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Updated Oct 23, 2023

11 Benefits of CRM Systems

Kiely Kuligowski, Business Strategy Insider and Senior Writer

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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 was worth more than $58 billion in 2022 and is currently one of the fastest-growing industries, projected to grow at a rate of 13.9% from 2023 to 2030, driven by consumer demand for better customer service, automated engagement and more nuanced customer experiences.

What is a CRM?

A CRM system is a type of software that helps businesses manage, track and organize their relationships with customers. CRM stands for “customer relationship management.” The CRM system can help you store customer data, such as user behavior, the amount of time a customer has been with your business, purchase records and notes on sales interactions. You can then use this information 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 features track 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.

TipTip

In the market for a CRM system? Check out our picks for the best CRM software for small businesses.

CRM benefits for small businesses

A CRM solution can be used in various ways and provide numerous benefits to your business. In general, these benefits all involve nurturing leads and supporting customers as they enter and move through your sales and marketing funnels. Specifically, CRM systems can achieve the following to do so.

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 accessible easily 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 tweak easily 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, such as 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. [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 segment your contact lists automatically 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.” [Related article: Why Demographics Are Important in Marketing]

9. Automated sales reports

Your team can collect and organize data about prospective and current customers easily 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. [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. [Related article: Workplace Conflicts? 5 Tips to Improve Communication]

Key TakeawayKey takeaway

The benefits of CRM include increased sales, detailed analytics, automated sales reports and better customer retention. CRM systems can also help improve internal communications so your entire team is on the same page when it comes to each lead and customer.

What companies can benefit from CRM systems?

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’ 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 daily 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. 

CRM software can take your customer service to the next level

A CRM software is an indispensable tool for a business’ sales, marketing and customer support teams. By building detailed profiles of leads and customers and tracking all your team’s communications with them, you can better serve your existing customers, acquire new ones and refine marketing campaigns to reach your target audience effectively. If you want to better organize your communications and pull back the veil on key insights surrounding your leads and customers, consider implementing a CRM system for your business.

Tejas Vemparala also contributed to this article. 

Kiely Kuligowski, Business Strategy Insider and Senior Writer
Kiely Kuligowski is an expert in project management and business software. Her project management experience includes establishing project scopes and timelines and monitoring progress and delivery quality on behalf of various clients. Kuligowski also has experience in product marketing and contributing to business fundraising efforts. On the business software side, Kuligowski has evaluated a range of products and developed in-depth guides for making the most of various tools, such as email marketing services, text message marketing solutions and business phone systems. In recent years, she has focused on sustainability software and project management for IBM.
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