What is CRM? CRM software is a modular technology system that includes sales automation, analytics, and marketing automation tools to gather customer data and empower sales teams to work at peak efficiency.

Customer relationship management solutions have become a mainstream part of the business world. CRM systems let organizations track customer data across channels, keep team members informed of user activities, and eliminate excessive manual work gathering information from clients.

With the rise of cloud-based CRM solutions, the technology has become more accessible, even for small businesses, and advanced functionality is becoming the new normal across a wide range of industries.

customer relationship management

Grand View Research found that businesses are moving toward increased use of cloud CRM solutions in order to improve customer retention. The technology accomplishes this by

  • Improving data management throughout the customer lifecycle
  • Providing greater visibility into customer behaviors
  • Allowing for better, more efficient service
  • Supporting geolocation functions that enable organizations to provide location-specific services
  • Incorporating marketing and sales force automation to streamline operations
  • Making data available across organizational channels to keep everybody on the same page

These capabilities make CRM systems invaluable in the increasingly digital business world. According to Grand View Market Research’s study, companies from a diverse array of industries are increasing their use of CRM platforms to keep pace with emerging customer and operational demands.

How CRMs are evolving for the digital age

Digital transformation is the big buzzword for businesses today. The term refers to the process of moving from the use of disparate digital technologies to embracing a digital identity that optimizes data, processes, and human interactions around digital capabilities.

To a great extent, this transition is taking place because consumers have embraced digital solutions as a major part of their day-to-day lives. As consumers interact with brands across digital channels, businesses need to respond quickly and efficiently. CRMs lay the groundwork for positive customer experiences in a digitally transformed world, giving businesses access to the data and backend capabilities they need.

A CXO Today report explained that CRM functionality continues to evolve in response to this digital revolution. The technology is shifting to support deeper use of data mining, built-in social functionality to drive collaboration, and dedicated customer-facing tool integration to allow for faster response. These types of solutions will continue to drive CRM adoption moving forward and further entrench CRMs as critical technologies in the modern enterprise world.

What to expect from a CRM implementation

In practice, a CRM system has the potential to transform your operations by giving your employees the tools they need to engage with customers and one another as efficiently as possible. However, getting there involves a potentially tricky implementation process. We’ll go into more detail about what actual CRM use looks like later on, but in the simplest terms, you’ll need to consider the following when implementing a CRM:

  • Expect a complex purchasing process during which you compare multiple solutions with similar features to identify the best option based on price and specific capabilities.
  • Be prepared to deal with service-level agreements and pricing structures built around resource consumption and the number of users accessing the system, not one-time purchasing costs.
  • Ensure you account for time to train employees and get them on board with the new solution.

Implementing a CRM is a big decision. You can expect the transition to be demanding. Keep reading to learn more about CRMs and what they can do for you so you can simplify the process and get your project off on the right foot.

Why CRMs are important for businesses

If you’re running a business or managing a team today, you’ve probably seen the effects of digital technologies. We’re all used to instant access to apps, data, and similar services on our phones at all times. We now expect businesses to be just as accessible. As a result, organizations are left scrambling trying to update their processes to keep up with today’s demands.

Instant access to digital technologies

In a 2018 McKinsey & Company survey, approximately 80 percent of businesses said they’re working on digital transformation. However, less than a third of those businesses report that their efforts have improved operations and that they are sustainable over time.

CRM technologies are at the center of this movement. They’re among the first technologies to emerge as accessible options for digital transformation, and they’ve become essential as companies try to adapt to today’s digital demands.

So who uses CRMs? Just about any business can find value from the software.

Data: The bedrock of CRM value

Consumers are asking for custom, personalized interactions with businesses. A Forbes report highlighted how retail giants like Amazon are using data analytics to create strong, personalized experiences that give customers what they want in convenient, accessible ways.

The move to custom, individualized experiences isn’t exclusive to retailers, and it isn’t simply a matter of recommending products or services like Amazon does. If you want to offer personalization, you’ll need your business to get better at gathering, communicating, and analyzing data.

Improving support processes

Imagine one of your customers emails your business for help and then calls. Unfortunately the person they talk to is unable to access the email they sent. They talk with your support representative and provide a bunch of information, only to be passed on to a higher-level support engineer who proceeds to ask them to repeat all of the same information over again.

This kind of negative customer experience happens all the time in both B2B and B2C settings. Team members don’t always have access to the same data, and they often have trouble communicating with one another.

CRM systems overcome this challenge by creating a single source of data that can automatically send updates and notifications to stakeholders, saving employees from missed updates that lead to negative experiences.

Driving better sales recommendations by tracking pitches made over time

Have you ever been in an awkward meeting where a new member of your team spends five minutes going through a detailed product pitch to a client only to have the customer respond that they heard the pitch two weeks ago and, while they like the idea, they simply don’t have the budget for it?

These types of experiences can leave clients feeling that they weren’t important enough for you to properly prepare for the meeting. This makes your organization look disorganized and unprofessional.

A CRM deals with these issues by tracking all meetings, who was at the sessions, and what was discussed. A new stakeholder can hop into the CRM and get a quick update on what products have been pitched, how the client prefers to interact, and other key data points that allow for better experiences.

Creating end-to-end visibility into customer-related operations

How easily can you track how a lead was generated? What about the cost of acquiring customers? Can you quickly assess the average time from initial contact to sale?

Sales and marketing teams in today’s digital-focused businesses depend on complex, multilayered metrics more than ever before. That’s why it’s vital to gather information in near real time, communicate it to relevant sources, maintain data quality, and create custom reports.

CRM solutions can do this through a blend of database systems, automation tools, and reporting capabilities that provide more valuable data and help you better understand how your operations play out in the customer relationship.

In practice, digital transformation is all about creating better customer experiences. You need data to do that.

Without the right information in the right place at the right time, your workers can’t meet the needs of customers who may email you one hour, call you the next, and complete a transaction on a mobile app later in the day.

If all of this data is spread out in different databases and content management systems, your teams will be unable to respond to customer demands as they arise. If the information is funneled into the CRM software, your teams can manage customer interactions from a single place.

Key CRM software value propositions

Today, companies can’t get by without the ability to leverage data in everyday operations. But CRM software isn’t just a database. By delivering information in line with specific workflows, the technology is a natural fit for various tasks and teams. A few prime areas where CRM platforms are particularly valuable include

  • Lead generation. Data gathered within the CRM system can identify how customers heard about a brand in the first place, why they initiated a relationship, when they moved from exploring options to seriously considering a purchase, how they interacted with sales (the number of meetings, website sessions, etc.), and what they actually purchased.

CRM software is the bedrock for tracking lead generation, qualification, and conversion in a cohesive way.

  • Marketing automation. A CRM platform can integrate with popular marketing automation solutions to create a holistic option for deeper marketing penetration, process automation, and efficiency gains across your teams.
  • Reporting. CRM systems typically provide a number of preconfigured, easy-to-create  reports that you can quickly distribute to stakeholders. Most CRMs also feature custom report generation tools that let you easily gather custom data sets, often sorted by date or other parameters based on your needs.

The technology allows you to create visualizations that make the data more digestible and actionable. In most cases, this includes incorporating personalized data visualizations on user dashboards so that users can see key metrics at a glance based on their job role.

  • Clerical automation. How much time do your sales, marketing, and support teams spend notifying one another of account updates, reporting to each other during meetings, and dealing with data quality across departmental lines?

A CRM system eliminates these problems: Once data is entered, it is automatically communicated to relevant stakeholders or logged into the right systems, all without duplicate manual data entry. CRM software can also automatically pull data from emails, messaging apps, and similar systems to further reduce the amount of clerical work businesses must do.

While these are the essential benefits of CRMs, many businesses find that CRMs can solve specific problems that are unique to their sales and marketing processes.

3 key types of CRM technology

CRM software typically falls into one of three broad categories, which often overlap.

1. Operational CRM

An operational CRM system’s features and capabilities improve operations to drive better customer experiences. They emphasize automation and similar capabilities that help employees get the job done better and more efficiently.

2. Analytical CRM

Analytical CRM systems are primarily devoted to data analysis. They gather information from diverse sources, offering backend analytics functionality, and delivering information to relevant users. These systems are ideal for businesses looking to gain greater insight into their sales and marketing units.

3. Collaborative CRM

A collaborative CRM system, as you’d guess from the name, helps employees work together more effectively. The software’s applications and tools are designed to help siloed business units break down long-standing operational barriers and drive better communication.

Most CRM platforms in use today will incorporate a blend of all three capabilities. A solution may emphasize one or another, but few lack features from these categories.

Common CRM system features

Specific capabilities can vary substantially between CRM platforms. However, a few of the most common features in CRM platforms include

  • Contact management
  • Quote and order management
  • Social media integration
  • Reporting
  • Email integration
  • Sales analytics
  • Mobile accessibility
  • File and document management
  • Marketing and support automation
  • Interaction tracking

These core capabilities come together to provide a holistic view of sales and marketing operations, letting teams track customer interactions across the pipeline, both before and after the sale. While this is not an exhaustive list of what any CRM platform can do, it provides an idea of how deeply ingrained the technology can be in any business.

CRM systems aren’t just lofty analytics solutions. Instead, they offer real, tactical capabilities that align with key operational pain points teams face every day.

Now that you have a clearer idea of why CRM solutions matter and what they do, it’s important to find the right solution for your needs.

How to find the right CRM

There are a lot of CRM providers fighting for market share right now. Look at some of the best CRM software options on the market, and you’ll quickly find a blend of longtime players promising powerful tools and emerging players claiming to disrupt the status quo and give businesses what they really need.

In many cases, these solutions share many standard features. It’s important to explore the technology’s specific functions and the industry it was designed for. This can make it easier to narrow down options to a reasonable list. However, before you get there, you’ll need to be sure you understand cloud-based CRM systems.

The benefits and pitfalls of cloud CRMs

At this point, the cloud is mainstream, making traditional CRMs all but extinct. With that in mind, it’s vital to understand key benefits and pitfalls that come with using this technology. (We’ll do a deep dive into the cloud later on in this guide.)


Benefits of cloud CRMs

  • Flexibility to add new features or scale your use of the technology with ease
  • Lower capital costs with the initial purchase
  • No need to manage or maintain servers and other data center hardware to support the system
  • Easier integration with other cloud apps and services through modern APIs
  • Simpler transitions between solutions as you don’t have to deal with data center disruptions or installation on end-user machines
  • Accessible to users logging into the CRM from locations outside the office

Pitfalls of cloud CRMs

  • Potentially higher long-term costs as you pay for subscriptions and deal with possible fees if your usage needs exceeds the limits of your service level agreement
  • The need to trust a third-party service provider with vital data that must be available to employees at all times
  • Extra stress on your network as all data involved in the CRM moves through the internet instead of being stored on end-user devices
  • Reliance on the CRM provider’s development road map for new features and capabilities

These pros and cons are an unavoidable part of cloud CRMs. You’ll need to keep these issues in mind when choosing a platform and look into how the solution provider enhances the advantages of the cloud while addressing the potential problems.

Major players in the CRM sector

There are a variety of CRM options out there; here’s a look at five of the most prominent players in the sector:

  • Salesforce. Salesforce dubs itself the top CRM in the world, claiming to be used at more than 150,000 businesses of all sizes. The solution focuses on ease of use, giving organizations a streamlined road map to implement the technology, customizing with varied cloud apps and services, and empowering employees to collaborate effectively.
  • Oracle. As one of the world’s leaders in database development and analytics, Oracle delivers a CRM backed by deep data ecosystems and access to a variety of its cross-channel commerce solutions.
  • SAP. Like Oracle, SAP brings a long history of analytics excellence and streamlined integration with diverse cloud tools to the CRM space.
  • Microsoft. The Microsoft Dynamics 365 platform provides core CRM functionality in a package that integrates with Office 365 and the rest of the Microsoft cloud. This powerful integration allows for easy scalability within the platform and brings the familiarity of Microsoft interfaces to the CRM space.
  • HubSpot. While HubSpot is especially well known for its dedicated sales and marketing software, it also offers free CRM tools that make the technology particularly accessible to businesses of any size.

This is just a snapshot of some of the industry leaders in the CRM space, but exploring each can give you a general idea of what the technology does and how it does it.

Key tools and features in contemporary CRM systems

Each CRM is going to offer different features and methods to complete a task. But core CRM functionality ultimately boils down to three key ideas:

  • Automation. Modern CRMs automatically compile data and perform deduplication to ensure the information you have about customers is accurate and up to date at all times. The technology can also be configured to send users alerts or provide dashboards that automatically notify team members when there’s a task they need to complete.

CRMs don’t just manage key data in the backend; they capture it from various sources and deliver it to the other apps and services you use.

  • Integration. Today’s CRMs are built in the cloud and typically designed to work easily with other apps and services in a cloud provider’s ecosystem.

Whether it’s direct CRM integration within a cloud platform or one that uses APIs to grab data from a source like social media, integration tools let the CRM access customer data or process updates and log them in near real time to ease the operational burden on end users.

  • Reporting. Gathering information from diverse sources and integrating that data with end-user apps is great for day-to-day operations.

Built-in reporting tools make CRMs invaluable from a strategic standpoint. The technology uses the customer and operational data it manages to compile reports on key metrics and benchmarks you want to track.

You can typically use CRMs to create custom reports as well. The software can prove vital in helping you gain deeper transparency into your business without a great deal of manual data gathering and analysis.

These three pillars of modern CRM technologies lay the groundwork for smaller features that you’ll want to explore as you dive into the specific solutions on the market. Understanding the core functions available can make it easier to investigate how different vendors achieve these capabilities and assess their fit for your needs.

Accounting for scalability and flexibility

How much do you expect your business to change in the coming years? Cloud-based CRM software should be able to scale based on your resource needs.

Adding new users to the subscription or handling more data isn’t a huge hurdle. But if you have unpredictable needs, you should explore the billing models used by different vendors.

Some solutions may allow for more flexibility without high costs. On the other hand, some vendors may increase their prices when you unexpectedly need more resources. As you weigh your vendor options, think about where your business stands in terms of the predictability of data storage, analytics needs, and the number of users in the system.

In terms of flexibility, talk with solution providers about their development road maps and how they prioritize adding or tweaking features based on feedback. Chances are there won’t be a system that has every single feature you want out of the box. You’ll probably either need some customization or have to look out for capabilities that the provider doesn’t offer. It’s important to understand the vendor’s approach to ongoing development so you aren’t surprised after making a purchase.

Choosing the right CRM for your needs is ultimately going to come down to identifying must-have features, capabilities you’d like, and functionality you don’t care about. From there, you can blend those specifications with your budget requirements to create a short list. Once you have a base, you can start going through sales demos and getting to know vendors to further explore your options.

The importance of CRM integrations

Integration is central to CRM value

Serving as a single source of data is the key purpose of a CRM system. If you’re considering the technology, you need to think about how it integrates with your existing systems to make sure it can function as your data hub.

You can’t have a dedicated marketing automation platform with its own set of customer data while your customer support team has separate account tracking software and your financial teams have yet another distinct record of customer information.

Think about trying to get by with customer data located in three distinct places. Your teams would all enter information manually in disparate systems, duplicating data on the same clients and storing that information separately. The result would not only be potential confusion, but also difficulty in tracking customer interactions across channels.

Two customer relation specialists are integrating different services

With a CRM platform that serves as a central warehouse for customer information, you can log relevant information once, and then it’s automatically visible to users on relevant teams. Generally speaking, you can add notes and use separate data fields for customers to clarify any key points of distinction, such as a client who wants to receive billing information at a different email address than marketing content.

The big-picture integration offered by CRM tools — gathering data from various apps, centralizing that information, and making it available to users in relevant ways — is central to getting value from the technology. However, more nuanced integration capabilities have emerged as CRM software has matured, adding a greater degree of convenience, data transparency, and operational efficiency.

Beyond basic integration: App integration and APIs

Before exploring the opportunities of CRM software created through app integrations and APIs, let’s focus on distinguishing what we’re talking about when we use these terms. Though they aren’t quite interchangeable, they have many similarities.

App integration. Application integration is when a CRM system and an application are able to work directly alongside one another, taking elements of the CRM solution or the discrete app and displaying them directly in the user interface.

APIs. An application programming interface is a prebuilt set of tools that allow a portion of an existing app to be used within another system.

App integration and APIs deliver value in the same way — by bringing functionality from various apps and services into the CRM system or bringing CRM capabilities into another application. This leads to huge efficiency gains, as it saves users from having to switch between multiple applications to complete a task.

Earlier in this guide we talked about how CRM software is a key component of digital transformation programs. These integrations are an essential part of this process. They ensure that users can get multiple tasks done through a single interface, making it much easier for them to meet customer demands.

The list of integration options could go on and on, but there are a few common ones that stand out.

Common CRM integrations and APIs

Let’s look at some of the options you should expect from a modern CRM system and a few specific examples to show the types of things a CRM integration can accomplish.

Email integration

Integrating your CRM with your email system is one of the most useful integrations. Imagine you’re a salesperson trying to set up a meeting in response to an email from a prospect. You open the email and get the request for the meeting, then have to jump into the CRM system to explore the prospective customer’s history and a record of how you’ve marketed to them.

From there, you go back to your email and write a message that is personalized based on that history, and you try to schedule a session. Then, you go into your calendar and block out time. Finally, you open your conference call application to schedule the call.

Now imagine going through that same process with email integration. You get the email, and a CRM interface built into the email either automatically links to the prospect’s record or displays key information on your screen. You can send the reply from there, and the CRM solution can grab the data for call scheduling and automatically create calendar holds and conference lines.

A task that would require a bunch of manual steps involving multiple apps is handled through a single interface, automating the bulk of the clerical work. This allows you to focus more of your time on personalizing your message to the client, not on worrying about th