What is CRM software? A Beginner’s Guide

CRM is short for Customer Relationship Management and is a strategy for managing a company’s interactions with its existing customers and prospects. CRM software makes it possible to record this process so that all forms of contact with a customer or prospect are recorded in a central system. This allows everyone in an organization to see a complete contact history, including all phone calls, emails, letters, quotes, service/helpdesk calls, and financial details needed to contact the individual with all relevant information. Most CRM systems have the same basic functionality that allows entering company details along with details of all contacts in that company. In some cases, each company may be listed as a branch of a larger organization, with each company and contact having their own unique contact record and history details. For each person, the details of each interaction can be logged so that future calls/letters to that person can be referenced if necessary.

CRM systems also allow for the storage of custom data for each record containing important information about the company such as revenue, number of employees or industry, typically used for marketing and sales purposes to target specific types of customers.

Some CRM systems are part of, or integrate with, larger systems that include account systems and service systems. This allows all financial information to be made available to the relevant people – for example, if a customer with accounts is blocked for not paying their bills, the sales team needs to know not to sell them anymore or offer discounts! Service data is also important for the same reason, so any recent issues can be addressed before further sales calls are made.

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Of course, all information in the system can be reported and used for marketing purposes. A CRM system also automates this process by being able to merge or email data and create call logs for telemarketing teams. As leads are generated, they can be logged with the right company and contact and tracked through to sale. This allows businesses to see how successful (or unsuccessful) each of their marketing efforts is by seeing how many leads were generated and what happened to each lead. The same style of reporting could be done based on seller, territory, or type of inquiry (i.e. a specific product or service).

Overall, a CRM system gives a company a better view of their relationship with all of their customers, which should help them tailor their marketing activities, manage existing customer relationships and thus improve retention rates and sell products.

What are the alternatives?

In reality, many companies do not use anything. They leave the management of their customers to their sales or support teams, but often the communication between the two causes problems. Contact with customers could be recorded in a spreadsheet, but this obviously has many limitations and managing multiple contacts and branches is impractical for most businesses.

Some accounting systems and service systems have small CRM packages built in, however these are often very limited and are commonly referred to as “contact management systems” as they simply allow for the collection of contact and customer details along with a basic notes field for contact establishment. This is suitable for many small businesses that do not have many customers or multiple sales reps, but as they grow they often need a centrally managed system that provides an overview of activity and can be viewed by multiple reps in different customer-facing roles.