What Is CRM? A Complete Beginner’s Guide

CareerFoundry contributor Dr. Anneke Schmidt

What is CRM? CRM stands for customer relationship management. It’s an all-encompassing digital marketing tool that enables businesses to manage customer relationships and data. CRM systems track customer interactions, personalize customer experiences, build brand loyalty, and generate more leads.

Sounds great, right? But how does a CRM system work, and how can you use it to reach digital marketing success? In this beginner’s guide, we’ll cover the basics of customer relationship management, the benefits of using a CRM system, and how CRM platforms facilitate the process of customer acquisition, engagement, and retention.

This article is for you if you’re new to the world of digital marketing or looking for a career change in this field. Feel free to use the clickable menu to find the information you’re looking for.

  1. What is CRM?
  2. What does a CRM system do?
  3. Why do companies use CRM systems?
  4. How does a CRM platform work?
  5. How to learn more about CRM
  6. Summary

1. What is CRM?

Basically, a CRM system is like a digital filing cabinet for all of your customer data. It stores everything from contact information and sales history, to purchasing patterns and preferences. This data can be used to support sales and marketing activities, such as email campaigns, personalization efforts, and customer segmentation.

CRM systems also enable you to track customer interactions over time, giving you a better understanding of their needs and behavior. This helps you to build better relationships with customers and provide them with more tailored services and experiences.

There are different types of CRM systems, such as:

  • On-premise CRMs are installed and maintained on the company’s own servers, requiring significant upfront costs and ongoing maintenance.
  • Cloud-based CRMs are hosted on the cloud, offering quick access without software installation.
  • Mobile CRMs are optimized for mobile devices, making them a good choice for companies with many on-the-go staff members.

Although all CRM systems offer contact management solutions, their focus may vary depending on the types of businesses and goals they can support. For example, some tools have a mainly operational focus—managing sales processes, customer service tasks, and customer communication—while others focus on marketing and analytics capabilities—providing insights into customer behavior and buying trends.

Which type of CRM a business uses depends on the size of the company, its budget, and more specific factors, such as customer segmentation, scalability, and the level of automation required.

2. What does a CRM system do?

No matter the type of CRM system you use, it should be able to perform the following key functions:

Store contact information

At the heart of every CRM system is contact information storage. It stores all customer or client-related data, such as names, emails, phone numbers, addresses, and other contact details. This data allows you to identify who your customers are and keep track of their customer journey. And what’s more, if you’re dealing with a large customer base, CRM tools enable you to segment customers into groups and assign specific tags to them. This makes it easier for you to target customers and personalize your messages and marketing campaigns for maximum impact.

Interested in learning more about customer journey maps for targeted marketing? Check out our comprehensive guide here.

Log communication history

CRM systems log the communication history between your customers and your company. This way, you can organize customer conversations by contact or account and track interactions with customers across multiple channels. This feature enables you to better understand customers’ needs, respond quickly and accurately to inquiries, and resolve issues faster. Another atdvantage is that with all your communication data in one place, it’s easier to spot opportunities for upselling and cross-selling.

Optimize the sales process

CRM tools also streamline your marketing efforts and automate repetitive tasks. For instance, you can use them to manage your sales pipeline, track leads, and monitor the progress of deals. That way, you can easily identify which stage they are in and take appropriate action to move them forward. 

You can also use CRM tools to schedule sales calls, set follow-up reminders, and assign tasks to team members. All this makes optimizing your sales process and maximizing your team’s productivity much easier.

Analyze customer behavior

Another key feature of CRM systems is analytics.  With powerful insights into customer behavior, you can get an in-depth understanding of your target audience’s preferences and buying habits. This allows you to track customer engagement and analyze the effectiveness of your campaigns. Furthermore, you can use this data to identify growth opportunities, create targeted marketing strategies, and personalize customer experiences.

Related reading: What are digital marketing analytics?

Improve customer experience

To elaborate on the previous point: one of the most significant advantages of CRM systems is their ability to provide a better customer experience. By collecting and analyzing data about your customers, you can create personalized campaigns that resonate with them. Additionally, CRM tools enable you to build loyalty programs to reward your customers for their engagement and keep them coming back for more. So, using CRM software is a great way to increase customer satisfaction.

Use marketing automation

Marketing automation—or sales force automation—is another common feature of CRM systems. With tools such as email campaigns and drip marketing, you can automate sales and marketing processes to save time and resources. This will enable you to focus on more critical tasks, such as nurturing relationships with existing customers, attracting new leads, and optimizing customer service. And, most importantly, it can help you to provide a seamless customer journey for maximum satisfaction.

Measure and grow your business

Finally, CRM systems can help you measure and grow your business. For example, you can use customer data to assess your campaigns’ lifetime value and return on investment (ROI). That way, you can adjust your customer outreach strategy as needed and make decisions that will lead to better customer retention and higher profits, which ultimately translates into business growth.

3. Why do companies use CRM systems?

Given all these features and functions, it’s no wonder that CRM systems are gaining popularity in the business world. Companies of all sizes are investing in CRM software to connect with customers and prospects, improve customer service, and enhance their marketing efforts.

Effective customer relationship management plays a crucial role in business growth today. With customer loyalty no longer a given, the only way to keep existing customers and attract new leads is by ensuring they remain as satisfied as possible throughout their journey.

A PWC report from 2018 on the future of customer experience in the U.S. confirms this:

  • One out of three customers will leave a brand they’ve been loyal to after just one negative experience.
  • 53% of customers hope to get better customer service from companies.
  • 70% of consumers say speed, convenience, and excellent customer support are the most significant factors determining overall satisfaction.

So, what do these figures tell us? Quite simply, customer satisfaction is the key to success in today’s competitive business landscape. And the only way to ensure it is by leveraging effective customer relationship management strategies. Successful business managers understand the importance of customer relations and take a proactive approach by utilizing CRMs.

4. How does a CRM platform work?

You’ve probably heard of popular CRM platforms such as Salesforce, HubSpot, Zoho, Freshsales, and Zendesk. But how do they actually work?

Here’s a quick overview of the steps involved in setting up and working with a CRM system:

  1. Setting up the platform: install, configure, and customize it to ensure it’s tailored to your needs.
  2. Collecting customer data: use forms, surveys, or other data collection methods to gather customer data.
  3. Inputting data into the CRM: input all the collected customer data into the CRM system.
  4. Automating processes: automate email campaigns, customer segmentation, and lead generation tasks.
  5. Analyzing data: analyze the data to gain valuable insights into customer behaviors and preferences.
  6. Improving relationships: use these insights to engage customers more effectively and build stronger relationships.

Of course, this is just a brief overview of how CRM systems work. Every platform comes with its own set of features and functionalities that can be tailored to a company’s specific needs.

5. How to learn more about CRM

There are countless free resources available online to help you learn more about customer relationship management. Official websites of popular CRM platforms offer comprehensive training materials. Here are our top three examples:

Another great starting point is the database from CRM.org. It contains a wealth of information about different types of CRM systems, their features, articles, and case studies.

And finally, if you want to learn more about digital marketing, consider enrolling in our free introductory course. It includes a tutorial on the most commonly used marketing metrics relevant to CRM, and it’ll give you the basics you need to get started in the field.

6. Summary

CRM solutions have become an essential part of modern digital marketing. They help businesses build better customer relationships, identify improvement opportunities, and increase customer satisfaction levels. 

With technology advancing at an ever-increasing pace, knowing how to implement and use these systems is a valuable asset for anyone interested in a career in digital marketing.

For more in-depth information on how to get into digital marketing, check out these articles:

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