What Is CRM Software? A Comprehensive Guide

Customer relationship management (CRM) software is a technology that makes it easy for different departments across a business to share the latest information about their customers and prospects. The software that powers CRM helps companies build stronger relationships, simplify processes, increase productivity, and grow revenue. Plus, it’s easy to use.

What we’ll cover:

• What is CRM software?
• The benefits of CRM software
• How does CRM software use AI?
• What is cloud-based CRM software?
• How to avoid CRM software implementation challenges
• How to choose the right CRM software for your business

At its core, customer relationship management software helps turn customer data into insights, so that businesses can serve customers better and grow relationships. CRM does this by breaking down the silos that can exist between teams — such as sales, marketing, customer service, commerce, and more — so they can work from the same up-to-date information.

CRM software is a central hub for storing and organizing crucial customer data like contact information, interaction history, and communication preferences. It then turns this information into a useful, single view of each customer's journey. With these insights, businesses can deliver personalized and tailored customer experiences that foster loyalty and increase satisfaction. Today, many CRMs are based in the cloud, making it easy for employees to access data from anywhere and for businesses to bring down costs without having to install and maintain on-premise hardware.

Beyond data management, CRM software simplifies the process of tracking the interactions your company might have with a customer — like phone calls, emails, social media, and live chats. Equipped with this knowledge, your employees are always in the loop on where customers are in the sales process, past pain-points, and how to provide the best experience. It also helps identify opportunities for upselling and cross-selling.

In addition to serving current customers, the best CRM software can also help you find new leads. That’s because CRM can use data, artificial intelligence (AI), advanced analytics, and reporting capabilities to uncover insights about customer behavior.

Businesses can use these trends, pain points, and opportunities, to make informed decisions about product development, marketing campaigns, and customer service strategies, just to name a few examples.

CRM management software can help companies increase customer engagement, enhance productivity, and unlock data-driven growth. Here are just a few of the many benefits of CRM software.

At every stage of the customer lifecycle, it's crucial that all team members are working with the latest information. Whether they’re looking for customer contacts, purchase history, meeting notes, or past service issues, CRM software acts as a single source of truth for all of your company information.

CRM software makes it easy for every employee to access customer data from wherever they are, on any device. It can also have built-in communication tools like Slack, making it easy for teammates to share information, discuss next steps, and review files within the flow of work.

If you use a modern, cloud-based CRM, there's no need to purchase hardware, servers, or additional security. And there’s no need to hire more IT members for installation and upkeep because your CRM provider manages all of these responsibilities remotely. Companies can leave those concerns behind and focus on building customer relationships.

Another benefit of CRM software that lives in the cloud is that it can scale easily, letting you add more features and users as you need them. Since it’s all done online, these updates don't require any downtime for implementation or updates. A cloud-based CRM software will grow as your business does, removing the need to start the search for a new CRM solution every few years.

CRM software makes it easy to see how your business is performing, gain insights, and project what to expect in the future. It can provide at-a-glance views in customized dashboards so each person or team sees what’s most relevant to them, along with suggestions on what actions to take next.

AI in CRM is quickly becoming the norm across industries, providing real-time insights and helping to improve relationships at every step of the customer lifecycle. AI-powered CRM software like Salesforce Einstein can analyze large volumes of data to proactively identify patterns and trends that drive more personalized customer experiences across departments. Generative AI can add even more productivity to your CRM software by helping you create new content — like sales emails, marketing campaigns, customer service responses, and custom storefronts — that is based on the customer data stored within your CRM.

With its ability to analyze customer and prospect data, AI helps sales teams decide which leads to follow. AI CRM can identify trends, like which current prospects and sales cycles are similar to ones that converted in the past. It can then suggest tactics that are most likely to succeed. This approach helps companies choose where to focus their efforts, enhancing productivity and increasing revenue.

Automation is another time-saving feature of AI-powered CRM software. It can perform repetitive tasks such as data entry, lead generation, and responding to customer service requests, freeing up valuable employee time for more complex and strategic tasks. This can improve efficiency and allow businesses to provide better customer experiences at a lower cost.

AI chatbots that provide automated customer support are always available, and speed up the time it takes for customer inquiries to be handled. The always-on availability of AI can write up call notes for service representatives and send up follow-up messages with information to customers.

AI can analyze vast amounts of customer data and interactions and use them to serve up customized product recommendations, offers, and discounts. These learnings increase customer engagement and sales, and can be proactively applied to customers that fit similar profiles. These trends can also be used to proactively identify potential service issues or cross-selling opportunities.

Interacting with CRM software is easy when you can use conversational AI to ask it questions as you would talk to another person. Employees can use tools like Einstein Copilot to generate answers to questions about your data, and can take actions, like generating marketing campaigns or pulling up answers to customer queries — all using every-day language. Customers can also speak directly with your AI as they would with a service rep, and receive easy-to-understand responses.

CRM software stores, organizes, and analyzes vast amounts of data. In the early days of CRM, these systems were hosted on-premise at the companies that used them. As technology evolved, many of the online tools we used for work, and in our lives away from work, shifted to the cloud. Today, traditional on-premise CRMs are available, but cloud CRM has multiple advantages.

Cloud-based CRM software is a software as a service (SaaS), or way to deliver applications over the internet instead of locally on individual devices. In this scenario, the online CRM provider remotely manages all infrastructure to host and run the system, eliminating the upfront costs and responsibilities for updates and security management.

Anyone who needs access to the CRM system — to pull customer contact information, review marketing campaign performance, identify customer service history, or more — can access it anytime on any device, like desktop, laptop, mobile, or tablet. They can also integrate with other external applications, enabling data to flow between them safely, bringing all customer information into a single view.

There are significant differences between cloud-based CRMs and on-premise CRMs. In the on-premise CRM model, a business hosts and operates servers and networks in physical locations, which house their customer database. Often, companies use this option because they are using legacy systems that were set up decades ago. Another reason could be because they operate in places where internet is unavailable or unreliable.

Compared to cloud-based CRMs, on-premise CRM requires significant upfront costs to install because it is built from scratch on-location, rather than already tapping into an existing CRM infrastructure. On-premise CRM software also requires that a company hire and oversee ongoing personnel management to maintain the system. Additionally, unlike cloud-based CRM, on-premise systems occasionally require internal IT resources, or an outside team, to take the system offline to implement updates. In addition to the costs involved, there is often time lost since employees who use the system cannot access it.

For these reasons, moving forward with a cloud-based CRM usually leads to faster setup, lower costs, less disruption, and downtime for maintenance.

While there are many benefits to using a CRM, choosing the best one requires planning so that you can avoid implementation challenges. Often, these issues arise from clunky, more-traditional on-premise systems. Cloud-based CRMs have been built to solve for these concerns, removing barriers to getting started.

It can be difficult to implement a CRM that lives on a localized server because there is much more effort involved in customizing these systems. Additionally, single-threaded CRM solutions, which are only able to perform one action at a time, slow down processes and integration with other tools.

• Solution: Cloud-based CRMs can be easily customized, giving you the flexibility to add features and to scale up or down as your business needs change.

The average company uses over 1,000 apps, yet the majority of these apps aren’t able to share data with each other. It can be a challenge to get a true single view of the customer if a CRM isn’t able to access data from external software applications like accounting, marketing, customer service, and ecommerce. Integrating these systems can be complex, time-consuming, and require significant technical expertise.

• Solution: Choose a CRM that is built to be integrated with your external systems and comes with support that can help you along the way.

Some CRM software can have complex user interfaces and require extensive training that can be expensive and take time away from more productive work. CRMs are meant to make work easier and more collaborative, but one that is difficult to use can have the opposite effect.

• Solution: Choose a CRM that allows you to choose your level of support options, such as online help centers, phone-based help, and full support teams. Proactive training options, like Salesforce’s Trailhead, can empower users to learn at their own pace and attain new skills.

Companies are entrusted with a lot of sensitive customer data, which makes it a popular target for cyberattacks. Businesses are legally required — and have an ethical obligation — to protect that information from unauthorized access.

• Solution: Choose a CRM with built-in security, like encryption, access controls, and firewalls. Your CRM partner should always be working to protect its systems from the latest threats.

There are several key factors to consider when choosing a CRM that will fit your company’s needs. Each business is different, but Salesforce offers CRM software options that can fit any company’s size, industry, or needs.

When choosing between CRM software options, think about the amount of employees, customers, and data you work with, as well as the complexity of your customer interactions. Then, consider the volume of inquiries and requests you receive, and the level of personalization you want to provide. Once you’ve done this, think about how these might change in the future. Look for a CRM that meets your current needs and can scale as you grow or start with a CRM for small business.

In addition to choosing a CRM that will grow as your company does, think about which options can evolve along with technological advancements. Another important factor is the CRM’s ability to integrate with other systems and applications you use on a regular basis.

Next, identify current pain points and challenges you have when managing customer relationships and interactions. Determine which CRM features and functionality have the potential to alleviate these frustrations and add them to your list of requirements.

Of course, budget is a factor when it comes to CRM. Factor in all potential costs, such as subscription plans, adding future users, and additional features. The cost of customer support is also an important consideration. Many CRMs provide different levels of support. Investing more at the start could pay off with a smoother implementation, more informed employees, and continued success.

Planning your CRM software search can take some time, but thinking about all of these factors from the start will help you make the right decision for your business. Once you do, you’ll be on your way to strengthening customer relationships, attracting new prospects, improving customer service, boosting sales, scaling marketing efforts, and helping you grow.