What is a CRM
Also known as: customer relationship management, CRM system, CRM software
CRM, short for customer relationship management, is the process and, almost always, the system that records who each contact is, where they came from, what they have discussed with the company and what stage of the sale they are in. It keeps anyone from being forgotten, gives the sales team a method and shows which channels bring real customers.
A custom furniture store got contacts through Instagram, its website and the personal phones of three salespeople. Nobody knew how many quote requests arrived each month, or how many went unanswered.
With a CRM, every contact lands in one place, with its source tagged and an owner assigned. In the first month, the store finds that many requests waited over two days for a first reply. It sets a same day response rule, and sales rise without more ad spend.
What a CRM stores
- Contact and company details.
- Source: the channel, campaign and ad that brought the contact.
- Conversation history across phone, email, chat and messaging.
- Stage in the sales pipeline and deal value.
- Tasks and next steps, with owner and deadline.
- Loss reason, when the sale does not happen.
Types of CRM
Contact management systems began appearing in the 1980s; in 1987, Pat Sullivan and Mike Muhney released ACT!, based on the idea of a digital Rolodex. Today, most CRMs mix all three types.
| What it is for | |
|---|---|
| Operational | Integrating and automating sales, marketing and support, with a single view of each customer |
| Analytical | Analyzing customer data for better decisions |
| Collaborative | Sharing customer information across departments and partners |
CRM and marketing
For marketing, the CRM closes the loop between ad and sale. If each contact's source is recorded, including the URL's campaign parameters, you can calculate cost per customer for each channel, not just cost per click.
The CRM is also where lead scoring, nurture flows and the history that keeps you from pitching the same offer to people who already bought live.
How to choose one
- Start with your sales process, and pick the system that fits it.
- Test it with the people who will use it: if salespeople do not fill it in, the CRM does not exist.
- Check integrations with the website, messaging, email and ads.
- Look at reporting: pipeline, source and loss reasons must be easy to pull.
- Check per user pricing as the team grows.
- Make sure data can be exported, so you are not locked in.
Why CRMs fail
- Nobody fills it in, because it takes effort and nobody checks.
- The pipeline has too many stages that nobody can tell apart.
- No one owns keeping the database clean.
- It is used only as an address book, not to manage sales.
Frequently asked questions
What is a CRM?
Customer relationship management: the process and system that record who each contact is, where they came from, what they have discussed with the company and what stage of the sale they are in.
What is a CRM used for?
To organize contacts and deals, make sure nobody is forgotten, give sales a method and show which channels bring real customers.
What are the types of CRM?
The classic split is operational, analytical and collaborative. Most current systems combine all three.
Does a small business need a CRM?
It needs an organized way to record contacts and sales. A simple CRM beats a spreadsheet once more than one person handles customers or leads come from many channels.
Does a CRM involve data protection rules?
Yes. A CRM stores personal data, so it needs a legal basis for its use, access control and a way to handle requests from the people whose data it holds.
Related terms
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Rodrigo Fávaro
Founder of ROO3, a marketing and technology agency in São José do Rio Preto, Brazil. Builds AI products running in production (Tobia, gerar.app, Pense Mercado) and maintains the AI Benchmark, a public ranking of AI models.
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