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Businesses with a small client base have little to no problem maintaining personal relationships with all their loyal customers. They'd often know small details such as preferences, favorites, goals, purchase histories, and maybe even unique points such as anniversaries or food allergies.

However, large businesses with thousands, if not hundreds of thousands, of customers can't keep track of individuals on a spreadsheet. But how do they ensure their customer relationship is still maintained? That's when CRM software comes to their aid.

What is CRM?

A Customer Relationship Management (CRM) system is a platform that allows businesses to maintain, manage and improve relationships with their customers. While the term is a broader strategy for working with customers, the CRM acronym describes software solutions for customer relationship management.

The CRMs are designed to gather customer data across multiple channels and touchpoints and store it in one centralized system. It replaces legacy systems such as documents and spreadsheets, which organizations rely on to keep customer information that helps deliver the best customer experience (CX).

CRM has become increasingly crucial for large companies to maintain their edge over competitors, as more than 80% of customers expect personalization from retailers and brands.

Failure to offer the best-personalized experience puts brands at losing loyal customers. The challenge is that customers often switch channels, and so does their data. Since much of their valuable information exists in those conversations and activities, a CRM becomes critical in keeping track.

CRMs primarily bring two benefits to businesses: the first is improved internal efficiency, and the second is enhanced customer relationships.

CRMs can also:

  • Significantly improve the organization of contact data
  • Streamline internal communication
  • Increase capacity for automation
  • Provide data-backed insights into customers
  • Support prospect pipeline
  • Improve communication with customers
  • Boost customer satisfaction

Types of CRM

Depending upon the specific business goal, CRMs can be classified into 4 main types:

  • Operationa
  • Collaborative
  • Analytical and
  • Strategic CRM systems.

Here's a breakdown of how each works and how they differ:

1. Operational CRM Systems

Operational CRM systems are designed to streamline all business interactions with the customer and build their relationships. It assists the business at all levels, such as marketing, sales and customer service, to enable a holistic view of the entire customer journey regardless of the many touch points.

The primary goal of these simple CRMs is to generate leads, nurture the leads into customers, and retain them through ongoing communication and customer service.

Operational CRM systems also provide automation features for marketing, sales, and customer service functions to offload administrative and low-value tasks. Here's how it works:

  • Marketing automation: The CRM can target specific customer segments and send digital ads, texts and emails. Targeted customers would have triggered the action with landing page visits or purchases. When working with long sales cycles, the CRM can track prospects' behavior at touch points, initiate follow-ups, and indicate when they are ready to progress to a sales lead.
  • Sales automation: CRM for sales works similarly to marketing automation and on behavioral triggers of leads. The CRM prompts sales teams to establish communications at strategic points. It can also store data on the leads and make sales forecasting.
  • Customer service automation: The CRM can manage the customer end of communication and offer self-service support features, AI-powered chatbots, live chat, and automated email responses, that help to handle most customer queries which do not require human interaction.

2. Collaborative CRM Systems

As the name suggests, collaborative CRM systems are designed to improve communication between departments such as marketing, sales and customer support to deliver the best customer experience.

Traditionally every department has operated and stored data in its silos giving rise to a fragmented organization. Global companies had an equally more significant problem of being far apart geographically. The departments needed to be more cohesive based on specific products, channels they served or skill specialities.

Collaborative CRM systems eliminate this problem by facilitating a seamless flow of information across the organization in real time.CRM treats every customer interaction with the brand as part of an interconnected bigger picture. Therefore it ensures all departments have access to the latest data on the customer so they can perform their task at their best.

For instance, customer support would have all the data collected by the marketing and sales in a contextually relevant manner. The responding agent would then have all the necessary information to answer their queries and avoid putting the customer through the exhausting process of repeating themselves. Every employee who interacts with the customer will have all the relevant information necessary for their interaction.

3. Analytical CRM Systems

Analytical CRM systems help analyze prospects' behaviours through the sales funnel. By analyzing customer data, it is possible to gain crucial insights into their interests, tendencies, and inclinations to make better predictions or nurture the leads. Businesses often collect vast amounts of data, and over 60% of it goes unused for analytics.

Analytical CRM is designed to leverage this data and offer deep insights that help businesses better understand the steps they must take with every lead throughout their sales funnel journey.

Post-sale, continued analytics can help maintain client relationships and boost retention by making delightful tailor-made offers. These CRMs are also helpful for running marketing campaigns, modelling future campaigns for effectiveness, and formulating winning tactics.

Analytical CRMs are used by businesses of all sizes, especially those looking to improve multiple areas on the customer and employee end.

4. Strategic CRM

Strategic CRM systems are similar to collaborative ones. However, the significant difference is that these systems focus on long-term customer engagement and relationships rather than immediate improvements.

The primary goal of strategic CRMs is to increase customer retention and boost customer loyalty. They are useful for large organizations wanting to build long-term relationships with their client base.

The CRM gathers information about customer preferences and activity over a long period for predictive analysis, which tells the companies about the right approach and channels. Typically IT companies who offer continuous services to their clients find strategic CRMs useful.

How to know which CRM is best for your business?

CRMs come in different types, and various functionalities- what suits one company may not do the other. When it comes to choosing a CRM, the right solution is the one that fits the organization's tech stack optimally.

Getting a complete hold of CRM's capabilities and organizational requirements is critical, as 48% of sales leaders say their CRM needs to meet their needs. While the actual process of deciding on the CRM is way more complicated, here's an overview of what can be expected:

1. Understanding the full functionalities of the CRM

While the CRMs are popular with large organizations, mid-sized companies and startups might have yet to explore the technology. Before making a selection, it's essential to understand what CRMs are, how they function and how they can benefit a company.

It's good to go over the concept in-depth to grasp what you need to look for fully. An excellent place to start is to evaluate what your closest competitors are using and its functionalities.

2. Clarity about your business requirements

Before narrowing down on a CRM solution, it's essential to list your business requirements that necessitate a CRM. Do you need one, or can you do something simpler such as a customer experience management (CEM) platform?

CRMs are typically great for organizations struggling with issues such as:

  • Difficulty procuring prospect/customer data
  • Lengthy sales cycles
  • Poor client communication
  • Difficult in management of schedules
  • Data silos in the organization impede different departments
  • Inability to maintain customer loyalty
  • Poor visibility into agent performance and pipelines

3. Understanding the different types of CRMs

As mentioned in detail earlier, CRMs are not a one-size-fits-all solution. The core functionality of the CRM can be centered on collaboration, analytics, and operations or long-term strategy.

Picking one or another depends on the type of your business, priorities, customers and the requirement of the CRM.

  • Collaborative CRMs, for example, are suited for multinational companies spread out across different locations.
  • Analytical CRMs are great for companies looking to improve their returns, data analysis and reporting capabilities.
  • Operational CRMs work well for scaling companies that need better data and process management.

4. Taking a closer look at the CRMs features

The software's top features and functionality must meet your requirements. It would be a waste if they offered a full suite of functions, including tools you'll never use. It would be ideal if the vendor allowed you to pick the features you need for the price you're willing to pay.

These include main functionality, integration, collaboration features, customization, ease of use, security, mobility, and help & support.

CRM features your organization's needs

Any mid to large-sized organization with customers ranging in the thousands will need a suite of essential features such as:

  • Contact management- stores and organizes details of business contacts and prospects.
  • Lead management- manages leads across the whole lifecycle from prospecting to conversion.
  • Campaign management- creates sales campaigns, measuring their effectiveness and comparison.
  • Email tracking- working emails throughout the campaigns and analysis of open rates.
  • Automation- features to streamline workflows, processes, sales tasks, etc.
  • Dashboards & reports: for immediate notifications on analytics, customer behavior and other essentials.
  • Social media management- integration with social media for deeper insight into consumer behavior.
  • Mobile apps- Access CRM through dedicated apps to get data on the go.

2. Cost consideration

CRM software is mainly offered as a SaaS service, bringing their price low and on a subscription basis. Most vendors charge a fixed amount per user or have a flat rate. The cost also depends on the features offered, and companies can start with the most straightforward suit shown and move higher only when required. It's better to start with the free trial to get a feel for the solution, even though the features are few.

3. Researching the vendor

The quality of the software and the service that comes with it is only as good as the vendors. Companies often rely on vendors for customer support and assistance on all available channels, such as text, email, call, tickets, live chat, social media, etc.

The vendor should even provide technical assistance and training about the product to ensure the customers use it best. Reviewing the vendor's reviews on various sites is one way to determine their competency. Reaching out to one of their customers can also give you more reliable feedback.

4. Trial run of the CRM

Once you're finalized on the vendor, you can take the product for a free trial (full- features preferably) to get a feel for its functionalities. In the trial period, you can figure out the compatibility of the solution with your tech stack, and if everything checks, transitioning to the paid version can be done in a jiffy.

Pros & cons of CRM system

CRM systems have pros and cons that can vary depending on the organization using them. Here are some of the most general pros and cons:


  • Top-of-the-line CRM systems have automatic data entry, which eliminates the drudgery of manual entry. These systems integrate with website activity and social media searches to gather data.
  • CRMs, with their efficient dashboards, allow you to organize information in the order of importance and streamline the process. Some solutions also offer custom dashboards that can be configured to your preferences to improve the workflow.
  • By having all data on a centralized platform, CRMs boost collaborations between all the teams. Marketing materials stored on the centralized CRM can also help sales to generate more leads through content.
  • Implementation of CRM can boost revenue. While it takes money to implement a CRM system, the return on them is often five times as much or more. Streamlined workflows and efficient teams translate into increased revenue.
  • Automation features on advanced CRMs that can take on the administrative tasks of sales reps can significantly boost revenue by allowing agents to focus more time on selling than administrative work.
  • All CRMs can scale; therefore, as your business grows, so does the CRM to suit your needs. Some solution providers can offer their services to teams that are only a handful in number and scale with them as they grow.


  • Low-end CRM requires data to be fed manually into the system. This means sales, marketing and customer support teams must spend big data into the CRM daily. While CRM brings benefits, it does not offset the costs.
  • Setting up CRM, in the beginning, is crucial for its operational viability. Vendors must offer comprehensive support to save time on the employee's part and low-interest rates.
  • CRMs focused on the sales manager's needs might become less than productive as it would sometimes be focusing on the wrong person. Framing the CRM to support the sales reps is ideal.
  • The cost of using high-end CRM can burn a hole in the pockets of small-scale companies. While high subscription costs don't matter much for established organizations, they can deter small ones.
  • The CRM's effectiveness is only as good as the supporting sales process. A sales plan and a robustly documented sales process can significantly boost productivity using CRM. Else, the system can fall into a state of disarray.

Useful tips for evaluating CRM system

Here are 4 essential tips besides what was discussed earlier on how to evaluate whether a CRM system is right for you:

1. Implementation timeline

Ask the vendor about how long it takes to implement the solution and the extent of their support for the data transfer and configuration. If there's a date for the company's move to the CRM, ask the vendor if they can offer extra assistance to meet timelines.

It's also essential that the software is intuitive. If the employees need help figuring it out, they will also be reluctant towards use or work to avoid working with it together.

2. Data security

Data safety is critical as customer data is one of the most precious things the company's business relies upon. Any CRM you choose should have multi-level protection, such as two-factor authentication and state-of-the-art security procedure to prevent data breaches.

3. Integration with the rest of the stack

If you're considering a CRM, there are high chances you're already working with a tech stack of tools. It's essential that the CRM integrates with these tools seamlessly of much time will be lost in setting up and configuring the CRM to work with the rest of the tech suite you have.

4. Scalability

Scalability is an essential factor to consider for startups and medium-scale companies. These companies will inevitably grow and expand their workforce and customer base; therefore, they must work with solutions that can scale as per their needs.

5. Support availability

Technical support is necessary at the beginning and during the support lifecycle. A glitch in unsupported CRM can harm the business more than do good. Therefore the vendor must offer technical support during your working hours to keep the system running.

Once you set your analytical criteria, select 5 vendors who match your expectations and cluster close regarding features, pricing and reviews. Create an evaluation criteria scorecard with the above parameters, and add your own as needed. List the vendors at the top and score them on each category to pick the best out of the lot.


The best CRM software is different from the one that's the most expensive or the one that has the most features, and it is the one that suits your needs the most. The right CRM is easy and intuitive to use, delivers performance, decreases costs, improves productivity and helps you forge the best relationship with your clients.

This article covers all the fundamentals of CRM and how to choose them. If you've made it this far, you have a good idea about what to expect when looking for a CRM platform.

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