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What is Customer Relationship Management?

Updated on September 27, 2015
heidithorne profile image

Heidi Thorne is an author and business speaker specializing in sales and marketing topics for coaches, consultants, and solopreneurs.


What is CRM?

Customer relationship management (CRM) is the process of managing and monitoring an organization's sales and customer service operations. It can be done manually or be automated with the use of computers. Systems are now often web-based for easy access anywhere. These systems are used in both offline and online sales operations.

Whatever system is used, its purpose is to provide access to and update data to facilitate the sales and customer service process:

  • Customer contact information (company name, contact name, job title, address, phone numbers, fax number, email address, website, social media connections, etc.)
  • Additional notes about the customer which could include birthday, communication preferences, special order instructions, any complaints registered and other information that can help salespeople establish and maintain a positive personal connection. These notes can be especially helpful in retaining customers when there is a change in sales personnel. If the system is shared by both sales and service personnel, everyone can then be alerted as to the status of any customer issues.
  • Purchase history.
  • Service record (e.g., car dealers may keep track of the times a car buying customer comes in for oil changes or repairs).
  • Log of contacts made with customer (e.g., "Emailed revised proposal on January 3.").
  • Calendar alerts for next scheduled contact. This is especially helpful for sales that have a very long sales cycle that could span months or years.


Old School CRM

Back when I started my sales career in the 1980s, we used a variety of physical CRM tools. These were sometimes referred to as tickler or trace files. Index cards, notes or files containing customer information would be arranged in date order and then pulled up each day. A salesperson would then contact the customer or prospect, make additional notes and retrace it for the next contact.

See some problems that could occur?

  • Information filed in date order would be difficult to find should the customer call prior to the designated followup date.
  • If a salesperson didn't follow up on the designated day and/or the customer wasn't available for an update, stacks of trace cards or files would pile up, also causing a hunt for data if it was needed out of sequence.
  • It was usually accessible by only one person and at one place at a time.
  • If the business closed, the file would then be floating somewhere between sales and service. More hunting if it needed to be accessed!

How did we ever manage back in the day? Well, we did... just slowly and inefficiently. (Confession: I still use a variation of the followup cards for some sales campaigns. Sometimes old school is still cool!)

Learn More about Online Marketing and Sales

Today's CRM

More recently, CRM programs have been software based. But today they are more likely to be offered as hosted cloud computing subscription programs that can be accessed anytime, anywhere. They may also offer mobile device capabilities and accessibility. Many of these systems also integrate marketing capabilities such as email marketing and social media. Some sophisticated, large enterprise level CRM programs are fully integrated into the company's accounting and order management system as well.

Though this represents a cost to the business, these programs can help coordinate sales and service functions and build sales while reducing waste of time, paper and other resources.

Costs are usually based on number of users, as well as the amount of data and file storage the business uses on the system. Therefore, a business needs to decide which prospects are worthy of entering into the customer relations management stream due to higher costs for additional data and storage. This is not just an exercise for CRM purposes; it's good to figure out how many resources should be allocated to prospects with low or questionable potential.

Smaller businesses, who do not use formal CRM programs, may instead use a combination of standalone marketing and operations tools such as email marketing services and accounting software programs to manage and monitor the sales function.

Disclaimer: The author/publisher has used best efforts in preparation of this article. No representations or warranties for its contents, either expressed or implied, are offered or allowed and all parties disclaim any implied warranties of merchantability or fitness for your particular purpose. The advice, strategies and recommendations presented herein may not be suitable for you, your situation or business. Consult with a professional adviser where and when appropriate. The author/publisher shall not be liable for any loss of profit or any other damages, including but not limited to special, incidental, consequential, or other damages. So by reading and using this information, you accept this risk.

© 2014 Heidi Thorne


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    • heidithorne profile image

      Heidi Thorne 10 months ago from Chicago Area

      Hi Daisy! Salesforce is a very popular platform. Glad to see it's working for you. Thanks for chiming in. Happy Holidays!

    • daisyscott123 profile image

      Daisy Scott 10 months ago from Washington

      A brief guide about CRM. Now I can easily evaluate which CRM is better for my business. I recommend salesforce CRM is best CRM for small business. Salesforce CRM is a cloud based platform.Thanks you so much.

    • heidithorne profile image

      Heidi Thorne 2 years ago from Chicago Area

      Hi teaches12345! Glad to see someone else remembers the index card days. :) So appreciate you stopping by and taking time to comment. Have a wonderful day & holiday!

    • teaches12345 profile image

      Dianna Mendez 2 years ago

      I remember those index cards! How times have changed. Thanks for sharing this valuable information that will surely give readers an informative glimpse into what CRM is and how it works.

    • heidithorne profile image

      Heidi Thorne 2 years ago from Chicago Area

      Wow, FlourishAnyway! What a disaster. Agreed, today's CRM programs usually require login access, thus preventing the nightmare you described. As well, with login access, former employees can be locked out of the system to prevent any unauthorized messing with records. Thank you so much for adding this important insight to the conversation! Have a great weekend!

    • FlourishAnyway profile image

      FlourishAnyway 2 years ago from USA

      I knew of one business that kept detailed records of their contacts that included comments about personality quirks and sometimes very honest assessments of who they are as people. The account was worth millions of dollars. Information was kept on a spreadsheet and oopsie was sent directly to the customer. There was some major backpedaling and explaining. It was humorous to me because I was not involved but it does teach some pretty big lessons. Maybe those CRM programs are the way to go now, huh? They'd probably prevent that type of mistake or at least make it harder.

    • heidithorne profile image

      Heidi Thorne 2 years ago from Chicago Area

      Hi Iris! Glad to see I'm not the only old school + new school biz person. :) Some of the new tools are pretty amazing, not too expensive (for 1 user) and worth checking out. Hope you're not working too much this holiday weekend. Thanks for stopping by and commenting. Cheers!

    • Iris Draak profile image

      Cristen Iris 2 years ago from Boise, Idaho

      Heidi, I too remember the days of physical tickler files. And I too use a combination of old school and hip and happinin' CRM tools. This article gave me some new ideas though about how I can be more efficient.

    • heidithorne profile image

      Heidi Thorne 2 years ago from Chicago Area

      Hi purl3agony! True, it doesn't matter what the organization is, everyone needs some system or process for managing sales, donors, sponsors... whatever. For the nonprofit where I'm on the board, we also use a donor management system and have just voted to purchase the monthly subscription version of it instead of the physical software. This will allow us to manage things more efficiently and provides us with a failsafe should the people currently handling this function leave or become unable to fulfill their duties. Hope you're having a delightful Thanksgiving! (We're eating later and I'm letting the pros do the cookin'!)

    • purl3agony profile image

      Donna Herron 2 years ago from USA

      Very interesting hub. In non-profits, we've been collecting and tracking this information in our donor or member management systems. I certainly knew that businesses kept this information too, but never thought about how. Thanks for another great hub! Best wishes for the holiday season!!

    • heidithorne profile image

      Heidi Thorne 2 years ago from Chicago Area

      Aw, billybuc, Bev is so lucky! Happy Thanksgiving to both of you!

    • billybuc profile image

      Bill Holland 2 years ago from Olympia, WA

      It is time for me to help Bev clean the house for company today. Wishing you a wonderful Thanksgiving, my friend.