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11 Benefits of CRM Systems

Kiely Kuligowski
Kiely Kuligowski
Staff Writer

CRM software can provide a wealth of benefits for your small business, from customer retention to increased productivity.

  • CRM software is used to gather customer interactions in one central place to improve customer experience and satisfaction.
  • CRM is one of the world's fastest-growing industries, expected to grow at a rate of 14% between 2021 and 2027.
  • The benefits of CRM include better customer retention, increased sales and detailed analytics.
  • This article is for small business owners and marketers who want to learn about the benefits of CRM software for small businesses.

Customer relationship management (CRM) software has become a near-vital tool for businesses of all sizes. CRM software can provide several benefits to any business, from organizing contacts to automating key tasks. It can also be a centralized, organized hub that enables consistent communication both with customers and within the organization. This is especially important as more organizations shift to remote work.

The CRM software market is currently one of the fastest-growing industries, projected to grow at a rate of 14.27% from 2020 to 2027, driven by consumer demand for better customer service, automated engagement and more nuanced customer experiences.

Editor's note: Looking for the right CRM software for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

What is CRM software?

CRM stands for "customer relationship management," a type of software that helps businesses manage, track and organize their relationships with customers. A CRM can help you store customer data such as user behavior, how long a customer has been with your business, purchase records, and notes on sales interactions, which you can use to optimize your sales and marketing processes and improve customer service across your organization.

"CRM … is a group of tools, technology and techniques used to help sales and marketing professionals understand their customers better," said Bryan Philips, head of marketing at In Motion Marketing.

CRM software works by tracking the behavior and actions of your current or potential customers through your business's website, social media, or email marketing campaigns and then guides the customer through the sales or buying funnel by sending a triggered email or alerting a sales representative of the customer's interest.

Key takeaway: CRM software is used to store, manage and organize data on your business's relationships with customers.

11 ways CRM can benefit your business

A CRM solution can be used in various ways and provide numerous benefits to your business. Here are 11 key benefits a CRM could provide.

1. Better customer service

Modern CRM software has many functions, but the software was created to improve business-customer relationships, and that's still its main benefit. A CRM manages all of your contacts and gathers important customer information – like demographics, purchase records and previous messages across all channels – and makes it easily accessible to anyone in your company who needs it. This ensures that your employees have all they need to know about the customer at their fingertips and can provide a better customer experience, which tends to boost customer satisfaction.

2. Increased sales

A CRM tool can help you streamline your sales process, build a sales pipeline, automate key tasks and analyze all of your sales data in one centralized place, potentially increasing sales and productivity. A CRM helps you establish a step-by-step sales process that your employees can rely on every time and that you can easily tweak as issues arise.

3. Improved customer retention

Once you've procured and converted leads, it's vital that you put in the work to retain them as customers and promote customer loyalty. High customer turnover can have many negative effects for your business, like diminished revenue or disrupted cash flow, so use your CRM and the information it provides about your customers to encourage repeat business. The CRM will provide sentiment analysis, automated ticketing, customer support automation and user behavior tracking to help you determine problems and quickly address them with your customers.

4. Detailed analytics

It's one thing to have plenty of data about your customers, but you need to know what it means and how to use it. CRM software typically has built-in analytic capabilities to contextualize data, breaking it down into actionable items and easily understood metrics. Metrics such as click-through rates, bounce rates, and demographic information allow you to judge the success of a marketing campaign and optimize accordingly.  

5. Higher productivity and efficiency

CRM software uses marketing automation technology, which expedites menial tasks like drip campaigns and frees up your employees' time to focus on work only humans can handle, like creating content. It can also ensure that no tasks slip through the cracks (e.g., all important emails are always sent to the right people). Additionally, a CRM can show you a dashboard of how your business processes are working and where your workflows could improve. [Read related article: How Workplace Automation Software Can Help Your Business] 

6. Centralized database of information

Another thing CRM software does best is providing a centralized database with all information on your customers, making it easily accessible to anyone in your company who needs it. This makes it easy for a sales representative to see what products a certain customer is interested in, for example. If the customer has previously interacted with the company, the CRM will include records of that interaction, which can inform future marketing efforts and sales pitches. This saves your employees the time of digging through old files and records, and it makes for a better and more productive experience for the customer.

7. Managed communications with prospective leads

Lead nurturing can be an arduous and complicated process, with many steps and opportunities to communicate. A CRM automatically manages the process, sending your employees alerts when they should reach out to the prospect and tracking every interaction, from emails to phone calls.

"One great advantage of [CRM] is that you can see your customer's journey holistically," said Michael Miller, CEO of VPN Online. "With every phase in the design and every email you sent out reviewed, you can quickly figure out the next move to make. It's like seeing it from the top view, and you can easily create a decision on what to do next."

8. Improved customer segmentation

A list of hundreds of contacts can be unwieldy and overwhelming. For example, how do you know which customers want to see your email about your new in-store product? A CRM will automatically segment your contact lists based on your criteria, making it easy to find the ones you want to contact at any given time. You can sort contacts by location, gender, age, buyer stage and more.

"Automation actually allows the marketer to have a more meaningful understanding of the customer and have more valuable interaction when they do interact because of it," Philips said. "The important part to understand about automation is that we don't want to write a general email to our customers. Instead, we want to send emails reflecting customers' preferences, interests and values by segmenting them into groups using the data gleaned within the CRM." [Read related article: Why Demographics Are Important in Marketing]

9. Automated sales reports

Your team can easily collect and organize data about prospective and current customers using the CRM software's dashboard and reporting features, which allow employees to automate and manage their pipelines and processes. The CRM can also help your team members evaluate their performance, track their quotas and goals, and check their progress on each of their projects at a glance.

10. More accurate sales forecasting

With any business operation, you need to be able to review your past performance and strategically plan for the future. Using the automated sales reports in CRM software, you can identify key trends and get an idea of what to expect from your future sales cycle performance, while adjusting your goals and metrics to suit those projections. [Read related article: 7 Ways to Improve Your Sales] 

11. Streamlined internal communications

Aside from facilitating communication between your business and your customers, a CRM can make it easier for your employees to communicate with each other. A CRM makes it easy to see how other employees are speaking with a potential customer, which helps your team maintain a unified brand voice. It also allows team members to send each other notes or alerts, tag each other on projects, and send messages and emails, all within one system. [Read related article: How Poor Communication Hampers Team Performance]

Key takeaway: The benefits of CRM include increased sales, detailed analytics, automated sales reports and better customer retention.

What companies can benefit from CRM?

Because CRM software provides such a breadth of benefits, many types of businesses and teams can benefit from it.

"Not all customers are created equal, so the value of a CRM is that it helps you keep the right customers and deploy your precious marketing dollars towards the customers that will return the highest value over their customer lifetime," said Mike Catania, CEO and co-founder of Locaris. "It is challenging for small businesses to identify and acquire customers, so bucketing them into optimal and suboptimal segments through CRM is inordinately valuable."

Businesses of all sizes, from solo freelancers to enterprise-level corporations, can use CRM technology effectively. After all, the key functions of a CRM are organization, centralized task management, marketing automation, and communication, which are important to every business's success.

Of course, some businesses stand to gain more from the use of a CRM than others:

Businesses with a dedicated sales team

If you have a sales team, a CRM is vital to help you manage your contacts and your customer relations. A CRM can even help you improve and grow your sales processes by using customer information, showing you key trends and areas where you can improve your strategies, and automating menial tasks for your sales representatives.

Businesses with a marketing team

CRM and marketing go hand in hand. CRM data can help your marketing team identify, capture, nurture and convert leads; track customer-salesperson interactions; monitor drip campaigns within the sales cycle, and more. All of this can create a smoother and more consistent customer experience.

Businesses seeking to increase efficiency

Because CRMs automate processes like contact organization and communication, the software can significantly speed up everyday processes and tasks for your entire team. A CRM can also reduce errors and ensure that all communications go out to the right people at the right time. [Ready to look for a CRM? Check out our guide to the best CRM software of 2021.]

Key takeaway: While all businesses stand to benefit from the use of a CRM, businesses that have sales or marketing teams or want to increase their efficiency should especially consider using one.

Image Credit: anyaberkut / Getty Images
Kiely Kuligowski
Kiely Kuligowski
Business News Daily Staff
Kiely Kuligowski is a business.com and Business News Daily writer and has written more than 200 B2B-related articles on topics designed to help small businesses market and grow their companies. Kiely spent hundreds of hours researching, analyzing and writing about the best marketing services for small businesses, including email marketing and text message marketing software. Additionally, Kiely writes on topics that help small business owners and entrepreneurs boost their social media engagement on platforms like Facebook, Twitter and Instagram.