or-the-other approach; ServiceNow CSM can supplement existing CRM solutions. With service-aware capabilities and ServiceNow’s industry leading Service Catalog (a self-service means of automating resolution of common customer requests), businesses can extend their CRM capabilities to provide a fully developed customer experience. ServiceNow Customer Service Management is designed to integrate easily with most existing CRM platforms.
Check out ServiceNow CSM and see for yourself just how far your customer relationships can go.