What is CRM? Meaning, ap­proaches, and tools

Customer re­la­tion­ship man­age­ment (CRM) is an important strategy for retaining existing customers and gaining new ones. CRM is also important for marketing. The first step is to find the right CRM system so you can identify the needs of your customers and meet these re­quire­ments in the best possible way.

Customer re­la­tion­ship man­age­ment (CRM) is when a company has a strategic, cent­ral­ised focus on its customers. Instead of leaving the re­la­tion­ship with the existing and potential customer base to chance, companies use this approach to try to cultivate and strengthen it in a very targeted manner. The basis of in­di­vidu­al CRM marketing is col­lect­ing and analysing all relevant data and findings in the customer lifecycle using pro­fes­sion­al CRM tools. CRM affects all channels, from marketing to sales to support.

The fun­da­ment­al goal of customer re­la­tion­ship man­age­ment is to improve business processes, es­pe­cially sales, marketing, and support. The sub­or­din­ate ob­ject­ives are as follows:

• Increase customer sat­is­fac­tion
• Increase purchase frequency through up-selling and cross-selling
• Strengthen loyalty to existing customers
• Ac­quis­i­tion (gaining more customers) and con­ver­sion (turning those in­ter­ested into customers)

The biggest benefit of proper customer man­age­ment is that it pursues all these goals sim­ul­tan­eously. The more effort you put in, the faster customers will realise that a long-term re­la­tion­ship is valuable to your company. This starts with cat­egor­ising your potential customers, which increases lead gen­er­a­tion as well as the chance of a purchase being made right from the start. In addition, customer re­la­tion­ship man­age­ment greatly sim­pli­fies the cross-team col­lab­or­a­tion required for this.

Even after the con­ver­sion, CRM remains mean­ing­ful and still offers many ad­vant­ages. If queries or com­plaints arise, you can leave a lasting im­pres­sion through per­son­al­ised, competent com­mu­nic­a­tion. So in the long term, you build up a base of loyal customers. This means you don’t only expect a high number of further purchases, but also save a lot of money on marketing. Satisfied customers will gladly tell others about your products and services and therefore regularly provide you with free leads.

Customer re­la­tion­ship man­age­ment is a mul­ti­fa­ceted and complex dis­cip­line. Within this dis­cip­line, there are un­sur­pris­ingly different focal points or ap­proaches that companies can pursue, sometimes more in­tens­ively and sometimes less. Which CRM approach the most mean­ing­ful for you is mostly depends on the type of company and its size as well as the business model. The most important CRM ap­proaches include:

Ana­lyt­ic­al customer re­la­tion­ship man­age­ment aims to gain important in­form­a­tion and insights from customer and trans­ac­tion data. This way you can identify the char­ac­ter­ist­ics, behaviour, and potential of your customers more easily.

In op­er­a­tion­al CRM, the in­form­a­tion obtained is utilised. In sales, for example, this can take the form of ABC analyses, cross-selling and up-selling, or customer seg­ment­a­tion. In sales, the findings can be used together with email marketing software to create per­son­al­ised news­let­ters. In addition, new data for ana­lyt­ic­al customer re­la­tion­ship man­age­ment is also obtained in this op­er­a­tion­al approach.

Col­lab­or­at­ive CRM is par­tic­u­larly important if your company consists of many in­di­vidu­al teams and or­gan­isa­tions. Here, the focus is on in­ter­ac­tion among employees and on the closest possible exchange with partners such as suppliers, logistics companies, and other external service providers. This is how a unified CRM concept can be formed.

Com­mu­nic­at­ive CRM focuses on all com­mu­nic­a­tion in­ter­faces to customers. It is often also regarded as a sub­sec­tion of op­er­a­tion­al CRM. It is also referred to as multi-channel man­age­ment, as more and more channels are becoming relevant for companies. These include print and TV media, telephone support, e-commerce, email and letter exchange.

An in­creas­ingly important sub­sec­tion of the com­mu­nic­at­ive approach is social CRM. This involves managing customer com­mu­nic­a­tion on social networks such as Facebook, Twitter, LinkedIn, etc.

Focusing on the customer is a seemingly simple strategy. However, for this to be im­ple­men­ted at all and for it to work in the long term, a suitable, easy-to-use CRM system is vital. CRM software brings together all factors of a suc­cess­ful customer re­la­tion­ship and combines them with customer data such as names, addresses or email addresses in a data man­age­ment platform. This data forms the basis of ana­lyt­ic­al CRM. In addition, a good CRM tool usually also offers the following options:

• Saves contact history (emails, notes on phone calls, etc.)
• Selects customers according to in­di­vidu­al criteria such as turnover or potential
• Segments customers into target groups based on demo­graph­ic, geo­graph­ic, psy­cho­graph­ic, and be­ha­vi­our­al char­ac­ter­ist­ics
• Manages documents
• Manages tasks and projects
• Manages ap­point­ments

All the collected and struc­tured in­form­a­tion stored in the CRM system helps your company to provide in­di­vidu­al and com­pre­hens­ive support to your customers. You always know what the re­la­tion­ship with an in­di­vidu­al customer is like. Are they regular customers, for example? Or are you dealing with in­de­cis­ive customers who may benefit from re­tar­get­ing? Does a person tend to buy smaller or larger products? And are there specific contact persons in the company? The CRM software enables you to answer these and other questions at a quick glance.

Customer re­la­tion­ship man­age­ment software comes in many forms. Depending on the program and scope, the various CRM ap­proaches can be easier or more difficult to pursue in your own company. For this reason, you should first consider what you want to focus on in your business. Ana­lyt­ic­al functions and measures, for example, are pre­destined for cus­tom­ised campaigns. For small and medium-sized companies, however, the ana­lyt­ic­al part is almost im­possible to get to grips with due to the amount of time involved and is therefore usually ir­rel­ev­ant. Of course, this is different for large cor­por­a­tions.

Other important factors that play a role in finding the right system for customer re­la­tion­ship man­age­ment are:

• Price: The budget for customer care is also not infinite. The cost of the CRM software in question must therefore fit into the planning.
• Usability: Since CRM programs should be used in all areas of a company, if possible, it is par­tic­u­larly important that the software can be operated in­tu­it­ively and is easy for beginners to get to grips with.
• In­ter­faces: The central function of CRM is to bring together customer data. Therefore, it’s very important for the CRM tool to provide ap­pro­pri­ate in­ter­faces to third-party programs so they can be easily connected.
• Mobile cap­ab­il­ity: Is it important for your company’s employees to have mobile access to the CRM solution? In this case, the user interface should be mobile-friendly and re­spons­ive. The best case would be if suitable apps were available.
• Support: If there are technical problems with the solution, it is important that the provider can help. This pro­fes­sion­al service should always be available so that you can quickly return to your day-to-day business after the problem has been solved.

CRM software can also be tech­nic­ally im­ple­men­ted in very different ways, which is typical for modern business tools. Basically, there are three options for in­stall­a­tion or hosting:

• Local: The CRM system is simply installed on your own PC.
• On-premises: For the on-premises licensing model, the server-based CRM solution is hosted on server struc­tures on the company’s own premises.
• Cloud: A CRM cloud solution is available to users via the internet. The ap­plic­a­tion and all user data are stored on the provider’s servers. This is also referred to as SaaS (Software as a Service).

It depends on the provider which variants are available for specific software. All three models have their ad­vant­ages and dis­ad­vant­ages, which we have sum­mar­ised for you:

Your company’s needs dictate how extensive a CRM tool needs to be and how it should be tech­nic­ally im­ple­men­ted. However, there are a few basic functions and features that customer re­la­tion­ship man­age­ment software should provide:

A CRM tool should always allow you to keep a complete database of your customers. This is where all the in­di­vidu­al contact data such as names, addresses, phone numbers and email addresses is collected. Filter options should be in­cor­por­ated for a quick overview.

For a good and long-term customer re­la­tion­ship, it is important that all employees in the company are kept up to date about a customer’s history. It should be easy to add notes on telephone calls or other con­ver­sa­tions as well as exchanged emails to the system. Thus, all employees have a complete, clear contact history of each customer.

If you have customers from the EU, then it is important to store all files, email at­tach­ments, etc. in the CRM system in a way that ensures that the GDPR are adhered to. An in­teg­rated solution for regular backups is also useful.

The larger your customer base, the harder it is to keep track of the various ap­point­ments and deadlines, which is why a calendar function can be practical. An in­teg­rated function for managing tasks, including the ability to assign customers directly, is also useful.

What is the status of a par­tic­u­lar customer? Is there any feedback on an offer that was sent to them? Can a concrete sales forecast be made? The more closely the entire customer cycle can be monitored and recorded with the CRM tool, the easier it is for you to intervene and optimise processes.

There are a variety of CRM Tools that you can use to spruce up your re­la­tion­ships with your customers and boost your business. Look into the various factors such as available features, cost, technical im­ple­ment­a­tion, and support, and you’re very likely to find the right tool for your purposes.

We have sum­mar­ised some of the most popular solutions for you:

Sales­force is one of the world’s leading CRM providers. The paid, cloud-based solution, which is used by more than 150,000 companies of all sizes and in all in­dus­tries, is available on a monthly sub­scrip­tion basis.

Zoho offers a cloud-based office suite and a complete CRM platform. The software can be tested free of charge for 15 days.

monday sales CRM provides deep insights into your sales and can be cus­tom­ised to fit your sales cycle. For team sizes from 3 to 200 members, you pay a monthly fee per user.

Sales Hub from HubSpot is a sales software that grows with your business. In addition to a set of free tools, there are ad­di­tion­al features included in pro­fes­sion­al monthly sub­scrip­tions.

Pipedrive is a CRM solution used by over 100,000 companies in more than 175 countries. After a 14-day trial period, there are monthly costs per user.

Customer re­la­tion­ship man­age­ment (CRM) is a must for any business that wants to retain its already loyal customer base and for it to grow. Before choosing a CRM system, you should keep in mind which factors are most important to your company. In addition to price, usability and scalab­il­ity, the system’s features should be con­sidered. The same applies to the question of whether a local, cloud-based or on-premises solution is more suitable for your company.