What Is CRM Software? A Comprehensive Guide

Customer relationship management (CRM) software makes it easy for different departments across a business to share the latest information about their customers and prospects. Enhanced by artificial intelligence (AI), the software that powers CRM helps companies build stronger relationships, simplify processes, increase productivity, and grow revenue through digital labor. 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

CRM software brings together data from multiple points in the buyer journey so that businesses can better serve their customers and grow relationships. It's a tool for uniting 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.

It's 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 so you can deliver personalized experiences that foster loyalty and increase satisfaction.

CRM software has AI features, too. An AI CRM can automate tracking customer activity across departments and communication channels and organize CRM database information. AI agents can help employees by autonomously carrying out tasks, analyzing patterns, and suggesting actionable next steps. These digital workers can tap into CRM software to help identify opportunities for upselling and cross-selling, generate personalized service responses and marketing materials, and more.

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.

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 have access to the latest information. Whether they’re looking for customer contacts, purchase history, meeting notes, or past service issues, CRM software is 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. Built-in integrations, like with the work operating system Slack, make it easy for teammates to share information, collaborate on files, and direct AI agents to take action within the flow of in places where they’re already doing work.

Using a cloud-based CRM means you don’t need to purchase hardware, servers, or additional security. You also won’t need to hire more IT staff members for installation and upkeep because your CRM provider manages all of these responsibilities remotely. It's straightforward, and it means businesses can keep prioritizing teams that build customer relationships and bring in revenue.

Another benefit of CRM software is that it can scale easily. You can start small and add more features and users as you need them. Since it’s all online, with rolling updates, you don’t have to take equipment or platforms offline to have fixes and features installed. Cloud-based CRM software grows as your business does, removing the need to search for a new CRM solution every few years.

CRM software with customized dashboards makes it easy to see how your business is performing, gain insights, and make future projections. AI-powered CRM analytics and CRM reporting offer predictive analytics that can forecast sales trends, identify at-risk customers, and suggest next steps.

AI in CRM systems has become the norm across industries, providing real-time insights and improving relationships at every step of the customer lifecycle. Agentic AI systems like Agentforce can analyze large volumes of data, identify trends, and drive more personalized customer experiences across departments. Generative AI adds productivity by helping create new content — like sales emails, marketing campaigns, customer service responses, and custom storefronts — based on the customer data stored within your CRM.

AI CRM analyzes customer and prospect data, providing insights that help sales teams prioritize which leads to follow. Sales AI can identify trends, such as which current prospects and sales cycles are similar to ones that converted in the past. The software can then suggest the tactics most likely to succeed. This approach helps companies choose where to focus their efforts, enhancing productivity and increasing revenue.

AI Automation, powered by autonomous agents, performs repetitive tasks such as data entry, lead generation, and customer service request routing. This goes beyond traditional robotic process automation (RPA) by using reinforcement learning to continually improve performance, allowing employees to focus on more strategic work.

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.

Customer service AI embedded within your CRM makes it possible to have always-available support for 24/7 customer inquiries and self-service. These intelligent systems can automatically generate call summaries, send personalized follow-up messages, and escalate issues to human reps when necessary, ensuring customers get immediate help while maintaining service quality around the clock.

AI analyzes vast amounts of customer data and behavioral patterns to provide highly personalized product recommendations and offers. These learnings increase customer engagement and sales, and can be proactively applied to customers that fit similar profiles. Marketing AI and commerce AI use these insights to create tailored experiences that increase customer engagement and sales while identifying potential service issues or cross-selling opportunities.

Conversational AI and natural language processing (NLP) make CRM interactions intuitive and accessible. These tools let employees ask questions in everyday language to sift through complex data, generate marketing campaigns, or access personalized customer information.

Cloud-based CRM software is software as a service (SaaS), ‌a way of delivering applications over the internet instead of locally on individual devices. The 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 uses the CRM system can pull customer or marketing data anytime on any device, whether it’s a desktop, laptop, smartphone, or tablet.

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. The 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 uses the CRM system can pull customer or marketing data anytime on any device, whether it’s a desktop, laptop, smartphone, or tablet.

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. Here are some of the benefits of going with a cloud CRM:

• Costs: Compared to cloud-based CRMs, on-premise CRM requires significant upfront costs to install. They’re built on-location, sometimes from scratch, rather than tapping into an existing CRM infrastructure.
• Accessibility: On-premise systems occasionally require internal IT resources, or an outside team, to take the system offline to implement updates, which can mean lost time and decreased productivity. Cloud-based CRM don’t need downtime for updates.
• AI readiness: Cloud-based systems have a greater ability to support AI capabilities. They can use advanced machine learning models and real-time data processing that would be too costly to maintain on-premise.

While there are many benefits to using a CRM, choosing the best one requires planning so that you can avoid CRM implementation challenges. Often, these issues arise from clunky, 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 900 apps, yet the majority can’t 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 an AI-powered CRM that is already built to automatically overcome CRM integration and implementation challenges around connecting data from multiple sources. Also, make sure it 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, making them prime targets for cyber attacks. AI plays a crucial role in CRM security, offering features that can analyze user behavior, detect unusual access attempts, and automatically take protective actions. Businesses are legally required — and ethically obligated — to protect customer information from unauthorized access.

• Solution: Insist on 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, the volume of inquiries and requests you receive. Then consider the level of personalization you want to provide. Look for a CRM that fits 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, especially in AI and automation. The rapid evolution of AI-augmented CRM means that choosing a platform with robust AI capabilities is essential for future-proofing your investment. Look for CRM systems that can integrate with other tools and applications you regularly use.

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. Review CRM pricing options to understand the required investment. Customer support costs are also an important factor, as many CRMs offer different support levels. Investing more at the start could pay off with a smoother setup, more informed employees, and ongoing success.

Planning your CRM software search can take some time, but considering all these factors from the start will help you make the right decision for your business. Modern AI-powered CRM systems offer unprecedented opportunities to automate tasks, gain predictive insights, and provide personalized customer experiences at scale. Once you select the right CRM software, you’ll be on your way to strengthening customer relationships, attracting new prospects, improving customer service, boosting sales, scaling marketing efforts, and growing your business for the future.