How I Understand Customer Relationship Management (CRM)


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Keep in mind when reading this that my background IS NOT in Customer Relationship Management (CRM), however as someone who is very involved with Social Customer Relationship Management (SCRM) it’s crucial to understand traditional CRM. My background has always been in social and in marketing.

First let’s start off with the obligatory wikipedia definition:

customer relationship management (CRM) is a broadly recognized, widely-implemented strategy for managing and nurturing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service. Customer relationship management denotes a company-wide business strategy embracing all client-facing departments and even beyond. When an implementation is effective, people, processes, and technology work in synergy to increase profitability, and reduce operational costs.

When most people think of CRM they think of a tool such as Saleforce or Microsoft (I can hear Esteban Kolsky yelling at me now) that allows organizations to efficiently operate and automate their sales, marketing, and service and support functions. Of course, it’s never quite that simple and tools are simply enablers. Gil Yehuda used a great example in a different context but he said that essentially tools are like owning the “Taebo” or “6 minute abs” dvd series. Just because you own those DvDs doesn’t mean you’re going to get in shape. The same is true for CRM (or for anything else that matter) tools, they need to be backed up by something more, a strategy and a process. Deploying a CRM tool in your organization doesn’t all of a sudden mean that your sales, marketing, and support functions are now going to improve. In order to succeed in CRM organizations need to consider 3 key elements: People, Process, and Technology which all work in concert. People use the tools, processes allow for the use to make sense and follow a workflow, and technology is the enabler.

Let’s look at the three functions of CRM, hopefully in a simple and easy to understand way. In this case you can equate the three roles of CRM to a simplified purchase cycle where marketing generates awareness, sales closes the deal, and service/support keeps the customer happy and coming back.


This is the front line of CRM which traditionally seeks to generate awareness for a product or service. Marketing in this case segments and profiles the customers, targets them, and makes the customer aware of “something”. Marketing automation is a way of segmenting, profiling, targeting, and generating awareness automatically. Think of email or direct mail marketing. You receive those based on preferences and data that an organization knows about you. Based on that data an organization can automatically segment and target you to receive marketing materials. You can set up systems to send out messages to desired market segments automatically based on variables such as time frame, i.e. every month we automatically send you an email. Marketing isn’t usually designed to make you purchase anything, it’s designed so that you are aware of another option when you are ready to purchase.


Once awareness is created and some sort of interest in generated via marketing, then the next step is actually to close the deal, this is where sales comes in. When most people think of CRM as a technology solution this is usually what they think of and what they visualize. The visual here is a dashboard where you can input and/or access information about a customer, contact info, notes about the customer, follow up efforts, and any/all customer interactions. If you get phone call from someone who is looking to sell you something most of the time this person is looking at some sort of CRM system which tells the sales guy everything he needs to know about you. Salesforce automation (SFA) allows you to do things such as make sales forecasts, track orders and inventory, and process an order. SFA really allows sales people to understand who they need to contact, when, and why; again this contact can all be done automatically as the CRM system stores all of this data and allows employees to segment. For example, in a CRM system I can easily pull up a list of all the prospects that I consider to be “hot,” or perhaps everyone that I have initiated a conversation with that I would like to move onto the next stage of the buying cycle. Depending on what you read or who you listen to you may here people equate CRM to SFA.

Service and Support

So if marketing generates the awareness and sales closes the deal, then service and support makes sure that the customer is happy after the purchase is complete. Service and support is rapidly becoming the key differentiating factor for consumers that are looking to do business with a particular brand. In fact, American’s on average are willing to spend 9% more on products and services that deliver superior customer service. Service and support is designed to solve customer problems and alleviate their concerns and frustrations. Again, all of these interactions and data are captured and recorded in the CRM system. So what happens after service and support? Marketing, it’s a circle that never ends. This is why traditional CRM has always been about retaining a customer to get them to purchase more.

That’s essentially how traditional customer relationship management works and breaks down. I know it can get more complex and detailed but the ideas and concepts here should make sense. The elements above are what make up CRM. I’m sure many of you reading that have a CRM background will most likely have your own thoughts to add, please do so in the comments section below. Did I miss something, does something not make sense?

Hopefully this helps clarify and simply the concept, writing everything out certainly helped me.

Republished with author's permission from original post.

Jacob Morgan
I'm a best-selling author, keynote speaker, and futurist who explores what the future of work is going to look like and how to create great experiences so that employees actually want to show up to work. I've written three best-selling books which are: The Employee Experience Advantage (2017), The Future of Work (2014), and The Collaborative Organization (2012).


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