What is CRM software? A comprehensive guide

CRM stands for customer relationship management, which is a system for managing all of your company’s interactions with current and potential customers. The goal is simple: improve relationships to grow your business. CRM technology helps companies stay connected to customers, streamline processes, and improve profitability.

When people talk about CRM, they’re usually referring to a CRM system – software that helps track each interaction you have with a prospect or customer. That can include sales calls, customer service interactions, marketing emails, and more.

CRM tools can unify customer and company data from many sources and even use AI (artificial intelligence) to help better manage relationships across the entire customer lifecycle, spanning departments like marketing, sales, digital commerce, and customer service interactions.

Those are the basics. So, why is CRM important, and who can benefit? Let’s take a look.

• What is CRM software?
• What does customer relationship management (CRM) mean?
• How does CRM software work?
• The benefits of CRM software
• How does CRM software use AI?
• What is cloud-based CRM software?
• A cloud-based CRM compared to an on-premise CRM
• How to avoid CRM software implementation challenges
• Why Fisher & Paykel chose Salesforce for their CRM
• How to choose the right CRM software for your business
• FAQs

CRM software is a tool that stores everything you know about your customers in one place. It keeps track of website forms, emails, calls, purchases, support requests, and any other interaction they have with your business. Instead of sales, marketing, customer service, and commerce teams keeping their own notes, CRM software gives everyone the same context.

In your CRM, you’ll be able to see who your customers are, what’s happened so far, and what they might need next. AI is now commonplace in CRMs, helping teams automate routine tasks, suggesting customers to focus on, personalising messages, and supporting customer service. All of this elevates support work, improving customer relationships and loyalty.

Customer relationship management is the day-to-day work a business does to understand its customers and build ongoing loyalty. Simply put, you are managing all the elements that impact the relationship you have with your customers.

This relationship typically starts by capturing interest and lead information through marketing, continues with sales reaching out or responding to inquiries, and carries through to service teams supporting customers long after their purchase. It can also loop back around again as marketing and sales teams upsell to satisfied and engaged customers.

Together, these teams are responsible for giving every customer a positive relationship with the business. Having CRM software enables teams to do their best work by giving them the tools to store data and contact customers on one platform.

Now that we know how helpful CRM software can be across teams, let's look at how it works.

The CRM pulls information from all your connected tools. This includes website forms, emails, call logs, social channels, live chat, ecommerce platforms, and service systems. Integrations and APIs move this data into the CRM in real time.

Most modern CRM systems run in the cloud. This means that your customer data is stored on secure servers that you can access through a browser or app. This removes the need for local hardware, cuts maintenance costs and updates automatically in the background.

The software then organises your data by cleaning up mistakes and linking each piece of data to the correct customer. This prevents duplicate records and keeps your customer profiles up to date.

As people move from lead to customer to repeat customer, the CRM logs every step. It updates the customer status in real time so teams can follow the entire relationship. If there are any support queries or updates to their plan, this will also be noted in the CRM.

Modern CRMs offer AI automation to take care of routine tasks like reminders, follow-up emails, and triaging support requests. AI can also analyse behaviour, predict which customers need support or are a churn risk, and recommend next steps.

Open APIs and built-in integrations can sync directly with your accounting tools, ecommerce platforms, and anything else you need to keep your business running. This reduces the need to enter information twice and keeps all teams on the same page.

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.

Using a CRM gives every team access to the same up-to-date customer information, which makes service more consistent and personal.

• Teams provide better service because they can see past enquiries, purchases, and support requests, which allows them to respond with the right context.
• More personalised experiences are driven by a complete view of preferences, behaviour, and communication history.
• Customer retention increases, since customers get more accurate and faster support.
• Handovers between marketing, sales, and service are smoother, since everyone works from the same customer view.

Sales teams are more effective when they’re not searching for information or guessing what to do next.

• Sales teams are more productive; they can track leads, schedule follow-ups, and manage deals from one organised workspace.
• Customisable sales processes guide your reps through each stage, reducing time lost to manual admin.
• Revenue growth is supported by automated lead qualifications and a deeper understanding of what your customers want.
• Forecasting is more accurate, helping leaders plan ahead and make decisions about targets and resources.

A CRM will improve how a business operates by centralising all its data and removing manual work.

• Data centralisation replaces scattered spreadsheets and duplicate records with a single, reliable source of truth.
• Actionable analytics through dashboards and reporting show performance, highlight trends, and suggest next steps.
• Automation for routine tasks like reminders, service routing, and follow-up communication frees teams to focus on higher-value work.
• Cross-department collaboration improves because teams can access the same information, review updates, and share notes. It can also offer built-in communication tools like Slack.
• Security and reliability improve due to cloud-based infrastructure that manages updates, backups, and compliance in the background.

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 Agentforce can analyse large volumes of data to proactively identify patterns and trends that drive more personalised customer experiences across departments.

Here are some of the most useful applications of AI you can apply using a modern CRM.

Generative AI can add even more productivity to your CRM software by helping you to create new content, like sales emails, marketing campaigns, customer service responses, and customised shop fronts. It can do this all based on the customer data stored within your CRM.

AI processes large volumes of information from website activity, purchase history, service interactions, and social media. It then identifies patterns that would be difficult for humans to spot, giving teams a deeper understanding of what customers need and how they interact with your business.

AI can forecast sales trends based on past data, highlight customers who may churn, and bring to your attention opportunities to upsell or cross-sell. These predictions help teams focus their time, plan ahead and intervene before problems escalate.

With its ability to analyse 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 agents can provide around-the-clock support across chat, messaging, and other digital channels. They can resolve common enquiries, summarise calls for service reps, and send tailored follow-up messages. This improves your response times and gives customers options for support outside of business hours.

AI can analyse vast amounts of customer data and interactions and use them to serve up customised 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 Agentforce 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 everyday 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, organises and analyses 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 delivered via the software as a service (SaaS) model, rather than being installed on local devices. This means that the software provider manages the hosting, updates and security, which removes upfront costs and technical upkeep for the business.

Since it’s on the cloud, teams can then access customer information from any device at any time from anywhere. Cloud-based CRMs also connect easily with other applications, allowing data to move smoothly between the systems you rely on.

Cloud-based CRMs and on-premise CRMs store their data in different ways.

On-premise systems run on servers that a business owns and maintains. This could be because they rely on older infrastructure or operate in places with limited internet access. This requires high upfront costs, dedicated IT staff, and planned downtime for updates and maintenance.

In contrast, cloud-based CRMs remove most of this overhead. They run on secure, remote servers, update automatically, and are quicker and cheaper to set up. For most businesses, this results in lower costs, support when you need it, and ongoing improvements downloaded automatically.

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 these concerns, removing barriers to getting started.

It can be difficult to implement a CRM that lives on a localised server because there is much more effort involved in customising 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 customised, 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 centres, 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 unauthorised 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.

Fisher & Paykel wanted every customer interaction to feel as considered as their products. To do that, they needed a CRM that brought all their customer information together and gave every team an accurate view of each customer relationship. They turned to Salesforce CRM to build that foundation.

Now with a CRM in place, teams can see exactly what products customers own, what they’ve browsed, the services they’ve booked, and any support requests. They can then use this data with Agentforce to deliver more personalised sales and marketing. This has led to a 40% increase in product views and a 33% conversion rate from tailored recommendations.

Fisher & Paykel also uses an AI agent built on Agentforce to guide customers through simple troubleshooting. The agent does this by drawing from more than 10,200 service articles, learning about product models and repair steps, and using semantic search to find the most relevant information. This has resulted in 65% of routine cases being handled via self-service.

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 number of employees, customers, and data you work with, as well as the complexity of your customer interactions.

Then, consider the volume of enquiries and requests you receive and the level of personalisation 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 businesses.

Did you know that Salesforce offers free CRM trial options? It might just be the perfect fit for your business.

In addition to choosing a CRM that will grow as your company does, think about which options can evolve along with technological advancements, particularly in the growing space of AI. 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.