What Does a CRM Do?

CRM stands for customer relationship management, and most CRM software is just that — a solution to help you manage relationships with your customers. CRM software gathers data throughout the customer lifecycle and allows you to use that information to improve your customer service and sales processes.

But that’s what a CRM is.

What a CRM does is this:

CRMs Increase Sales

Actually, CRMs don’t sell anything. They’re just software tools, after all.

You wouldn’t say that a hammer built a house, would you? However, if you had been trying to build a house without nails, wood, and your bare hands, and then somebody gave you a hammer, you’d probably give a lot of credit to that hammer.

CRM software solutions are like that. They don’t increase sales for you. They just make it a lot easier for you to increase sales in your company.

Here’s how:

You Understand Who’s Buying Your Stuff, & Why

Especially if you sell products online, it’s not always easy to get a firm grasp on your market and audience.

Did you ever see those Kia Soul car commercials with the dancing hamsters? Kia created the Soul specifically for a younger generation, and they marketed it in a way they thought would be hip and young. Meanwhile, who ended up being the demographic that first adopted the Kia Soul?

Little old ladies.

After the car had been on the market for a while, it ended up having a broader appeal, and people from all age groups started buying Kia Souls.

Here’s the point:

Kia designed that car for people in their early twenties. They designed their marketing for people in their early twenties, and advertised in places where those people were likely to hang out. And little old ladies were the ones that they captured.

That happens in sales and marketing more than you might think. No matter how much market research you do ahead of time, and no matter how savvy and experienced your sales team, the market still does whatever the market is going to do.

Having good CRM software helps you find these idiosyncrasies in your own company, and that’s vital.

Maybe you’re marketing to millennials, but baby boomers are the ones who are actually buying. If you’re smart, you’ll change your marketing to suit the market, since the market isn’t going to change to suit you.

You Sell More With Less Investment

Understanding your audience better means that your advertising and marketing is better and more effective.

The more targeted and specific your marketing efforts, the more you’re going to sell…and you can spend less money to do it.

Use the data that your CRM system gathers to figure out who to market to, where they’re likely to see your advertising, and what they respond to. When your ads have higher conversion rates, you’ll get even more CRM data, and you can make those relationships even better.

You Develop Customer Loyalty

In business and in life, relationships are important.

For your business, developing better relationships with your customers encourages those customers to keep coming back. As someone makes repeat purchases, they actually get more likely to buy again, and they tend to place even bigger orders as time goes on.

Marketing to loyal customers also yields much higher conversions than going for new acquisitions. Where most industries see 1% to 2% conversions on their ads that are targeted at new customers, advertising to repeat customers often see conversion rates at 60% to 70%.

By using your good CRM software to develop stronger customer relationships, you encourage customers to come back, spend more, and share your brand with their friends.

You Increase Conversions

A high quality CRM makes it easier for your sales team to convert the leads you already have.

There’s not a lot of point in spending the time and money to generate new leads if you can’t handle the ones you have, is there?

CRM software can help you map out your sales process so that you better understand when, why, and how your prospects convert to customers. It can also help your sales team keep track of where each prospect is in the sales process, so they waste less time duplicating effort and sell more effectively.

You Gain Perspective to Make Smarter Decisions

Your CRM gathers the details for you so that you can take a step back and see the big picture. You can see trends and hangups far more easily, and rather than relying on your intuition, you make decisions driven by real numbers.

Especially as your business grows, it’s important to gain insight wherever you can. Your administrative responsibilities keep you busy, and it’s easy to lose the all-important connection with your customers. That’s exactly what customer relationship management is all about — forging and maintaining those relationships when it’s not easy anymore.