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According to research published by Gartner, Customer Relationship Management (CRM) software has become the largest software market in the world, creating $39.5 billion in revenue as of 2017 and continuing to grow. That’s pretty significant, considering the plethora of software categories out there. So what is customer relationship management, and how exactly does software help with it? 

Simply put, CRM is how your sales team manages relationships with customers and leads, and CRM software is a tool with features that help you track interactions, inquiries, and sales. As we delve into it though, you'll see that the best customer relationship management software involves many more features to help you and your teams create experiences that keep customers coming back. It helps you manage the entire customer lifecycle, starting with marketing and sales, and ending with return sales, customer support, and customer service interactions.

Below, we'll get into how a CRM works, key features to look for, and how to pinpoint the right time to integrate it with your business model.

What is CRM and How Does it Work?

From reaching a potential customer to acquiring and converting new leads, a good CRM platform will help make the entire sales process easier and more efficient. This type of software provides businesses with a place to store contact information and other data on leads, prospective clients, and current customers, as well as a hub to collaborate with other teams and individuals by sharing details of customer interactions, purchase histories, and other important customer data.

A CRM system also helps sales teams and marketing teams improve the customer experience by ensuring every person a customer interacts with at your business can access important information about their wants and needs. A CRM can even help salespeople keep track of facts and news from the client, giving themselves and other team members subjects of interest when small-talking with the customer on follow-up calls.

With the best CRM software, you can automate workflows to streamline menial or repetitive tasks. From marketing campaigns and social media posts to customer support and customer retention campaigns, there are plenty of opportunities to put more time back into your day with CRM workflow automation tools.

CRM solutions come with various features to help you throughout each step of the customer journey. These include:

  • Marketing automation tools to help your business reach new potential clients
  • Forecasting tools to predict and measure your growth and profitability
  • Contact management databases to keep track of your customers
  • Email marketing, customer loyalty, and customer engagement tools for client retention
  • Sales management tools to track purchases and other vital data

Let’s take a closer look at how some of these key features work.

Lead Generation

To start the sales cycle, you need to make people aware of your brands. This helps generate leads and eventually, sales. Depending on the nature of your business and your marketing department’s methods, you may have warm leads, cold leads, or a combination of both.

  • Warm leads: Leads who know your business and have expressed some level of interest in the goods or services you offer.
  • Cold leads: Leads that may not know of your business and require an introduction before entering your sales funnel.

Managing these leads in a central, organized space is key, especially if you want to keep them moving throughout your sales funnel. A CRM lets your marketing department keep better track of leads and marketing initiatives, helping them become more effective collaborators with sales teams and customer support representatives.

Customer Information

CRM systems store vital customer data so that your sales team, marketing team, and other departments can access it. That includes basic stuff, such as contact info and purchases, as well as analytics and suggestions for future interactions.

Information that’s typically stored within a CRM includes:

  • Company name and website
  • Contact name and title
  • Email address, telephone number, and other contact information
  • Social media profiles of primary contact
  • Personality traits, likes, and dislikes
  • News and details of conversations with the client
  • Lead scores
  • Phone calls and contact history
  • Purchase history
  • Potential upsell opportunities and anticipated customer needs

By putting together all of this information, sales and marketing teams are able to keep track of who they’re talking to, what they’re selling, and past conversations to increase the likelihood of future customer engagement and purchases. A good salesperson gives the impression that they know their clients inside and out but without a CRM at their disposal, most would find themselves at a loss when it comes to recalling the little details like children’s names and ages, hobbies, and anticipated business needs.

Customer Interactions

The customer journey and customer experience are two crucial components of your sales process. While these two terms are often used interchangeably, it’s important to note that each has a different meaning.

  • Customer journey: The path a customer follows from the time they first discover your brand to the time they make a purchase and decide whether they’ll give you their return business.
  • Customer experience: A single step in the customer journey, which defines how the customer feels about your brand and product after making a purchase.

There are seven stages of the typical customer journey. These are:

  1. Initial awareness of your brand occurs when your marketing team brings new products and services, or the brand itself, to market. They may advertise these with television, radio, social media, and other marketing campaigns.
  2. Triggers happen when the consumer feels inclined to purchase what you sell or something like it. This motivates the customer to explore your offering.
  3. Initial brand consideration starts when the customer notices your brand and realizes that you offer what they need. Here, they may take time to research your brand and consider whether what you’re offering really suits them.
  4. Evaluation of your brand against other businesses with similar offerings. This may include looking into your company history or values, comparing features and costs, and looking at reviews from previous customers.
  5. Purchasing a product or service from your business.
  6. Customer experience is possibly the most important part of the customer journey. This occurs after the customer has made a purchase and is able to decide whether they want to do business with your brand again. The customer experience includes the customer’s impression of your company itself, as well as the value of the purchase they made or quality of service received.
  7. Loyalty, which is only part of the journey if the customer experience is positive. Loyalty may be in the form of repeat business, writing positive reviews, or telling friends and family about your company.

A collaborative CRM can help you manage several stages of this journey, helping you track customer interactions starting with the first engagement and continuing throughout the customer’s relationship with your business.

Marketing efforts can be also managed, tracked, and even analyzed with a CRM, making this a particularly useful and cost-effective tool for startups and small businesses, which often have smaller budgets than mid-size companies and enterprises. Once a consumer enters your sales pipeline, the sales team can track every interaction in detail, ensuring that no matter which sales rep contacts the client, they’ll be up to date on the client’s preferences, needs and personality.

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Workflow Automation

One of the most useful CRM tools is workflow automation, which is designed to help you optimize your time by automating some of the easier, more repetitive tasks that salespeople and marketing reps have to handle throughout the day. This puts more quality time back into your day and the days of your employees, giving them the chance to focus on sales instead of paperwork and work toward meeting or exceeding their sales goals.

Workflow automation tools can take care of everything from organizing new customers and uploading their contact information to reminding sales teams to conduct follow-up calls to ensure customer satisfaction and retention. Other tasks that are often able to be automated—depending on the CRM provider and the complexity of the software—include email marketing, spreadsheet creation, and real-time customer support with the use of chatbots.


Analytics are an important part of ensuring that your marketing campaigns are successful, and that you have high customer satisfaction rates. One of the many benefits of CRM software is its ability to automate standard business processes, including marketing and sales analytics.

Every CRM is different but when you pull up an analytics dashboard on your software, you should see several standard data visualizations. That includes:

  • Year-to-date and month-to-date revenue
  • Which touchpoints are generating leads
  • Conversion rates
  • Closed deals
  • Lost deals
  • Sales goals
  • Total leads
  • Total sales calls booked
  • Customer acquisition costs
  • Promotional costs vs. return on investment
  • Time to close

Having immediate visual access to these numbers is convenient for tracking sales leads, ensuring business needs are met, and determining whether change is needed to achieve sales goals and add to the bottom line.

Types of CRM Technology

Now that you know how a CRM helps your business track customer data and ensure the customer experience helps your brand build a positive image, it’s important to understand the various CRM technology. There are several types of CRM that you can use to help your business work smarter instead of harder.

Cloud-based CRM

A cloud-based CRM is typically the easiest to use and maintain, and if you don’t have an in-house IT department, it’s usually the simplest option. This is considered software-as-a-service, or SaaS, which means everything you need is typically rolled into your subscription fee, including tech support.

Cloud-based CRMs are hosted on your CRM provider’s servers and can be accessed by you and your team through an internet portal. These CRMs are the easiest to set up, they can be accessed from anywhere with an internet connection, and they encrypt data to ensure the security of you and your customers.

On-premises CRM

If you choose to have an on-premises CRM, that means you’re hosting the software on-site. You’ll need your own server, and likely your own software technician to implement and operate the program, and to provide employees with tech support.

While operating an on-premises CRM can be expensive, it does have benefits. It offers you complete visibility and control over your setup, customer data, and information security, as well as the opportunity to scale your server capacity as your company grows.

Open Source CRM

An open source CRM is the best option if you have unique needs or want full control over how your CRM works. This type of sales CRM can be customized in any way you see fit without the risk of breaching licensing agreements or other regulations.

While open source CRM can be of great benefit for businesses with unique needs that don’t fit into the standard CRM features, pricing can be a problem for smaller businesses with smaller budgets. If you’re not tech savvy, you may need to hire a software developer or CRM consultant to manipulate your CRM and update it to your liking. Depending on the scope of the project, the cost can climb into the tens or even hundreds of thousands.

When is it Time to Adopt a CRM?

A CRM isn’t for every business. If you’re just starting out, your small business might not have the need for an operational CRM quite yet. However, as you grow, it’s important to be armed with a solution that keeps you and your team working as efficiently as possible, and customer relationship management software could be just what you need.

Your Customer Base is Growing

As a startup or small business, maintaining customer files might be easy. But as your customer base increases, it can quickly become difficult to manage the segmentation of customer needs, and to keep your client information up to date.

If your customer base is growing, consider the benefits of a CRM and how they could help your company grow faster without overwhelming you.

Your Sales Team is Also Growing

If your customer base is expanding, chances are your sales team is growing too. You can help your salespeople work more efficiently by giving them access to the data they need, when they need it—even if someone else needs that same customer file at the same time. A CRM can help you keep your sales team, regardless of its size, organized and on the same page.

You Need to Accurately Track Revenue

If you’re becoming overwhelmed by data and numbers, an analytical CRM can help you keep track of the important information that determines your revenue. That includes everything from basic sales figures to calculating your ROI when it comes to ad spend and other marketing efforts.

You Want to Improve Sales Forecasting

A CRM can go beyond helping you get a look at current revenue, it can also help you catch a glimpse of what the future may hold for your business. Use CRM data such as lead generation, sales, and ROI figures to pinpoint sales patterns and forecast what the months and year ahead should look like. Accurate sales forecasting is also a great tool for setting sales and lead generation goals.  

You Want More Return Customers

We mentioned it before but it’s worth mentioning again. The customer experience is everything when it comes to building repeat business from loyal customers. If you want to increase your rate of return customers, CRM software is the way to do it.

Tracking interactions and other customer data can help you better the experience your customers have with your company and your salespeople, ensuring your team has the tools it needs to strengthen customer loyalty and increase repeat business.

Build a Better Business with Customer Relationship Management

From tracking the success of your marketing efforts to securing more repeat business through a better customer experience, CRM software offers the tools you need to keep your goods or service-based business on the path to success.

A good CRM will provide you with comprehensive customer data management tools, sales tracking, and analytics that help you determine when marketing spend is bringing in more revenue and what needs adjusting to improve your ROI.

If you’re just starting to explore your options when it comes to CRM, take time to learn more about how much a CRM costs before committing to a purchase and explore some of the best CRMs on the market.

Want to get involved in the conversation? Have some great tips to share about selecting the right CRM for your business? Chat about it on social media or leave a comment below.

And while you’re at it, don’t forget to subscribe to our newsletter so you can access up-to-date information about sales software and other tools that are designed to help you and your business succeed.

By Phil Gray

Philip Gray is the COO of Black and White Zebra and Founding Editor of The RevOps Team. A business renaissance man with his hands in many departmental pies, he is an advocate of centralized data management, holistic planning, and process automation. It's this love for data and all things revenue operations landed him the role as resident big brain for The RevOps Team.

With 10+ years of experience in leadership and operations in industries that include biotechnology, healthcare, logistics, and SaaS, he applies a considerable broad scope of experience in business that lets him see the big picture. An unapologetic buzzword apologist, you can often find him double clicking, drilling down, and unpacking all the things.