What Is CRM? [FAQs]

    By Dan Lyons | Small Business


    Today’s question of the day: What is CRM?


    Everyone in marketing tosses this acronym around. If you run a small business or work in sales, you've probably heard of CRM. But maybe you're sitting there wondering what those letters could possibly stand for.

    Crazy Red Monkey? Champion Runner Man? Corn Row Marketing? Can’t Read Maps?

    Well, no. It’s Customer Relationship Management.

    See? That clears things up, right? Er, no. The annoying thing about CRM is that even when you find out what the letters stand for, you might still have no idea what this stuff is.

    But fear not, dear reader. Hang in for a few hundred words more, and all will be revealed.

    What Is CRM?

    Customer relationship management refers to a set of software programs that let companies keep track of (that’s the “management” part) everything they do (that’s the “relationship” part) with their existing and potential customers.

    At the simplest level, CRM software lets you keep track of all the contact information for these customers.

    But CRM systems can do lots of other things, too, like tracking email, phone calls, faxes, and deals; sending personalized emails; scheduling appointments; and logging every instance of customer service and support. Some systems also incorporate feeds from social media such as Facebook, Twitter, LinkedIn, and others.

    Information at Your Fingertips

    The goal is to create a system in which sales managers have lots of information at their fingertips and can quickly pull up everything about a prospect or existing customer. That way sales reps can be more effective and more productive.

    Sales professionals get more done in less time, because they’re not looking all over the place for various bits of information. Instead of hunting through a Rolodex, email inbox, and dozens of disparate spreadsheets, they have a nice dashboard with everything they need to know – right in one centralized place.

    CRM in the Cloud

    Some CRM vendors sell their software as a cloud-based service. That means you don’t actually buy the software and install it on your own servers. Instead you pay a monthly subscription fee, and you get the software over the internet, via a web browser. was the first company to deliver CRM software using the cloud-based, AKA “software as a service” (SaaS), model. But others now offer CRM this way, too. You can still buy the old-fashioned "on location" stuff, but we highly recommend a cloud-based system.

    How to Shop

    Another tricky aspect is that every CRM vendor is different, which makes it difficult to compare systems. It's not like setting up one of those grids where you compare the Ford Explorer to the Toyota Highlander. When you go shopping for CRM software, you'll need to first determine which functions matter to you, and which ones you might need in the future.

    Then figure out which vendor will best be able to stay with you as you grow. You don't want to overpay and get all sorts of stuff you don't need and will never use. But you also don't want to get something too simple that you'll outgrow at some point; if you do that, you'll end up a few years down the road going through a painful process of migrating everything to a different system.

    As you can see, the issue of price is actually less important than these other issues. Of course price always matters, but it shouldn't be the biggest factor driving your decision.

    Connection to Marketing

    It’s smart to use CRM software in conjunction with marketing software like HubSpot.

    This is radically oversimplified, but you can think of the two categories this way. Marketing software (like HubSpot, which we call inbound marketing software) is used to attract visitors, generate leads, and nurture those leads. And once those visitors become prospects/leads and customers, they are tracked by the CRM software.

    It’s really important that both systems can send each other information and work together seamlessly, so that companies can keep track of prospects, leads, and customers at every stage of their customer lifecycle.

    This then becomes another issue to consider when buying CRM software. Which marketing software are you going to use, and do the two work well together?

    Is it Sales or Marketing? Yes!

    In some cases, the two categories (marketing and CRM) become so intertwined that the lines between marketing software and CRM software have become blurry. In a sense, what you’re building is one system to keep track of every interaction you have with prospective customers or existing customers.

    Investing in Growth

    Even if you’re running a small business or ecommerce site and don’t intend to scale your company, using a CRM program can make sense, as it allows you to put everything into one place where it’s easier to find. Usually you can buy just the modules you need, so you don’t have to pay for some huge complicated system where you’re only going to use 10 percent of what it offers. If you're still not sure whether you're ready or a CRM, this post should help you decide.

    But if you’re running a business and intend to scale up and keep growing, CRM is pretty much a no-brainer. Your success depends on being able to delight your customers. Knowing as much about them as possible, delivering rapid responses to their inquiries, solving problems quickly, and delivering a personalized experience in which a customer feels special: These are what CRM software will let you do, and they are key to your success.

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