What Is CRM? A Guide to CRM Software Types, Benefits, and Features

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Building personal relationships with your customers is easy when your client base is small. You might know their goals, purchase histories, and perhaps even more personal details like their food allergies or holiday plans.

However, as your business expands, things get more complicated. How do you ensure every client receives the same high standard of care? How do you provide personalized, relevant interactions when your customers number in the thousands?

Customer relationship management (CRM) software can help. CRM reduces your administrative burden and helps to improve customer experience—even as your business grows.

What is a CRM?

A customer relationship management system is a platform designed to help businesses manage and improve relationships with customers and potential customers. 

CRM collects and stores customer information, activity, and communications in a centralized and accessible database, replacing the spreadsheets, documents, and apps businesses often use to track customer data. You can use a CRM to plan outreach, analyze performance, manage customer interactions, and streamline billing and customer support processes.

What are the benefits of a CRM?

CRM provides two major benefits: increased internal efficiency (which can decrease business costs) and improved relationships with customers (which can increase revenue). In other words, implementing a CRM solution can help you widen your profit margins.

Increased internal efficiency

CRM tools can save business owners a lot of time, reducing administrative burdens and streamlining workflows for sales teams, marketing teams, and customer service teams. The efficiency benefits of CRM include:

  • Improved organization. CRM facilitate contact management. By keeping all of your customer data in one place, a CRM makes it easy to find the information you need to onboard a new client or team member.
  • Streamlined internal communication. Some CRM systems are designed to help your company’s different departments work together. For example, your sales and marketing team can monitor and communicate lead activities within the platform, keeping everyone up to date without time-consuming meetings or email exchanges.
  • Increased capacity for automation. CRM can help you automate marketing communications, customer interaction, activity logging, and data entry. Many also provide workflow automation functions, which can trigger notifications to sales and marketing teams to complete specific tasks. 

Improved customer relationships

CRM software can improve customer experience, making it easier to attract new customers and improving your customer retention rate. Here are five ways a CRM can improve your customer relationships:

  • Improved communication with customers. A CRM allows you to send personalized communication to individual customers or customer groups easily. 
  • Support of prospect pipeline. A CRM can help you identify what types of outreach are most appropriate for a given prospect or customer based on their history of engagement. For example, your CRM’s lead management tools can assess where a potential customer is in the buying process and provide relevant outreach to help them move along the sales funnel. 
  • Increased customer satisfaction. CRM can help you effectively respond to customer requests, monitor engagement, and provide a high-quality, individualized customer experience.
  • Providing data-backed insights. A CRM can analyze sales, customer support, and customer engagement data to provide insights into customer acquisition, experience, and retention—all of which you can use to optimize your strategy.
  • Increased employee job satisfaction. Since a CRM can track a customer’s journey from first touch to maintenance, sales, marketing, and service can use this info to have more effective interactions with customers. A better experience for customers, a better experience for employees.

There are four main types of CRM systems: operational, analytical, collaborative, and strategic. Each is designed to meet a specific business goal. Many businesses use multiple CRM systems or develop a custom CRM solution that combines elements of each system. Here’s how these four CRM systems differ:

1. Operational CRM systems

Operational CRM are designed to help execute sales, marketing, and customer service functions. They help streamline and manage all the ways your company interacts with customers.

The main goal of this type of operational CRM is improving customer acquisition and retention: they help generate new leads, nurture them, convert them into customers, and retain them through ongoing marketing communications and high-quality customer service.

Businesses of all sizes use operational CRM systems and frequently enable time-saving CRM automations, including:

  • Marketing automations. Marketing automation can target specific customer segments with emails, texts, and digital ads. These can be initiated by triggers, like a purchase or landing page visit. For longer sales cycles, operational CRM can track touchpoints, automate follow-ups, and indicate when a lead should progress to a sales lead.
  • Sales automation. Like marketing automation, sales automation uses behavioral triggers to help your sales team automatically provide customers with strategic communications at specific points in the sales process. They also help you score and manage leads and can automatically generate sales forecasting reports.
  • Customer service automation. CRM customer service automations include self-service features, live chat and AI-powered chatbots, and automated email responses, which can help you efficiently handle customer requests.

2. Analytical CRM systems

Whereas an operational CRM system helps get leads into your sales funnel, an analytical CRM system enables you to understand how your prospects are moving through your sales funnel. 

Analytical CRM systems capture, store, and analyze customer data to provide insights into how customers interact with your business, allowing you to assess the effectiveness of marketing, sales, and customer service efforts and adjust your strategy accordingly. You might run a report on six recent marketing campaigns, analyze the data to gauge their efficacy, and model future campaigns on the winning example’s tactics.

Analytical CRM can also run performance reports, such as sales history and customer service satisfaction scores, allowing you to leverage the strengths of high-performing team members and identify areas for employee development.

Analytical CRM are used by businesses of all sizes and are particularly valuable for those focused on improving their customer relationship management practices. 

3. Collaborative CRM systems

In a large business, sales, marketing, and customer support teams frequently collaborate on client accounts. The main goal of a collaborative CRM is to improve customer experience and streamline business processes by facilitating communication between departments.

Collaborative CRM are particularly popular with large businesses—companies with large customer bases in which multiple people service individual client accounts. Here’s an example of how communication between departments might play out over a customer life cycle:

  1. A sales team member gathers information on a new lead at an event and uploads it to the CRM database.
  2. A marketing team member inputs the new lead into an automated marketing campaign. 
  3. When your sales team member reaches out with a follow-up call, they can see the customer’s entire history with your company, from the initial conversation at the event to their engagement with marketing materials.
  4. Your new customer makes a purchase, automatically prompting a customer service call to thank them for their business.
  5. The customer submits a customer request, which notifies a customer service representative via the CRM. Because the customer service agent has access to the customer’s entire marketing, sales, and customer service history, they can resolve the issue quickly.

4. Strategic CRM systems

Strategic CRM are sometimes lumped in with collaborative CRM and provide many of the same features. The difference is that while collaborative CRM focuses on immediate improvements, strategic CRM concentrates on long-term customer engagement. Their main goal is to support customer retention and increase customer loyalty.

Strategic CRM collects information about customer needs and priorities to provide value to your client base. For example, they might tell you which communications channels specific customers prefer to use. They’re handy for businesses requiring long-term customer relationship management, such as an IT company that provides clients with ongoing data management services.

1. Identify your goals

Do you want to streamline communications between your sales and marketing teams? Improve customer retention? Evaluate a potential product launch? Answering these questions before choosing a CRM system helps ensure that it will meet your needs.

2. Choose a CRM

Once you’ve identified your goals, choose a CRM type—operational, analytical, collaborative, or strategic—research CRM providers, and select a vendor. 

3. Set up your CRM

Download the application, grant access to appropriate employees or company members, import company and client data into the CRM database, and integrate your CRM with your existing tools and platforms. 

4. Implement tactics

With your CRM set up, use its features to execute tactics, like an automated email marketing campaign or an improved customer service program.

5. Analyze reports

Use your CRM to produce reports, analyze data, and adjust your tactics accordingly.


What is a CRM, with an example?

A customer relationship management (CRM) system is a software application to help business owners build and maintain customer relationships. HubSpot is an example of a CRM. HubSpot CRM supports sales, marketing, customer service, and operations functions.

What are the different types of CRM?

There are four main types of CRM systems:

  • Operational
  • Analytical
  • Collaborative
  • Strategic

What is CRM used for?

CRM is used to improve customer relationships. They provide a secure, organized, low-touch storage system for customer information and help businesses efficiently provide personalized, relevant communications to their customers.