what is a crm system

What is a CRM system: CRM 101


What is a CRM system? When we’re talking technology and terms, it’s sometimes difficult to get a handle on the basics

Your business works hard to drive prospects to your site, convert them, and get them up and running using your tools or services. Your team goals are tied to the concepts to working well, month over month, and quarter over quarter. This game plan drives everything about your business. 

But the devil is in the details – don’t forget – retention matters, too. Because all of that time and effort – and often money – spent on acquiring new customers is for naught if those customers don’t stick around for the long-term. 

What is a CRM system

The quality of your business’s product matters plenty when it comes to long-term customer loyalty, but so does your customer service. 

  • How well are you educating your new customers on how to use your product?
  • How quickly are you responding to their questions?
  • How easy is it for them to get in touch with you?
  • Are you doing anything to anticipate their questions and concerns in a proactive, rather than reactive, way?

All of this matters when it comes to customer retention –– and is why brands invest heavily in CRM systems (or customer relationship management systems).

A CRM system is a technology tool for effectively managing your company’s relationships and communication with customers and potential customers. The goal here is pretty simple: improve business relationships, increase conversions, and improve retention rates. 

What does a CRM System do?

A CRM system collects first-party data from the potential customer given to your company, and then tracks that customer, any additional data collected on them –– including email communication with your team, calls, web pages visited, products used, etc. –– throughout their lifetime with your company. 

This gives companies the ability to do a couple of very important things:

1. Understand where a customer is in their lifecycle with your brand: Are they just migrating over from another tool? Are they coming up on a scaling moment when they may need more support? These are the types of tipping points in which your team should be reaching out, rather than waiting for the customer to do so.

Reach out with helpful information, see if you can connect them with folks who can even do the projects for them, and so on. Whatever it is, you can better understand exactly what this customer might need based on their past history with your business. 

2. User experience and customer experience in inextricably related: By aggregating CRM system data, you can begin to spot points in your customer’s lifecycle where things get difficult, confusing, or when they may churn (lowering retention). These are moments you want to look deep into, and understand what is causing the issue.

If you can, fixing this issue within the user experience (that is the UX and design of the product itself), you can mitigate FAQs, churn, and a need for customer service in general. This allows your team to focus more on customer acquisition customer service, rather than retention because your UX is already solving for it. 

What is a CRM database?

A customer service relationship management database is where all of your customer and potential customer information is stored. Like a filing cabinet system, which are analog databases, CRM databases contain your customer and potential customer names, emails, addresses, point in the sales pipeline (prospect, customer, etc.), and more. 

This database allows businesses to go in and pull lists based on various criteria. This is helpful for email outreach, prospecting campaigns, and advertising targeting (direct mail, paid social, paid search, etc.). 

All customer relationship management systems and tools have a CRM database. This is the core of what they are. All other capabilities beyond this database are extensions of the product, often built for specific use cases. Those specific use cases can help you understand which CRM systems are right for your business. 

How do I choose a CRM?

The type of CRM system you choose for your business will depend on the features and extension you need beyond the core CRM database that makes up modern customer relationship management software. 

Some CRM systems are built, for instance, for B2B (business-to-business) businesses, while others are built for B2C (business-to-consumer) businesses. Some CRM systems get even more detailed that that, and target specific industries. For instance, some CRM systems are built for the retail industry, while others are built for the technology industry. 

In order to choose the right CRM system for your business, you’ll need to contact a few CRM companies and go through what is often known as an RFP (request for proposal) process. In this process, you’ll ask need-to-know questions about the platform and be able to compare your options side-by-side. You’ll get a demo of the tool. 

One thing you’ll want to be sure to ask for in the RFP is for customer examples within your industry. Better yet, if the CRM system company can give you contact information to those brands so you can call them and ask them specifically what they like or do not about the tool. 

Do not be afraid to ask detailed questions of the CRM system companies. CRM software is not inexpensive, and it plays a huge role in how your customer service works end-to-end at your company. It is a vital aspect of any growing or established business, and doing the due diligence now will pay off in dividends down the road. 

Shine in the moments that matter. Download our report on the future of customer experience.

Tracey Wallace
Share this:
Tracey Wallace

Subscribe to our newsletter for the most up-to-date e-commerce insights.