What Is CRM (Customer Relationship Management)?

Manually tracking sales, leads, emails and interactions is a challenge, even when you’re just starting. But as you scale, spreadsheets get messier, inboxes get overwhelmingly crowded and important details start to slip through the cracks.

This is the point where a customer relationship management (CRM) solution becomes essential. In this guide, we’ll look at what a CRM is, explore why it’s so important and discuss how it can help you work smarter and deliver more personalised customer experiences at scale.

• CRM definition: What does it mean?
• Who is CRM for?
• Why is a CRM important for your business?
• What are the benefits of CRM?
• What does a CRM system do?
• Key CRM features
• What are the different types of CRM?
• How much does a CRM cost?
• How to choose the right CRM system
• How to create an effective CRM strategy
• How Salesforce’s CRM can power your business growth
• FAQs

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 improve profitability and grow your business.

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 many other touchpoints spanning departments like marketing, sales, digital commerce and customer service.

CRM tools unify customer and company data in one place, creating a single source of truth for all of your interactions. Many also use AI (artificial intelligence) to help you gather relevant data in less time and better manage relationships across the entire customer lifecycle.

Companies and industries of all sizes use CRM software, from large enterprises that need to easily track customer activity in one place and share it across departments, to small businesses, which often need to do more with less, to startups and nonprofits that need to be nimble and efficient. No matter your industry, if you communicate with customers (and your employees rely on information about those customers), a CRM system can help.

Customer relationship management software can benefit virtually any department at your company, from sales to service and IT to marketing and beyond. Whether you want to start big or small, it's easier to get started than you might think.

Doing business has become more complicated. The average organisation uses close to 1,000 different applications, but only 28% of these apps are integrated.

To stay ahead, your company needs to be focused on its customers and enabled by the right technology. But getting up-to-date, reliable and actionable information can be tricky. How do you translate the many streams of data coming in from sales, customer service, marketing and social media into useful business information?

You can do all of that with a CRM solution. Here are just a few reasons why using a CRM database is important for your business.

Customer relationship management software like Salesforce CRM can give you a clear, unified customer profile — a single, simple, secure and customisable dashboard that provides a customer’s purchase history, order status, outstanding customer service issues and more. This information can be invaluable, especially since 70% of customers expect every representative they contact to know their purchase and issue history.

Whether a customer has previously reached out via phone, chat, email or social media, a single source of truth ensures everyone at your company can provide the expected level of service.

Having a single source of truth doesn’t just benefit customers: It keeps companies organised and focused on revenue-generating activities. Sales teams generate a flood of data while talking to prospects, meeting customers and collecting valuable information.

If all that information gets stored in handwritten notes, laptops or inside the heads of your salespeople, there can be serious cost implications. Details can get lost, follow-up on action items isn’t prompt and customers get prioritised based on guesswork rather than data. And if someone leaves the company, unless their contacts and notes are saved in a CRM, that information — and the potential business associated with it — may disappear along with them.

Using CRM software means less administrative work and more time to focus on sales.

A CRM brings your teams together, sharing information that makes everyone’s job easier.

For example, marketers can use CRM tools to manage campaigns and lead customer journeys with a data-driven approach. CRM software provides visibility into every opportunity or lead, illuminating a clear path from inquiries to sales. Then, commerce teams can serve up personalised offers on your website, and customer service already knows a customer's history if they reach out with questions.

Some of the biggest gains come from combining CRM with the power of AI. It enables you to pull together everything you know about a customer, and even some things you didn’t know, quickly. Then your team can use it to personalise every interaction. Having this level of knowledge makes every employee even smarter and more productive, especially when you use AI agents that can take action autonomously based on the instructions you provide.

Solutions like AI agents can help speed up tasks for teams across your business, too. With AI agents, labour-intensive tasks, such as drafting sales emails, crafting marketing messages and writing or localising product descriptions can now be completed in a matter of seconds.

They’re having a significant impact; 83% of developers believe AI agents are changing how businesses operate, and 78% worry they’ll be left behind without them. Pairing AI with a powerful CRM will give your business the intelligence and automation it needs to work smarter, stay ahead of customer needs and maintain the edge over your competitors.

As your business grows, so do your customers’ expectations and the number of interactions you have to manage. A CRM gives you the flexibility to scale without losing the personal touch that helped you grow. It keeps your data connected and your processes consistent, whether you’re serving five customers or 5,000, letting you deliver consistent experiences at every stage of your growth.

Modern CRM platforms can adapt to new workflows, store increasing volumes of data and integrate with new systems as and when you need them. Plus, because everything lives in one centralised system, your teams can have everything they need at a glance, no matter how complex your operation becomes.

And, with AI taking the manual effort out of tedious workflows, it also frees up resources, allowing your teams to focus on higher-value work, such as engaging, converting and retaining customers.

There are many benefits of using CRM software, especially when your business combines CRM with AI and data you can trust. Here are just a few of them:

The ability to share data across your teams easily is a huge benefit to both your customers and your business. A CRM provides everyone at your company with a simple, customisable user interface with real-time updates they can use to serve customers. So when a customer calls in with a question, the service agent can see their entire history, past marketing offers and previous purchases.

The CRM can even offer up suggestions for new products the customer may like, based on trends and insights uncovered by AI. A CRM with messaging capabilities that incorporates your customer data makes it even easier to communicate across your teams, with the data you need to collaborate right at your fingertips.

When all team members can access the same customer information, collaboration becomes faster and more reliable. Teams no longer need to chase up information across departments or hunt through tools for the most up-to-date record. Everyone stays aligned, which equals fewer delays and faster, better experiences for your end customers.

Introducing a CRM platform has been proven to produce real results across a business. It helps employees save time, work more efficiently, unlock opportunities and serve customers better. Using Salesforce CRM, global customers across all business sizes have a proven track record of success, including:

An AI CRM will help your business grow. It can make your employees more efficient, serve your customers better and find new opportunities you may not see on your own. AI agents can also improve customer service, and they can help employees be more productive, with the ability to autonomously provide 24/7 customer service, engage with prospects, provide personalised product recommendations and more.

CRM software helps employees get more done, faster. With CRM automation, you can streamline complex, multi-user processes into simple workflows. Plus, fully integrated productivity platforms like Slack provide a single place where employees can collaborate right in the flow of work and automate processes. With the help of AI, the best CRM software can automatically generate workflows to create even better experiences.

By understanding your customers better, cross-selling and upselling opportunities become clear, giving you the chance to win new business from your existing accounts and to build lasting, more profitable relationships. With more visibility, you can keep your customers happy with better service. Happy customers become repeat customers, and repeat customers spend more.

Today's customers expect fast, personalised support at any time of day or night. A CRM system can help you provide the high-quality service that customers are looking for. Your service representatives can quickly access a customer’s record of all past interactions and provide quick, informed answers and assistance. Better support increases customer satisfaction and makes long-term customer retention a much more achievable goal.

A good CRM system will gather information from a large variety of sources across your business and beyond. In addition to providing information about individual customers, it can serve as a listening engine. Using AI can give you unprecedented insights into how people feel and what they’re saying about your organisation. You can use this information to improve your offerings, spot problems early and identify gaps.

A CRM lets you store customer and prospect contact information, identify sales opportunities, record service issues and manage marketing campaigns, all in one central location that’s available to company stakeholders. It does this by organising customer and prospect information in a secure, easy-to-use digital record with important information, such as a contact‌’s email, telephone, social media handle, previous interactions with your company and more.

This helps you find new customers, win their business and keep them happy. And with CRM automation, you can collect even more information, such as news about your accounts, faster and keep everyone up to date.

Customer relationship management software provides businesses with tools that help them communicate better, both internally across teams and externally with customers. Here’s how:

Today’s CRM software lives in the cloud, giving you the ability to safely save and access all of your customer data from anywhere at any time. That means every employee has the same information in real time and can make updates wherever they are.

The shift to a cloud CRM also makes implementing a CRM system easy and more cost-effective. There’s no hardware, which significantly reduces costs. Since there are no frustrating version-control issues or updates to schedule, installation and ongoing management are easy lifts for IT teams. And, with a cloud-based CRM, you only pay for the number of seats you use and the features you need. As your business grows, you can add more of both, enabling your CRM to scale along with it.

Moving to the cloud has changed CRM in countless ways. Now, anyone can work from anywhere on any device, boosting collaboration and bringing down costs. Plus, it offers enhanced security, increasing the safety of your customers’ information and your company’s data.

With a consolidated view of every prospect and customer, CRM software can manage day-to-day customer activities and interactions. For marketing, this means engaging your prospects with the right message, at the right time, through targeted digital marketing campaigns and journeys. Sales reps can work faster and smarter with a clear view of their pipeline and produce more accurate forecasting.

Commerce teams can quickly launch and scale ecommerce — from online orders to curbside pickup — for their consumers (B2C commerce) and business buyers (B2B commerce). And customer service agents can respond to customer needs on any channel — from the office, at home or in the field.

As mentioned, the average company uses close to 1,000 apps, most of which can’t talk to each other. A CRM platform can connect with other business apps that help you develop customer relationships. CRMs integrate with your favourite business tools, such as document signing, accounting, billing and surveys, so information flows both ways to give you a true 360-degree view of your customer.

The latest CRM systems have built-in intelligence and trusted AI. They use your customer data to create customisable, predictive and generative AI experiences that automate administrative tasks like data entry and lead or service case routing.

Automatically generated insights or service call recaps help you understand your customers better, even predicting how they’ll feel and act so that you can prepare the right outreach. AI can even help you find opportunities that may be hidden in your business data.

And, because CRM platforms unify your data in a secure system, they make it easier to show customers how and why you’re using AI. Currently, customer trust in AI has fallen to 42% (down from 58% in 2023). A reliable CRM lets you keep your AI usage transparent and explainable, helping you deliver superior experiences without compromising trust.

Broadly speaking, there are four main types of CRM you need to know about, each tailored to a specific focus.

This CRM focuses on automating and simplifying day-to-day customer-facing tasks like sales pipeline management, marketing and service case routing.

With AI agents, these systems can take things further, autonomously generating tailored sales pitches, reaching out to leads with personalised messages and even acting as 24/7 service reps to free up time for complex cases.

Analytical CRMs focus on collecting and interpreting customer data to reveal patterns and buying behaviours, such as which products are most likely to sell or which deals are most likely to close. AI enhances this by surfacing predictive insights and optimising campaigns in real time, enabling faster, smarter strategising.

Collaborative CRMs improve communication across teams and external partners by uniting them with a single view of customer and business data. Conversation-first interfaces like Slack make it easy to share customer information, project status and insights, keeping teams connected and tasks on track.

Strategic CRMs prioritise long-term customer relationships, with advanced reporting and analytics to help you make smarter company-wide decisions. AI makes these insights even more actionable, helping you personalise experiences and adapt to changing conditions in real time.

A great CRM integrates all of these solutions. For instance, Salesforce brings operational, analytical, collaborative and strategic CRM capabilities together in one platform, powered by Agentforce for trusted AI, Data 360 and CRM Analytics for unifying and exploring data, and Slack for collaboration.

Customer relationship management software can make a big impact on your business in many ways, but that doesn’t mean it has to come with a big price tag. CRM products and services are made for businesses of all sizes, and they can meet a company’s needs across all areas of the business.

While the cost of enterprise CRMs can be as high as thousands of dollars a month, CRMs for small businesses are typically affordable.

For example, the Salesforce Starter Suite starts at just $35 per user per month, giving you an all-in-one solution for small business commerce, sales, service and marketing at an affordable price point. You can then flexibly scale up as your business grows. And the best part is that you don’t have to commit straight away. Try Salesforce free for 30 days.

In addition, Salesforce's free CRM, Free Suite, is an easy, cost-free way for individuals and small businesses to get‬ started with Salesforce CRM. Switch from unwieldy spreadsheets to an intuitive CRM that keeps your customer data organised in one place. Try it now, for free (up to two users), with no expiration date.

Choosing the right CRM means finding a system that fits your goals, team and industry. The perfect solution should make it easier for your sales, service and marketing team to do their jobs, not add another layer of admin.

Here are some key things to weigh up when you’re comparing options:

• Ease of use: If your CRM is hard to use, your team won’t adopt it, and you’ll never see the full value of your investment. Look for a clean interface with simple workflows and good in-platform guidance. For instance, Salesforce offers free training resources on Trailhead that cover everything from CRM fundamentals to advanced AI.
• Integrations: Your CRM needs to connect smoothly with the tools you already rely on, like support desk, email, calendar and marketing platforms. Integrations reduce double-handling and create a single source of truth for customer data.
• AI capabilities: Modern CRMs need to do a lot more than store contacts. Look for built-in AI features like automated data capture, lead scoring or AI agents that can handle routine tasks and recommend next-best actions. This will amplify your decision-making and let your team focus on high-value work.
• Scalability: Can you easily add more users? What about unlocking more advanced features as you scale without starting from scratch? Can you gradually integrate more complex workflows as your teams expand? Look for a CRM solution that will grow alongside your business.
• Security: Check how the vendor handles data protection, access controls and encryption. Also, confirm that they work in line with regulations like the GDPR as well as industry-specific standards. This is particularly crucial if you’re working in a highly regulated industry like government or healthcare.
• Pricing model: Look beyond the ‘headline price’ to dig deep into what’s included in a CRM’s pricing. Consider per-user versus per-org pricing; limits on records, emails or automation; and any extra costs for add-ons like analytics or AI. This will help you understand the true cost and avoid surprises as your team grows.

Once you’ve defined your criteria, you can assess vendors against them and decide on the right solution, tier and add-ons. Salesforce, for instance, offers solutions for businesses of all sizes, from a free suite for up to two users, to packages for small businesses, all the way through to complex, industry-specific deployments. But the best fit will always come from matching the features and pricing to your internal processes and growth plans.

When you start to integrate successful CRM strategies using your chosen tools, there will be a learning curve. To make things easier, create a basic strategy up front before you put your solution to work. Here’s a practical framework you can follow:

What are your goals, and how do you intend to achieve them? Perhaps it’s faster response times during customer support queries, improved collaboration between teams, higher conversion rates, better retention or upselling more products. Turn these into SMART goals so you can configure your CRM around them and track progress over time.

You likely already know your target audiences, but take the time to refine your understanding by creating an ideal buyer persona. This goes a bit beyond broad demographic data and focuses on key questions:

• What are your customers' pain points?
• What are their goals?
• What are they looking for in your product?
• Where do they want to engage with you?

To get answers to these questions, collect information from places like your website, social media channels, feedback forms and teams to gain more valuable data about your customers.

Gathering this kind of data is something the right CRM can do particularly well. For instance, Salesforce can automatically pull behavioural data from your website, campaigns and service interactions into unified customer profiles, helping you spot opportunities for engagement.

Now that you have a solid understanding of your target customer, you need to map how they travel from awareness to conversion through the sales funnel. How many touchpoints do they engage with, and how long does it take for a lead to travel from one stage to the next?

Once you’ve determined this, consider these questions:

• What are the key touchpoints at each stage (ads, forms, demos, support tickets, blogs)?
• Who is responsible for each touchpoint?
• What is the customer trying to achieve at this stage?
• What are the customer's challenges at this stage?
• At what point does the customer transition to the next stage?

This customer journey map will provide a foundation for your CRM, ensuring that every step is visible and nothing slips through the cracks.

Using your customer journey, determine how you’ll use your CRM to create a consistent experience across marketing, sales and service.

Here, you need to assess how teams will share information, how ownership passes from one team to another and how you’ll determine success at each stage (such as response times and handover notes). The ultimate goal here is to get a 360-degree view to build a smooth experience for the entire customer journey.

Now that you’ve determined how you’ll create a unified customer experience, you need to prepare your teams to make that happen.

This involves clearly defining roles and responsibilities, setting expectations for each stage of the customer journey and providing CRM-focused training for different functions. In essence, you need to help your teams understand how the CRM system supports their day-to-day work and what they need to do to use it to its fullest.

Your CRM depends on high-quality data. Integrate processes to collect data from various sources and ensure your existing customer data is clean and properly catalogued.

With these six steps, you’ll be prepared to integrate a CRM solution into your organisation.

Salesforce’s Data 360 can help you unify your data from different systems in real time, while built-in data validation tools ensure the information is standardised, accurate and actionable.

List the systems your teams already rely on, like emails, POS systems and ecommerce solutions. Then, start integrating these into your CRM system so you can see everything in one place.

It’s so important to choose a CRM solution that offers easy integrations. The Salesforce AppExchange lets you connect thousands of different systems and solutions to your workflows in just a few clicks.

Now that everything is in place, you’re ready to use your CRM to deliver exceptional customer experiences.

Here, the goal is to put into practice the things you’ve learned from previous steps. Encourage your teams to use data from the CRM to personalise customer engagement. They can then log their activities to feed information back in for future interactions.

You should also start layering in automation and AI at this stage, such as using Agentforce to score leads, recommend actions or generate follow-up emails, to reduce manual admin tasks and help your teams focus on high-value conversations.

The final step is to review your CRM strategy continually as your business and customers evolve. Revisit your goals and processes, review performance regularly and adapt your workflows to stay aligned. CRMs like Salesforce have built-in dashboards to help you monitor performance trends and test new approaches to refine your approach continually.

CRM systems are the best way to turn data and strategy into conversions and retention. But the key to maximising your growth is choosing a platform that’s powerful, easy to use and scalable.

Salesforce offers a wealth of advanced CRM tools designed to help you grow, thrive, and scale. Here’s how our range of products can help.

Together, these solutions create a connected, AI-powered customer platform that helps you sell, service, market and grow your business from a single source of truth. Try Salesforce free for 30 days to test the world’s #1 CRM solution.