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What is CRM (Customer Relationship Management)?

By Dan Blacharski
Updated May 16, 2024
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A central goal of every business is to serve its customers. For as long as there have been merchants, success or failure has hinged on this simple rule. Customer Relationship Management (CRM) is a way of using technology to do just that.

There are many pieces of software available that offer customer relationship management features, but in reality, CRM goes beyond software implementation. It's a business strategy that often involves using multiple pieces of software, as well as implementing policies that promote (1) the collection of customer information, and (2) the use of that information by individuals throughout the company in order to maximize customer service and increase sales.

The customer relationship management system is an enterprise system, which means that it spans multiple departments. Virtually all departments within a corporation have at least some indirect access to customers, or customer information; the goal of CRM is to collect that information in a central repository, analyze it, and make it available to all departments. For example, a company's call center may have a "screen pop," a small application that is connected to the phone system. This application, which is a type of CRM, automatically senses who is calling, and by the time the agent answers the phone, produces a screen on the computer that lists important information about the caller, such as what they have purchased in the past, what they are likely to buy in the future, and what products the company may have available that would go well with what the customer has already bought. This "screen pop" is made up of several bits of information from different databases; it may draw on information from the accounting department to show the agent what their current balance may be; it may draw on information from the sales department to show what has been purchased recently, and it may draw on information from the credit department to show the agent what terms can be offered.

Because a customer relationship management system is so complex, often involving multiple silos of information and multiple pieces of software, all tied together in a single interface, it's often hard to set up. Some larger companies use an integrator to put the CRM system together. Because of the complexity of CRM, smaller companies often see it as too expensive. However, even the smallest company can implement a CRM strategy. While a Fortune 500 company may spend hundreds of thousands of dollars annually on customer relationship management, a small one-man shop may even handle CRM with a box of index cards and a ball point pen. Midsize companies may use simple, off-the-shelf software such as contact managers and spreadsheets, and still have a very effective CRM system that can help them to serve customers in the best possible way, and to make the most advantageous use of information that has been collected.

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Discussion Comments
By anon80819 — On Apr 28, 2010

Customer Relationship Management (CRM) is a key business philosophy that centralizes the customer in all interactions. CRM technology supports this philosophy. With the advent of the cloud, CRM applications can be accessed online, with only a web browser and an internet connection.

By pcmc519 — On Jun 25, 2009

I need some clarification...I represent what I believe to be a very innovative technology.

Anyway I presented it to a prospect and they absolutely loved it but their IT guy said "We currently use a CRM that handles our email marketing campaigns that provides almost all the same functionality that your technology provides. From what I saw your technology's real value is for companies that do not have many tech savvy people that need a simplified solution."

I've never seen a CRM system that delivers embedded video e-mail (no bandwidth), trackability and point & click technology. Am I living under a rock or is this person oversimplifying?

By kavaas — On Mar 04, 2009

What are the advantages to use an information system in CRM?

By sqadeer — On Oct 18, 2008

I come from a customer service background and i am given the responsibility of running a real estate company as a CRM, and i have been asked to put a strategy and plan for a full year on how i would run the department and how to go about it, however i am confused on how to start therefore what would be the best advice you can provide me.

By mjall — On Dec 26, 2007

hi,

I come from a customer service background and i am given the responsibility of running a real estate company as a CRM, and i have been asked to put a strategy and plan for a full year on how i would run the department and how to go about it, however i am confused on how to start therefore what would be the best advice you can provide me.

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