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What is customer relationship management? The complete guide to CRM

What is CRM
What is CRM?
What does a CRM do?
Who would benefit from a CRM?
How does a CRM improve my sales and marketing?
What are the different types of CRM?
How to select a CRM vendor and what to look for in software
How to build a CRM-driven sales process
Final thoughts

When you understand the purpose and benefits of effective customer relationship management (CRM), you can choose tactics and technologies that make your business more profitable.

In this guide, you’ll learn what CRM is, how the right tools and strategies can transform a business, what to look for in a CRM system and how to build a CRM-driven sales process to grow productivity and revenue.

What is CRM?

CRM stands for “customer relationship management” and refers to the processes and tools an organization uses to manage internal and external relationships.

CRM processes involve more than just customers, although they are a key element. Other contacts a business might keep in its CRM system or involve in its CRM strategy include:

  • Email subscribers

  • Sales leads

  • Prospects

  • Brand advocates

  • Influencers

  • Media figures

  • Employees

When we talk about customer relationship management, we’re usually referring to a CRM system: technology used to record, organize and analyze contact data.

Centralizing contact information using a CRM allows you to maximize the value of every interaction your business has throughout the sales cycle.

CRM platforms like Pipedrive provide salespeople, marketers, customer support representatives and other stakeholders with data-driven insights to make decisions that increase profit.

For example:

  • Sales and customer service reps can use purchase data to understand buyer needs. This allows them to recommend relevant products to optimize the customer experience and increase sales.

  • Business leaders can use sales data recorded over months or years to spot trends and forecast revenue. This allows for more effective resource and inventory management.

Sales managers can analyze team performance data to identify winning patterns and training opportunities.

What does a CRM do?

In the broadest sense, a CRM is a place to store contact data: information like customer phone numbers, email addresses, social media profiles and website activity.

It’s what a CRM allows a user to do with this information that makes it more valuable than a basic spreadsheet.

While features vary across tools, the best CRM solutions support businesses in the following areas.

Lead management

Lead management is the process of generating, organizing, tracking and nurturing leads (potential customers who are interested in your brand or products) to conversion.

A CRM with the right lead management features optimizes this process by:

  • Capturing lead data from various sources (e.g. web forms, social media profiles and instant messaging apps), often automatically

  • Qualifying and scoring leads based on their chances of conversion, so sales teams know where to focus their efforts

  • Distributing leads to the best-matched sales reps

  • Reporting on lead behavior (e.g. brand interactions, website visits and buying decisions) to uncover hidden pain points

  • Guiding sales reps on when and how to act to close more deals

Pipeline management

A sales pipeline is a visual overview of where each prospect is in the sales cycle. It helps you identify opportunities and bottlenecks and provides easy-to-read data for updating stakeholders and forecasting sales performance.

With each stage of the sales pipeline mapped out in a CRM, you can refine the activities that move buyers toward conversion.

For example, if leads often drop out between the proposal and negotiation stages, you can incorporate proposal and negotiation skills in your team’s training to improve close rates.

Task management

It takes many small actions to turn leads into loyal customers. From phone calls, follow-up emails and in-person sales meetings to product trials and demonstrations, reps must know when and how to act to inspire buying decisions.

A CRM allows sales leaders to assign tasks to reps so they can keep track of their responsibilities. The results are fewer missed tasks, increased customer satisfaction and more sales.

Workflow automation

Only 53% of respondents to Pipedrive’s State of Sales Report 2020-2021 said they spend most of their workdays selling. Tasks that regularly pull sales professionals away include prospecting, lead qualification, account management, marketing and administrative support.

An advanced CRM can automate many of these repetitive tasks to help reps focus on closing deals.

For example, with Pipedrive, you can trigger personalized emails to go out whenever a new deal is created or updated. This allows you to keep leads warm while you spend time on other high-priority tasks.

Other helpful workflow automations include lead capturing and distribution, email marketing, customer support (e.g. via chatbots) and performance reporting.

Reporting and forecasting

CRM dashboards and reporting tools help sales leaders make sense of large volumes of customer and performance data.

Automatically generated charts, graphs and interactive tables make it easy to discover winning strategies and address bottlenecks. For added value, custom reports allow managers and stakeholders to generate actionable insight from the metrics most relevant to their organizations.

Visualizing past and current data also allows more accurate forecasting, helping leaders plan winning sales strategies and allocate resources.

For example, if annual sales data shows a regular dip in demand after Christmas, this could be an ideal time to ramp up marketing efforts or increase training.

Centralized communication and documentation

Every step of a prospect’s journey through the sales funnel is facilitated by conversation. It could be salespeople sharing deal updates and insights or reps building buyer trust with follow-up calls and emails.

A CRM centralizes communication to help sales and marketing teams stay informed. Users can contact buyers and each other from a single location and keep records of interactions for a more detailed picture of customers’ needs.

Documentation is a valuable extension of centralized communication. Sales leaders can use a CRM to keep important sales documents, like invoices and contracts, secure and organized.

Who would benefit from a CRM?

A 2021 global survey of business decision-makers found that 80% of industry-leading organizations use CRM software. The Gartner study also found that adoption is growing fastest in the following industries:

The diversity of this list shows how versatile CRM tools are. Essentially, any organization with internal and external contacts to manage will find value in some or all CRM features.

CRM apps are valuable to small businesses, too, as they help keep growing companies organized, informed and compliant.

The idea and cost of replacing spreadsheets with sophisticated technology can seem daunting to business owners. However, the best CRM tools are flexible, accessible and SMB-friendly.

For example:

  • Customization enables companies to tailor solutions to evolving needs, processes and tech systems

  • Cloud-based software allows small organizations to access powerful capabilities without major financial commitments

  • Lean, intuitive interfaces enable teams of varying tech proficiency to manage data and reduce admin

The teams and roles that benefit most from CRM applications

While CRM tools and data are valuable in most business areas, there are three types of users that notice the biggest day-to-day advantages.


More than just a place to store customer information like telephone numbers and email addresses, CRMs help marketers:

  • Collect audience data from a range of sources to enhance lead generation

  • Understand audience needs and behaviors, so they can create engaging content that generates brand awareness, nurtures leads and strengthens customer relationships

  • Segment audiences for easier content targeting and marketing personalization at scale

Centralizing audience data also allows marketers to measure campaign performance, both in real time using dashboards and periodically with reports. From there they can make improvements and repeat winning strategies.


Personalization is more important than ever in sales. As per McKinsey’s Next in Personalization 2021 Report, 71% of buyers expect companies to deliver personalized customer interactions and 76% get frustrated when it doesn’t happen.

A well-maintained CRM equips salespeople with the knowledge to address individual buyers’ needs, making deals more likely. Here are three examples of what that can look like:

  1. A new sales rep joins the team and can immediately see a repeat customer’s purchase history, previous interactions and communication preferences. Without needing to talk to the buyer or trawl various sources for background information, they can make relevant product recommendations to maintain sentiment, trust and customer loyalty.

  2. During a routine catch-up call, a sales manager hears a client discuss a new business challenge. Seeing it as a cross-selling opportunity, they update the associated CRM deal with details of the problem and arrange for a rep to follow up with relevant recommendations.

  3. After receiving a complaint via email, an account manager changes a client’s sentiment to “unhappy” in their CRM. Later that day, the salesperson responsible for the client’s purchase sees that the status has changed and brings forward a scheduled follow-up call to restore the relationship.

Customer service teams

After marketing generates a lead and sales converts it, customer support is largely responsible for maintaining the relationship to maximize profitability.

By using the same CRM as their marketing and sales colleagues, customer service staff get a consistent, data-informed view of their audience’s circumstances and needs.

Information on previous inquiries, transaction histories, contact preferences and more add valuable context to support conversations, allowing agents to provide relevant information.

A CRM can also centralize all customer communication, bringing email, instant messaging, helpdesk and phone features into a single interface to save support staff time and minimize confusion.

Should I buy a CRM?

Many businesses start by storing lead and customer data in spreadsheets. This can work at first but as company growth adds more data, business processes tend to break under the strain.

When you keep contact data in different places, with little or no standardization, it’s difficult to get a clear view of your audience.

For example, a salesperson and marketer could store the same lead in different tools with their own scoring systems. This kind of discrepancy leads to disjointed customer conversations that hinder rather than help buyer journeys.

A CRM centralizes customer knowledge and interactions to keep buyer-facing teams (namely sales, marketing and customer support) informed and aligned. Automation features make CRM investments even easier to justify by eliminating busywork and boosting productivity.

For most companies then, the answer to our question is “yes”.

Although you may manage without a CRM at first, business growth almost always makes better organization and data management essential. Consider finding a suitable CRM platform before issues start showing: it should be even faster to implement with a smaller dataset.

How does a CRM improve my sales and marketing?

The aim of a CRM is to help you control complex sales processes and organize contact data, but what do these high-level benefits look like on a day-to-day sales and marketing level?

Here are five ways a CRM improves sales and marketing performance.

1. Optimize your sales funnel to close more deals

Marketing attracts leads and passes them to sales, but without a robust, organized system it’s difficult to keep track of opportunities and follow-up activities.

A good CRM platform helps you track all sales activities, before and after conversion.

Every lead can be allocated and followed in real time along the sales pipeline, allowing you to find improvement opportunities, spot winning patterns and refine your sales funnel.

2. Generate higher-value leads to increase profits

The more audience data you collect, the easier it is to define your ideal customers.

For example, if CRM reports show that US-based females aged 40-45 have a significantly higher customer lifetime value (LTV) than those aged 30-35, targeting the former with lead-generation content is likely to be more cost-effective in the long term.

With this kind of data made accessible through visual pipelines, reports and dashboards, marketers at all levels know who to target for the best sales outcomes. They can tailor content to engage with the right buyers: those most likely to become loyal followers.

3. Build solid relationships to improve customer retention

To build strong, profitable relationships with people in your target audience, you must address their challenges.

While it’s inevitable your ideal buyers will share some characteristics, McKinsey research tells us they want and expect to be treated as individuals:

Seventy-two percent [of consumers] said they expect the businesses they buy from to recognize them as individuals and know their interests.

A CRM will help you get to know large groups of people in granular detail so you can address specific pain points, build trust and keep the same customers coming back.

Use your CRM to get to know leads, prospects and customers via:

  • Past communications

  • Buying journeys

  • Purchase histories

  • Website activity

  • Marketing campaign responses

4. Streamline cross-team collaboration to achieve bigger goals

Sales and marketing share many common goals. The better aligned they are, the better your business should perform.

According to Pipedrive’s State of Sales and Marketing report, companies with well-integrated sales and marketing departments were twice as likely than companies with poor revenue team integration to have exceeded their 2021 revenue targets.

A CRM acts as a central knowledge hub for sales, marketing and other customer-focused functions. It enables teams to share valuable insights for more informed decision-making at all stages of the customer lifecycle.

For example:

  1. A sales rep asks a customer which factors contributed to their recent buying decision

  2. The customer reveals that a product spec sheet on the brand’s website made it easy to compare different products, but a convoluted checkout process almost stopped them from ordering

  3. The sales rep records this conversation in their CRM and feeds it back to the marketing team, which replicates the useful spec sheet for other product pages and simplifies the payment process

  4. The next customer benefits from a more streamlined buying experience

CRM Technology

5. Eliminate busywork to grow productivity

Salespeople and marketers often spend hours on mundane admin tasks. A good CRM can process some or all of this repetitive work so team members can give human attention to the leads and customers who need it most.

Automation capabilities vary between CRM tools. With Pipedrive you can automate almost any step of your sales process, as well as some marketing tasks. Examples include:

  • Triggering personalized emails to go out whenever a new deal is added

  • Scheduling follow-up tasks when deals reach certain stages in the pipeline

  • Scoring leads so reps know who to contact for the best outcomes

Automation is directly linked to business and individual performance. Our State of Sales and Marketing report revealed that people who automate tasks are 16% more likely to hit their targets.

Pipeline view

What are the different types of CRM?

While all CRM platforms are designed to help you monitor and manage customer relationships, their approaches vary.

Before you start evaluating potential solutions, it helps to understand the various types of CRM and how their features can help with different parts of your sales and marketing processes.

The three main types of CRM you’ll come across are:

  • Operational. Operational CRMs focus on helping businesses manage the overall process. Features typically include advanced automation tools to streamline relationship management.

  • Collaborative. A collaborative CRM is designed to align your marketing, sales and other customer-facing teams. It makes it easy to track interactions across the customer journey and share insights with team members and other departments. This may also be referred to as a “strategic CRM”.

  • Analytical. An analytical CRM helps you gather, manage and analyze your customer data. Typical features include data enrichment and dashboards with visual reports to help you generate actionable insight.

Beyond these high-level descriptions, you’ll find some terms that are more explicitly tied to a CRM’s features, capabilities or characteristics. For example:

  • A mobile CRM is a tool that users can access on a smartphone or tablet, usually via an Android or iOS app. This portability enables users to be productive in different locations.

  • A cloud CRM is hosted on the provider’s servers (rather than on-site with the user) and accessed via the internet. Cloud hosting gives users access to greater processing power at a smaller cost (typically a monthly subscription charge based on total users).

Most modern CRMs cover all of the functions above to some degree. However, you might have specific priorities, in which case it makes sense to choose a CRM that complements your business needs.

For example, a startup or small business may be more concerned about optimizing the processes that fuel new customer relationships, so would benefit most from an operational CRM. Larger companies with teams across multiple sites can use a collaborative CRM to support alignment. If you’re part of a more established business that already deals with lots of customers, you’ll benefit more from an analytical CRM.

How to select a CRM vendor and what to look for in software

According to Fortune Business Insights, the global CRM market was worth $64 billion in 2022 and is expected to reach $145 billion by 2029.

Identifying the right software for your business in such a busy, fast-evolving landscape is difficult. Different tools meet different needs, and choosing the wrong one could complicate your sales and marketing processes.

With that in mind, here are five steps to help you choose the perfect CRM for your business.

Step 1: Define your needs and objectives

Think about what you want to achieve with a CRM so you can make a list of features and characteristics to prioritize.

Work with relevant team members and stakeholders at all levels to identify pain points in existing processes.

If sales reps are often rushing back to their desks to complete data entry tasks at the end of the day, they’d benefit from a mobile CRM. If marketers are getting low engagement from catch-all bulk emails, they’d benefit from market segmentation capabilities.

Use these discussions to build a tailored checklist of features and requirements, prefaced with a simple statement of purpose. For example:

“Our chosen CRM must help the organization track and prioritize sales opportunities, streamline and personalize outreach activities at scale and provide ample reporting to generate insights at all levels of the business.”

Having a statement like this (especially one with full stakeholder approval) will help you keep sight of what you’re trying to accomplish throughout the research process.

Step 2: Set your CRM technology budget

When you’ve mapped your needs, start thinking about how much you can invest in a platform that meets your criteria.

Cost doesn’t always indicate suitability. You’ll find some of the more expensive platforms, especially those with lots of advanced features, are difficult to implement and use at a small business level. Equally, a free CRM is unlikely to have all the capabilities needed to help a young company grow, so look for the right balance.

Factor in the expected return on investment (ROI) of your chosen tool when assessing pricing. For example, it’s easy to justify a subscription cost of $1,000 a month for a tool that boosts revenue by $120,000 per year.

Automation features are a key factor when estimating ROI. Say a tool allows you to send follow-up emails to sales leads automatically. Work out how much time reps spend on this activity at present and how much that costs the business, then factor some of the savings into your budget.

Step 3: Audit your existing tech stack

With the right CRM ​​add-ons, integrations and apps, you’ll be able to share data across various platforms and achieve a higher degree of sales and marketing automation.

Before you look at a CRM tool’s integration capabilities, consider what technologies your team uses and values most. Key areas include:

  • Email and communication (e.g. internal and external instant messaging channels)

  • Website analytics

  • Business proposal software

  • Social media (e.g. for lead generation)

  • Task management

  • Phone

Use this audit to build a list of integrations and add-ons to prioritize. If there are any tools that might overlap or are likely to get replaced by your CRM’s features, consider how you’ll transfer data between them.

Step 4: Compare features to find tools that meet your objectives

Once you understand your needs and constraints, you can start comparing CRMs. Use important features to build a shortlist of tools that have the functionality to help your team do their jobs.

The exact capabilities you need will be unique to your business. On top of the basic functionality we mentioned earlier, here are four key features that benefit all users.


Your sales process is unique, so your CRM should be too. Choose a tool that allows you to add custom stages to sales pipelines, generate bespoke reports and create your own data fields.

This kind of customization will help you build a tool that accommodates and accurately reflects your way of working.

Integrations provide additional functionality so you can tailor your CRM as your business grows. For the ultimate customizing freedom, look for solutions with API access and developer tools – these allow teams with the appropriate skills to build tailored features and connect almost any other sales tech.

Synchronized email

As well as saving team members time by eliminating the need to switch between apps, synchronized email adds transparency and accountability to your sales efforts. Users can see all follow-up activity and get notified when recipients read or respond to messages so they can act quickly on hot leads.

Compatibility with your email service provider should be your first priority. Then look for features that streamline email-related tasks. For example, email automation and customized templates will help you build and repeat deal-winning campaigns.

Comprehensive support options

Even if you choose the leanest, most intuitive CRM, you will have questions at some point. Ensure your team can get answers quickly through channels that work for them.

Support has little value if the average response time is measured in days rather than minutes. Look for vendors that promise fast responses so that if a key feature doesn’t work as it should, or if you need advice, you don’t lose any productivity.

Email, phone and FAQs are essential but basic support options. For extra value, look out for:

  • Live chat. Suited to simple-but-urgent issues, chat features allow users to keep working while they wait for a response.

  • Forums and communities. Ideal for learning about features from people like you who use them every day.

  • Online courses. Perfect for mastering a CRM platform in your own time or dipping in to brush up on a specific feature.

The time it takes for a CRM vendor to answer your research questions can give you a good idea of their promptness in general.

Mobile-friendly design

The ability to access CRM data in different locations is increasingly important.

According to our State of Sales and Marketing report, almost half of respondents (48%) say that they now work remotely more often, while two-thirds (66%) of respondents say that the remote working trend has had a positive impact on their working life.

Smartphone and tablet apps allow sales reps to access data, make updates and take notes from anywhere. Team members can stay informed throughout the day and maximize selling time on the road.

An Android or iOS app doesn’t always indicate full mobile-friendliness in a CRM. For the best results, look out for the following mobile CRM features:

  • Offline access. Review customer information and task lists without needing an internet connection.

  • Schedule management. Organize your and your reps’ days from anywhere by adding and editing activities on the go.

  • Note-taking. Prep for meetings in any environment and record important details while they’re fresh.

  • User-friendliness. A simple, intuitive interface allows users to complete the most important actions on a small screen.

For ultimate on-the-go productivity, consider how your CRM works with your team’s favorite mobile apps. For example, Pipedrive connects with WhatsApp and Google Maps so users can chat with leads and plan routes to meetings.

Step 5: Test and evaluate

Once you’ve built a shortlist of suitable tools, it’s time to start testing.

Some providers offer free trials, allowing you to test features with real data. Look for trials that provide full access and don’t require any payment details. These are signs that the vendor is confident in their offering.

While it takes time to fully get to know a new piece of software, the best tools make the basics obvious, so a trial period of 14 days or more should be enough to gauge suitability.

Even if there’s no trial option, most reputable CRMs are sold as subscription services (software-as-a-service, or SaaS). This means you can start using them without making any major financial commitments. Consider trying each of your frontrunners to get a better idea of how they work in a real sales environment.

CRM Driven Sales Process

How to build a CRM-driven sales process

CRM tools collect, organize and translate data that helps you make more profitable business decisions.

The right CRM data allows you to:

  • Focus on the most impactful sales activities

  • Tailor training and development to your team’s needs

  • Optimize buyer experiences to shorten the sales cycle and close more deals

Building a sales process around data takes time. Get there by following these three steps:

1. Collect the most valuable data

Adopting a CRM has already put you on the path to collecting more data. The challenge comes when there’s too much of it and you’re not sure what’s useful.

Early in your CRM journey, identify the types of information that matter to your organization. Generally speaking, if data contributes to or measures progress against business objectives, it’s useful.

For example, molding your ideal customer profile helps you attract the right buyers, which in turn helps to improve customer retention (a wider business objective). Lead source and sales pipeline data will show where your best customers come from and who’s most likely to convert. You can then tailor your marketing activities accordingly to get closer to your objective.

2. Act on that data to improve sales processes

The most valuable data is that which helps you make better business decisions. Learn from successes and failures throughout the sales process to make the buyer journey as smooth (and profitable) as possible.

For example, say your business has an overall lead conversion rate of 20%. That means 80% of your deals are lost somewhere on their way to the final stage.

Track each lead’s flow within your CRM to identify frequent drop-off points so you know what to fix. If 70% of those prospects go cold right before conversion, you might need to simplify your checkout process. If only 10% make it past the first follow-up call, consider assigning leads to different reps.

3. Measure and learn from team performance

Your CRM’s reporting doesn’t just show sales pipeline health. It also gives you insights into how your sales team performs, so you can promote best practices and address inefficiencies.

For example, if you notice that 60% of your salespeople have overdue tasks on their to-do lists, you might:

  • Reallocate responsibilities to avoid losing customers or missing opportunities

  • Use workflow automation to free up team members’ time

  • Recruit new staff to increase team capacity

You can also use data on your most successful salespeople to help the wider team improve. If one rep relies heavily on WhatsApp to communicate with leads and consistently meets their quota, make sure others have the resources to work in the same way. Even better, integrate WhatsApp with your CRM to pull useful lead data directly from reps’ chats.

Final thoughts

With the right CRM, any team can increase productivity and improve sales outcomes.

To maximize your CRM ROI, analyze your needs, list your priorities and shop around for the perfect functionality.

You’re unlikely to find a solution that does everything you need straight out of the box, so flexibility and versatility are vital. Custom data fields, automations and third-party integrations will all help you build a system that meets your needs now and scales as your business grows.

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