Try Magnimetrics Tools for Excel for Free for 7 Days

Try Magnimetrics Tools for Excel for Free for 7 Days

Try Magnimetrics Tools for Excel For Free for 7 Days

CRM: What is Customer Relationship Management and Why You Need It

We can categorize customers and prospects in profitability tiers by linking them to demographic data and purchasing information. However, this is only an analytical view of clients, treating them as resources for our selling efforts. We can yield much better results if we treat them as human beings looking for genuine and more personalized interactions.

As our business grows, keeping all our customer data in spreadsheets and shared folders becomes a task that is tedious and prone to error. Critical data is scattered into employees’ notepads, e-mail inboxes, and social media accounts.

CRM systems help organize our various sources of data

And this is where an adequately implemented Customer Relationship Management (CRM) system can help us consolidate all our data into one easy-to-access platform, by introducing Business Intelligence to our business.

What is Customer Relationship Management (CRM)?

It is crucial to keep track of clients and prospects. This ensures better customer acquisition and retention, which is the primary purpose of CRM.

CRM platforms enable the business to form better relationships with 3rd parties.

CRM is a strategy companies use to manage communication efforts with both existing customers and prospects. It can help us streamline customer management, build strong relationships, and improve client support, sales, and profitability.

When we say CRM, we usually refer to a system. These are the technology products companies use to record, analyze, and report transactions and communication with third parties.

Customer Relationship Management can also relate to the strategy of the company for managing clients. We also use the term to refer to the process of customer management.

A well-implemented system will show us well-organized summary dashboards to visualize our customers’ profiles and our interactions in an easy-to-read way.

CRM Development

Customer Relationship Management started as a sales and marketing toolset but has evolved over the past years. A CRM platform can now help with customer service, supply-chain management, and others.

Sign Up for our Newsletter

And Get a FREE Benchmark Analysis Template

How Does CRM Work?

Customer Relationship Management systems help us consolidate variable streams of information to give us an integrated business view. As a system, CRM becomes a central place, where we store all customer and prospect interactions, ensuring all team members have easy access to relevant information. In turn, access to all this data helps us provide clients with more personalized interactions.

CRM’s not only track every call, e-mail, and meeting. They can also store notes, follow-up plans, and the next steps we need to take. This ensures we don’t miss opportunities to close new deals and grow business with existing clients.

Key features of a CRM

  • Contact management;
  • Lead and prospect management;
  • Sales forecasting;
  • Social media and e-mail integration;
  • Dashboard performance analytics.

CRM solutions provide functionalities to track clients’ interactions from multiple data sources, like e-mails, phone calls, and social media.

CRM software gives the sales and marketing teams the tools they need to effectively manage the entire funnel from lead generation to closing a deal.

CRM systems provide the company with features that record and analyze customer behavior online. They help us automate processes and ensure the business has better performance tracking. Some offer analytics platforms to follow marketing campaigns and assess their efficiency in generating leads and converting them to paying customers.

Major Types of CRM

In regards to where we store data and how we access the Customer Relationship Management platform, there are three types of CRM’s:

  • Desktop systems – these run on a single computer and are suitable for freelancers and small teams with one person in charge of sales and marketing;
  • Self-hosted systems – these have an in-house server where all data is stored and client apps that can access the data;
  • Cloud-based systems (SaaS) – service providers supply and manage our CRM, accessible from any connected device.

Looking at Customer Relationship Management implementations, we have the following types:

  • Strategic – aimed mostly at creating a company culture around customer service;
  • Operational – CRM systems usually focus on optimizing and automating sales, marketing, and customer support. These implementations provide a per-user dashboard with insightful summaries to help with the day-to-day tasks of our team;
  • Analytical – one purpose of a CRM is to collect customer data from multiple sources and present it to lead to an improved and more informed decision-making process. Analytical CRM’s employ data mining, pattern recognition, predictive and prescriptive analysis, and other statistical concepts to analyze customer data and provide managers with invaluable information to support strategic and operational decisions.

CRM systems often have an embedded Data Warehousing solution, where various technologies ensure our data is properly collected, processed, and aggregated.

Benefits of Having a CRM System

If a company implements a CRM system and set it up correctly, this will have many advantages for the business going forward.

Sales managers will be able to get an overview of the team’s progress towards sales goals, which will positively impact accountability. They can also track marketing campaigns and analyze how well a particular product is performing. On the other hand, sales reps will get a deeper understanding of clients and face fewer administrative tasks to focus more time on selling.

Our marketing team can also use the CRM system to map out customers’ journey from lead to a sale. Such information can be invaluable in forecasting and budgeting future campaigns.

Customer support can track all communication with clients across multiple channels, like e-mails, phones, social media, and others. By doing so, they can offer much faster and better responses to queries.

The HR team of the company can employ the platform to follow-up on employee performance. They can also speed up the onboarding process for new hires by automating some of the more rudimentary tasks, like managing candidates, analyzing departments’ resource needs, and others.

Supply-chain teams can track interactions with suppliers and compare their efficiency in terms of delivery.

Advantages of CRM

  • Enhanced contact management – a CRM system has every call, question, and interaction in it so that the entire team can access the full customer profile
  • Cross-team collaborations – it enables people from different parts of the business to work together so that teams can build on the experience and knowledge of others;
  • Sales forecasting integration – having a single source of information makes it much easier to make better predictions for the future performance of the sales force, and these get better as we apply insights from predictive analytics on top of historical data;
  • Increased productivity – with a CRM system, we can cut back on follow-up e-mails, as these can be auto-generated. Management has a readily available overview for each client and doesn’t need to reach out to sales managers for information. Customer support specialists can easily access all data on a client in an instance and provide a better response to customer inquiries;
  • Reliable reporting and better analytics – having all data in the same system makes reporting integration a much easier task. The increased visibility ensures we notice and resolve problems with the underlying data timely. CRM’s make our data intelligent and relevant to the business by aggregating multiple sources (sales, finance, marketing) and visualizing the data to make it more accessible;
  • Improved transparency – such platform help us achieve greater transparency within the company, outlining clear segregation of duties and providing better performance tracking for our sales representatives;
  • Sales improvements – CRM helps us focus on the right prospects by giving an overview of conversion effectiveness across the entire sales process. Cross-sales and upsells become easier once we get a better understanding of our customers. A well-implemented system helps streamline and automate the sales process and build pipelines for higher conversions;
  • Customer satisfaction – CRM’s aggregate information to build profiles of all leads, prospects, and customers, giving us easy access to our data; having a summary of all previous interactions makes it easier to deal with new problems and even anticipate complaints in advance; customers have a much better experience, as they don’t have to get in touch with various departments, but instead have a single point of contact and their issues are resolved faster;
  • Better products and services – having various information sources integrated into our CRM system can help us analyze what our customers think of our products and services, which leads to improved offerings that better match their expectations;
  • Higher efficiency – having all functions focused in one place improves the workflow; there’s better collaboration between team members, which leads to better project management, while task automation helps us reduce project hours.

Customer satisfaction

Making sure customers feel satisfied with their interactions with the company has a significant impact on business performance. It can make or break customer loyalty. Striving towards a higher customer satisfaction level can reduce complaints and clients’ likelihood of switching over to a competitor.

Our customers also get some benefits from CRM system implementation. They start to enjoy improved day-to-day service. Clients receive better information, resulting in fewer support needs and increased customer satisfaction. Combining these, the company begins to generate more customer equity.

The insights we can generate from our CRM will also help us improve our pricing and develop pricing tiers that correspond to our customer needs better.

Do You Need a Customer Relationship Management system?

CRM’s are suitable for all kinds of businesses, from freelancers to home-run e-commerce endeavors, to mid- and large-sized enterprises.

Customer Relationship Management helps everyone in the company with better organization, task automation, a centralized project management hub, and the growing benefits of AI and Machine Learning algorithm integrations. As a result, work gets done faster and better with less time and effort and reduced human error possibilities.

Companies are becoming more remote, and teams are working more flexibly. Having all our processes managed in a centralized way and accessible everywhere, on-the-fly plays a considerable role in ensuring our business operates well.

Online competition is also growing, and a well-implemented CRM solution can give us an edge over our competitors.

Challenges and Disadvantages of CRM

Customer Relationship Management systems are a great addition to any company that can provide better analytics to optimize our sales and marketing processes. However, they pose some challenges and may even bring disadvantages to the business if implemented incorrectly.

Most CRM systems are complicated and require much additional manual work from the sales team. Sales managers and representatives have to believe in the added value of the CRM solution to the company as a whole, as they don’t usually see the exercise as having enough return in value for them.

Customer Relationship Management platforms center around clients (it’s in the name). They won’t provide benefits if we are struggling in other areas, like engineering, sourcing, production, shipping and handling, finance, and general administration.

Companies often try to implement CRM’s as an all-in-one solution, putting much stress on teams to use the system for tasks it was not designed for. And this is the most common reason why many implementations fail.

CMR’s can only track the data that is in the system. Suppose salespeople are not diligent in documenting every offline activity within the platform. In that case, this will result in skewed and misleading metrics that can quickly pile up and become harmful to the business.


Customer Relationship Management systems leverage actual sales data to take the guesswork out of business decisions. Their ultimate goal is to improve customer acquisition and retention.

Workflow automation takes care of most of the manual rudiment processes of selling, resulting in less data input exercises. Having such tasks off their plate allows salespeople to focus more on areas where the human factor matters more.

To get the most out of a CRM platform, we need to build it in our business strategy. This will increase the company’s efficiency, productivity, and profitability.

A well-implemented CRM helps with team management, data security control, and ensures compliance with data privacy and governance regulations.

FREE Intro to Google Data Studio

Learn the basics of Business Intelligence by creating a Sales Dashboard in Google Data Studio. Take our free introductory course on Udemy.

Dobromir Dikov


Hi! I am a finance professional with 10+ years of experience in audit, controlling, reporting, financial analysis and modeling. I am excited to delve deep into specifics of various industries, where I can identify the best solutions for clients I work with.

In my spare time, I am into skiing, hiking and running. I am also active on Instagram and YouTube, where I try different ways to express my creative side.

The information and views set out in this publication are those of the author(s) and do not necessarily reflect the official opinion of Magnimetrics. Neither Magnimetrics nor any person acting on their behalf may be held responsible for the use which may be made of the information contained herein. The information in this article is for educational purposes only and should not be treated as professional advice. Magnimetrics and the author of this publication accept no responsibility for any damages or losses sustained as a result of using the information presented in the publication. Some of the content shared above may have been written with the assistance of generative AI. We ask the author(s) to review, fact-check, and correct any generated text. Authors submitting content on Magnimetrics retain their copyright over said content and are responsible for obtaining appropriate licenses for using any copyrighted materials.

Leave a Reply

Your email address will not be published. Required fields are marked *

You might also like one of the following articles:

Financial Analysis

Support Startup Growth with Digital Loans

In today’s dynamic and uncertain business environment, startups face numerous challenges. Effective financial planning and analysis (FP&A) processes are essential for startups. FP&A helps startups

Read More »