What is CRM? The complete CRM guide.

What is a CRM system?

A CRM system gathers, links, and analyzes all collected customer data, including contact information, interactions with company representatives, purchases, service requests, assets, and quotes/proposals. The system then lets users access that data and understand what happened at each touchpoint. Through this understanding, a complete customer profile is developed, and a solid customer relationship is built.

Customer data can also be aggregated to populate incentive compensation modeling, sales forecasting, territory segmentation, campaign design, product innovation, and other sales, marketing, and customer service activities. CRM tools and software help you streamline the customer engagement process, close more sales deals, establish strong customer relationships, build customer loyalty, and ultimately increase sales and profits.

Learn more about Oracle's comprehensive CRM sales solution

Who should use a CRM?

CRM tools have almost always been seen as sales tools. However, over time, these solutions have extended their reach and become integral to marketing, ecommerce, and customer service functions.

The power of customer relationship management is derived by constantly gathering customer data, analyzing that data, and then using those insights to deepen relationships and improve business results. It allows any customer-facing employee to convey, "We know you, and we value you."

A set of data-driven CRM tools supports you beyond the sales process, which is crucial to business performance. With the in-depth knowledge of your customers, you can:

• Offer and sell new, add-on products—at the right time in the right way at the right price
• Help customer service teams resolve issues faster
• Help development teams create better products and services

CRM: What is the goal?

CRM software supports strong, productive, loyal customer relationships through informed and superior customer experiences. The goal? To improve customer acquisition and retention by providing experiences that keep your customers coming back. Customer relationship management is both a strategy and a tool that supports those experiences in five key ways.

CRM features and benefits

Customer relationship management solutions are one of the largest and fastest-growing enterprise application software categories. The CRM market size was valued at $41.93 billion in 2019 and is projected to reach $96.39 billion by 2027, growing at a CAGR of 11.1% from 2020 to 2027.

More and more companies are using CRM solutions to acquire more sales leads, improve the sales pipeline, boost productivity, and improve customer satisfaction. However, many have encountered problems ranging from cost overruns and CRM integration challenges to system limitations. These are avoidable problems, and you can help ensure success by focusing on a customer-first strategy.

It's critical for businesses to have integrated, customizable, and comprehensive views into their customers’ and potential customers’ solution/product interests, customer service needs, and purchase history. A good CRM system should provide that view. All data is in a single location, viewable through optimized dashboards.

Additionally, your marketing team can leverage CRM solutions to orchestrate personalized marketing and lead generation campaigns. These systems can help track all cross-channel interactions—from engagement to purchase. Mature cloud CRM solutions do more. They are fully integrated with back-office solutions to successfully support the entire customer journey.

Because it manages prospect and customer engagement points across all channels, your CRM system can inform all your communications and marketing activities, delivering the 360-degree customer view needed for a truly connected omnichannel experience.

Many different vendors have many different types of solutions. However, a few capabilities are must-haves.

Types of CRM

CRM software solutions, at their core, are used to manage customer relationships and sales interactions. Still, many businesses leverage these systems simply as a sales force automation tool. But these solutions, such as Oracle's, offer many more valuable capabilities that span a wide range of marketing and sales functions, including marketing, customer service, sales, and partner channel management.

Today’s CRM software can support the entire customer journey. But what one company may need from a CRM system can be vastly different from what another company might require. To help you select the right CRM for your organization, it’s helpful to know that there are three main types of CRM solutions: collaborative, operational, and analytical.

CRM and data

Data is the most critical part of any CRM software solution. In fact, customer data is the starting point for all marketing and sales activities. Successful customer engagement and relationship strategies hinge on accurate, complete, and accessible customer profiles. Bad data comes from several places, including:

• Fraudulently entered data
• Keystroke errors
• Duplicate customer information
• Natural changes (company bankruptcy, job changes)

Incomplete and inaccurate data can increase quickly to degrade the value of your CRM tools, resulting in unnecessary expenses. Conversely, when customer data is complete and accurate, businesses stand a better chance of reaching their target customers and prospects. In short, your data is a valuable asset. So it’s important to focus on collecting and optimizing these four CRM data types:

Identity data

Identity data includes descriptive details to identify customers, leads, and contacts. This data should be used for marketing segmentation.

Descriptive data

Descriptive data includes lifestyle details relevant to your contacts. It is what completes that all-important 360-degree view of leads and contacts.

Quantitative data

Quantitative data includes measurable data points that can help you interpret how your leads and contacts have interacted with you.

Qualitative data

Qualitative data can help you better understand your contacts’ intent, including search behaviors related to buying decisions.

CRM vs. marketing automation

Both CRM and marketing automation systems are data-driven. They focus on gathering, storing, and using data. For example, marketing automation systems gather leads by communicating with potential and current customers.

Specifically, marketing automation looks to gather enough customer data points to show intent and then hands that person off to the sales team as a marketing-qualified lead (MQL). A CRM solution picks up where the marketing automation solution left off and works to convert those marketing-qualified leads into contacts.

AI in CRM

The best CRM systems offer robust analytics coupled with AI and machine learning. AI is the future of customer relationship management, going beyond contact management and sales force automation to truly helping you sell.

AI in CRM can guide you toward the next-best actions and provide smart talking points—specific to each customer opportunity. AI also delivers timely customer intelligence that helps you optimize customer experience (CX) across marketing, sales, and customer service.

CRM vs. CX

When customer relationship management first arrived on the scene, businesses would capture data but not know what to do with it. Today, CRM systems are integrated with AI, which helps interpret and predict what that data means.

CRM AI capabilities are the foundation to using a 360-degree view of the customer that will start them on their way to becoming your customer. As these AI enhancements continue to evolve, CX will continue to improve—and in turn, customer expectations will continue to increase.

Your business needs to fully understand your customers (and how they buy) to not only meet their expectations but to provide them with compelling experiences. This is the future of CX and should serve as your guide to selecting the best CRM solution.

How CRM improves customer experience

A complete customer view is necessary for business success and growth. Without a CRM system, you'll struggle to develop that much-needed 360-degree view of the customer that you need to:

• Personalize customer interactions
• Automate business processes (with appropriate CX integrations)
• Track all customer interactions

How CRM improves customer service

Cloud CRM

As with any other business application, the decision to host your CRM on-premises, in the cloud, or as a hybrid model depends on your business needs.

On-premises CRM

On-premises CRM gives you complete control over your system, but there is a trade-off. These systems must be purchased, installed and deployed, monitored, maintained, and upgraded. As a result, they can be costly, involve time-intensive installations and upgrades, and require in-house IT resources for ongoing maintenance.

With an on-premises CRM solution, access to new functionality can be a long, drawn-out, and expensive process. Also, sophisticated AI-based technology—to support virtual assistants, chatbots, next-best recommendations, and predictive analytics—will not be available.

Cloud CRM

Software-as-a-service (SaaS) options offer simple interfaces that are easy to use and require less IT involvement and investment than on-premises CRM tools. Because upgrades are pushed through automatically, you always have the most up-to-date functionality without significant IT effort.

This includes new advanced technology, such as AI and machine learning that can help you turn your customer data into relevant customer experiences. Cloud-based CRM also offers the convenience of anytime, anywhere access through mobile devices.

Hybrid CRM deployment

A hybrid CRM deployment requires trade-offs in all the areas mentioned above, but this deployment model can also deliver the best of both worlds. However, it's important to recognize that IT technology is increasingly moving to the cloud. Companies that remain heavily invested in on-premises CRM risk being left behind as competitors advance to the cloud. Your ability to provide mobile access will also be limited.

There are so many things to take into consideration when selecting a CRM system for your organization. But in the end, the CRM model most suitable for you is the one that allows you to interact with your customers in meaningful ways to drive exceptional customer experiences.