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Article 12 min read

Customer relationship management: A guide

By Mark Smith, Content marketing manager

Last updated April 5, 2024

Over the past 30 years, the term customer relationship management (CRM) has evolved with the times—what was once seen as a tool designed to provide visibility into a company’s sales pipeline has morphed into something much more powerful.

At its heart, CRM is about managing current and potential customer relationships by collecting and analyzing data. So while sales teams have long used CRM systems for tracking and evaluating leads, they’re now just one of many organizations that rely on the technology.

“CRM as the industry thinks of it is a tool that was built for salespeople, but the new world of CRM software is not built for salespeople,” says Jon Aniano, vice president of product for Zendesk. “It’s built for the customer, and it’s built for customer experience.”

That emphasis on the customer, and specifically a business’s relationship with that customer, has pushed CRM systems from their sales niche to a starring role in the customer journey. CRM’s key strength is its ability to provide a single, unified view of each customer, a direct result of how it can collect data from multiple tools and, critically, provide the kind of insights that can fuel proactive support.

So while sales teams still benefit from CRM technology, other teams derive just as much benefit from it, including customer service, product development, and marketing. And importantly, a CRM solution can help break down internal silos, enabling teams to collaborate more effectively and serve customers holistically.

In this guide we’ll examine how CRMs help companies build relationships with customers, how that effort can improve business outcomes and customer satisfaction, as well as some techniques for managing the process.

How to build relationships with customers

Why should you build relationships with your customers? Simply put, if your business doesn’t, your competitors will. One of the driving forces in modern consumerism is the rising expectations of customers, who increasingly demand that companies provide an omnichannel support experience. When they reach out to a business, they want to be able to do it from any channel—phone, messaging, email, chat, etc.—and they want to know that the company serving has a clear picture of who they are.

By nurturing relationships with their customers, businesses drive engagement and loyalty. This is where the different categories of CRM systems come into play. “We’ve got this exploding world of public social media where basically the customer is in control of the conversation, they’re in control of their own experience, and they have incredible expectations about what having a relationship with a company means,” Aniano says. “We’ve gone to this place where companies know they live or die by the actual long-term relationships they establish with their customers.”

As a result, Aniano says, the cloud-based CRM has become the place where the entire customer relationship—which is composed of customer interactions, or conversations—lives. Those conversations can come from a host of channels, including social media, email, and more. “It’s a place where those conversations are instrumented, where things are recorded and referenced, where a company can now truly understand what value it’s delivering to customers and how it can best maintain that relationship over time,” Aniano says.

The understanding gleaned from CRM doesn’t just help large companies manage customer relationships—it can also play to the strengths of small businesses, highlighting their innate advantages in providing personalized service to consumers. “Small businesses today are in a world that is more challenging, more daunting, than it has ever been in the past,” Aniano says. “The opportunity for a small business today is to provide a level of relationship that cannot exist between the business and the customer—that cannot exist with a large company.”

How good customer relationship management can improve business

CRMs are particularly well suited to modern business, Aniano says, because many successful companies have transitioned—or are in the process of making the change—from focusing on simply increasing sales to recurring revenue models, such as with software-as-a-service (SaaS). So when future revenue depends on not only maintaining a relationship with a customer but enhancing the customer experience, having a CRM in place becomes crucial.

“That initial sale is one of the least important interactions you’ll have with a customer over time,” Aniano says. “So CRM implementations have moved from incentivizing sales and creating sales efficiency to delivering the best customer experience possible and maximizing the long-term relationship with the customer.”

And the wealth of data that a cloud-based CRM centralizes for companies opens up opportunities for greater sales efficiency, proactive support, and targeted marketing efforts, says Shawna Wolverton, senior vice president of product for Zendesk.

“One of the greatest benefits of CRM is that everyone can be on the same page about where you are with your customers—you can push out information, you don’t have to call,” Wolverton says. “It’s not a phone call, ‘How’s the deal going?’ You can log on, see the stages of all your opportunities. As a manager, especially, it’s being able to get a high-level view—‘Yep, all the customer issues are being taken care of, all of the leads are being owned and addressed’—and to have that all in one place and to have the ability to focus on other things and set up rules for when you need to pay attention. For example, maybe you don’t care until the big deal closes. Maybe you want to know if a case has been open for three days and no one’s touched it. With a CRM, you can set rules so you don’t have to keep an eye on how your business is running—you only need to pay attention to when things are going off the rails.”

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Techniques to manage customer relationships over time

It can be tempting to think of CRM software as a solution in itself. But as Wolverton notes, if the techniques your business uses in managing customer relationships is convoluted and inefficient, no software tool will fix those problems.

“The thing to think about with CRM is that it is as good as you decide to make it,” Wolverton says. “The data that goes into a CRM is the data that comes out, so you need to make sure that for the people who are closest to your customers, it’s really easy for them to update the CRM. How many conversations start with, ‘Are you still at this address?’ You want the people on the front line to be sure that customer data is good, but then having data sit there is not particularly interesting—you need to get insights from that data with great reporting tools. You need to also take action based on that customer data—so rules and processes that make the best use of that data.”

Beyond making it easy for employees to update customer data in a CRM, companies need to think about whether a CRM can automate routine tasks. The time savings gained from automation can then be redirected into more proactive, hands-on support.

“With CRMs, you think of customer service—a lot of it is about people wanting refunds, or they want to update and change something, and those things often need approvals,” Wolverton says. “How can you automate some of those processes? You don’t want to bring your junk drawer into your CRM solution. It’s a good time to look at your business and the systems that are working and the ones that maybe aren’t. Think of all the places you have pain, and see if maybe there’s a solve for that in your new CRM system.”

Meanwhile, managing customer relationships over time requires clear, actionable reporting about the entire customer journey, from prospects in the sales pipeline to common pain points for current customers.

“If you’re not thinking about the value that you want to get out of a CRM, and a sort of ideal state for the information you want to know—I think it’s great when you’re starting with a CRM to understand the reporting questions you’re going to have and then work backward,” Wolverton says. “Those are some of the best ways to think about how to design your CRM—it’s about knowing what answers you’re looking for. Or even a problem you might get—like today, we have no idea what our pipeline looks like, we do not understand why we get spikes in customer support calls. It’s about being able to see success as milestones in your roadmap, being able to answer some of those questions, and gradually rolling out a system that gets you there.”

Best CRM software to help with customer relationship management

So how will you know which CRM software solution is right for your business? The range of options might seem daunting, but arming yourself with information—as well as having a clear understanding of your business’s needs and existing processes—can make the search easier to manage. Wolverton says companies should consider a few important factors: ease of implementation, the availability of product support, and reporting functionality.

“The range of CRMs is very large. Some of them are difficult to install—that’s still a thing—and others are difficult to configure,” says Wolverton. “How easy is it to get started? How available is help—is there someone you can chat with or call as you’re getting started who can help you out? What kinds of things are you trying to solve? If you want to get a CRM software to get some insight into where your product or service is doing well, or on average how long is it taking to close deals, then you probably want to make sure that there’s some reporting that’s part of the CRM you’re buying as well.”

When selecting CRM software, it’s also critical to consider how it aligns with sales, marketing, and customer service departments—for example, does it provide the kind of pipeline visibility needed for the sales team and leadership? Does it enable marketing automation, making it easier to understand how to create targeted messaging based on past customer conversations with loyal customers? Marketing automation—paired with popular tools such as MailChimp—can lead toward increased sales since customer data will provide insights into what pitches will resonate with customers.

For example, a CRM with advanced marketing automation can enable teams to automatically track which messages have the best customer engagement and also send offers based on a customer service history and a customer’s journey with your company. That makes it considerably easier to tailor messages that in turn will have a greater chance of converting into sales.

Will you have the kind of CRM tools on hand that will help boost customer engagement via proactive messaging, as well as reach out to potential customers?

Beyond that, Aniano says, be sure to consider ease of use. A tool that’s cumbersome and difficult to customize will stand in the way of nurturing customer relationships and harm productivity. “Beyond being the record of customer interactions, CRM systems need to have toolsets like workflow, custom fields, and tagging, to give you the ability to act on the customer experience and the customer relationship where it’s most important to your business,” Aniano says.

Keys to a successful CRM implementation

When implementing a CRM solution, think about how much you can do on your own—can you set the system up yourself, or will it require onsite help? If you can’t handle it in-house, expect future support costs and limited ability to customize the platform to your needs, especially in a timely fashion. Should you try a free CRM trial to give it a test-run?

“If you are a small business and you need a CRM, you had better be able to sign up for a trial and get it up-and-running for a use case and connect it to one or more business tools on the first day,” Aniano says. “If that’s something you can’t do as an enterprising business owner, as a key employee at a small company, then that’s a red flag. If you end up having to call sales, call a technical expert, just to get the simplest use case done as a small business, then that’s probably going to prevent you from delivering the customer experience or delivering on your vision of the CRM—if you don’t have the resources now, you’re not going to have them in six months. The best indicator of CRM success is day one to day five success as you go through that trial.”

Especially for small businesses, which might be relying heavily on tools such as Quickbooks, Google docs, and Dropbox, Aniano says, it’s vital to consider just how a CRM solution will integrate with those existing tools.

“When you’re buying a CRM, which might be the second or third technology purchase you make, you had better hope that it’s pre-integrated with those other tools you use,” Aniano says. “Because as a small business you don’t have the time and certainly don’t have the resources to be doing heavy implementation and integrations yourself.”

And while choosing a CRM that’s customizable should be a priority, that doesn’t mean you should go overboard during implementation, Wolverton says. “With any CRM, the ability to customize is incredibly tempting,” she says. “Customization is great, but it should always be used sparingly. You can end up in a place where you’ve created a data record or a process where I’m sure you want 300 fields from each one of the people interacting with your CRM, but they’re just going to stop using it.”

That means when building out your CRM, adopt the mindset of a business transformation consultant—and a user experience expert—and then test, test, test. “It’s always good to say, ‘Hey, we built this. Does it work?’” Wolverton says. “Does it feel right to the people who are using it, before you roll out things in a big way? Don’t overwhelm your users. Make sure that you’re constantly going back—I think that people sometimes think that once you set up a CRM and get going, you’re done. It’s a perpetual process. You want to do continuous improvement, make sure you’re continuing to use all of the functionality that you set up. The great thing about SaaS and online CRMs is that new features are coming out all the time—and you get them as part of your subscription. It’s great to give yourself time on a regular basis to understand the new things and how they could benefit your business.”

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