How Does CRM Software Work? A Full Guide On CRMs for 2024

Depending on the context, CRM – Customer Relationship Management – can refer to a business strategy, a technology, or a specific set of business processes within an organization. CRM software, on the other hand, refers to any application or platform used to centralize and facilitate communication with customers, clients, or users – with most providers running on the cloud today.

A core function of client management software is to serve as a unified repository of information on your existing customers, clients, and sales leads. You can store everything from customers’ names and email addresses to phone numbers, social media profiles, and websites, among other details.

Most CRMs will also let you track every interaction between a customer and your business. This is vital for customer management and determining where each individual is in the funnel and their preferences, so you can segment your audience and tailor your marketing messages accordingly.

And that’s just the start. Most modern CRMs offer a lot more functionality on top of data centralization. You can also use CRM software to visualize your workflows and optimize your sales pipeline, manage and nurture your leads, automate sales processes, monitor all your marketing activities, and generate custom reports with actionable insights.

Put simply, CRM software eliminates the guesswork from customer relations, letting you make data-driven decisions and saving you a ton of valuable time.

EDITOR’s CHOICE

Monday CRM – Affordable, Easy to Use, and Scalable

  • Powerful Sales Automation
  • Task and Project Tracking
  • Efficient Roadmap Planning

How Does CRM Software Work?

The way most CRM software works is pretty straightforward. First, you integrate it with all your business touchpoints, such as your website, landing pages, business inbox, social media platforms, marketing campaigns, and other communication channels.

Monday CRM Centralized Communication

After doing this, your CRM will automatically record every interaction between a prospect or existing customer and your business, letting you access the information in real-time. This means every person on your team can see all the information on any prospect, customer, or client, as well as all the previous conversations they had with your business.

As a result, you can personalize every interaction, whether you are creating an automated email campaign, one of your sales representatives is reaching out to a prospect, or a customer support agent is responding to a support ticket.

The wealth of data CRM software collects also lets you accurately assess the performance of your marketing efforts, streamline your sales pipeline, improve customer experience, and increase customer satisfaction.

CRM software can also help you to identify new sales opportunities, shorten your sales cycles, facilitate collaboration between sales teams and marketing departments, and ultimately increase your profits.

You might still be asking the question, “What does CRM stand for?” In short, CRM stands for taking complete control of how customers and potential clients engage with your organization.

Read More:

The Best CRM Software Solutions in 2024

Every business needs a tool to effectively manage and streamline its customer relationship management. These are the market’s top-rated software we recommend:

 

Pros and Cons of CRM in Business

Given the range of benefits sales CRM software offers, you’re probably wondering why there are companies out there that aren’t using it. And the answer is simple — CRM management software is a long-term investment.

Most CRMs work on a monthly subscription basis, so you need to make sure you’ll get a positive ROI after implementing a CRM solution for your business. While there is some crossover with project management platforms – and many providers deliver integrated CRM and task management solutions – they are fundamentally separate tools.

Monday.com CRM definition

To help you better ascertain whether a CRM app is what your company needs and how much your business will benefit from one, let’s take a look at the major pros and cons of CRMs in business:

Pros of CRM

Centralize and Automate Data EntryFacilitates Customer CommunicationImproves Team CollaborationCreate Targeted CampaignsStreamline WorkflowsAccurate Sales Forecasting

Regardless of a prospect’s entry point into your sales funnel, you’ll have all the information you need in one place. You’ll also be able to do away with spreadsheets and save a ton of time since you won’t have to manually enter customer data.

In addition to details like a prospect’s name, email address, employer, and phone number, you’ll also see every message exchanged between them and your business.

All of this will be stored in your CRM, meaning you’ll also be able to communicate using their preferred channel from a single platform rather than having to switch between email, social media, and instant messaging apps.

With a CRM software solution in place, every team member can see what everyone else is working on. They can easily share notes from client calls, exchange documents, and send instant messages to their coworkers without leaving the application.

Knowing exactly what stage every lead is at and what their preferences are allows you to easily segment your audience. This, in turn, lets you develop highly targeted email campaigns for every segment, so you’ll have much higher open and click-through rates.

Most CRMs include project and task management features that allow you to organize work, monitor projects and individual tasks, and set up measurable goals for your team.

Many are also integrated with task management platforms, so it’s easy to get all the functionality you need.

You can use CRM software to accurately forecast sales for the next quarter by setting deal values and lead close probabilities, giving you a better idea of your expected cash flow.

You can then track forecasted vs actual sales by quarter, by month, or even by individual sales rep.

Cons of CRM

It's a Long-Term InvestmentRequires Some Technical KnowledgeRequires Capital InvestmentMight Not Make Sense for Your Organization

It usually takes a few months before you start seeing the benefits of a CRM in your day-to-day work.

To take full advantage of a CRM solution, everyone in your organization must fully utilize its features and functionality. More often than not, this necessitates additional training, which is both costly and time-consuming.

CRMs typically have a monthly cost per user, so the more people you have using it, the higher your monthly expenses will be.

The more customers and prospects you have, the more you will benefit from a CRM. In reality, it only makes sense to leverage a CRM if you’re selling products and services to many clients and regularly get new prospects.

Another thing to keep in mind is that CRM software isn’t used to quickly generate an uptick in profit. While it does help save valuable time and cut costs by increasing productivity, you should look at it as a way to improve your bottom line and increase customer satisfaction rather than as an immediate revenue generation stream.

Read More: A Full Look at the Benefits of CRMs

What is CRM Software Used For?

We’ve already touched upon the fact that CRM software is used for much more than simply organizing the data you have on your leads and customers. Let’s look at the common use cases for CRM software, so you can better ascertain how your business might benefit from it.

Contact ManagementLead Management and ScoringPipeline ManagementSales AutomationMarketing AutomationChannel AttributionCustomer SupportAnalytics and ReportingTab title

Contact Management

In addition to storing and organizing customer data, CRM software allows you to track every interaction between existing or potential customers and your business. This lets you see all the ads they clicked on, all the pages of your website they visited, and every message exchanged between a prospect and your sales reps.

As a result, you can segment your audience and personalize your marketing messages to make them more compelling to prospects based on their preferences.

Lead Management and Scoring

Lead scoring is an excellent way to differentiate between leads based on their level of interest, so your sales representatives can invest their valuable time in talking to qualified leads who are more likely to make a purchase.

CRM software with lead scoring capabilities automatically tracks each lead’s email open rates, website visits, and click-through rates, among other parameters.

Pipeline Management

CRM software can help you visualize and optimize your sales pipeline and processes. This helps ensure that every sales representative knows exactly what processes they need to follow, what the next stage of the sales process is, and where each prospect is in your sales funnel.

Sales Automation

In addition to helping you make your sales pipelines more efficient, CRM software lets you automate repetitive tasks to save valuable time. This can include everything from assigning leads to sales representatives and moving leads through your funnel to sending event-based emails to leads and generating weekly and monthly reports.

Marketing Automation

Rather than sending email blasts to your entire email list, you can leverage CRM software to set up multi-layered email marketing campaigns tailored to your audience’s specific segments.

For example, you can start an email campaign whenever someone subscribes to your lead magnet, then move them to a different campaign if they visit a particular product page, click a link in one of your emails, or don’t open multiple emails in a row.

This way, the emails feel much more personalized, and you can ensure that the right people get the right message based on their previous interactions with your business, their interest in specific products and services, or their stage of awareness.

Channel Attribution

Another useful feature of CRM software is channel attribution. This lets you see exactly which marketing channel brought you a lead or a sale, so you can more accurately gauge the efficiency of your marketing campaigns. Prepare for CRM marketing!

This way, you’ll know whether you need to improve your email copy, tweak your paid ads, change up your lead magnet offers, or fine-tune your website to boost lead generation.

Customer Support

As you would expect, most CRM software solutions come with an integrated ticketing system. This way, your customer service team will have every request, issue alert, and bug report submitted by a customer in one place.

Additionally, CRM software can provide a knowledge repository. Customer service agents can then quickly browse this to find answers to questions and solutions to problems their coworkers have previously addressed.

What are the Different Types of CRM Software?

While every CRM will help you store customer data, manage leads and prospects, and optimize your pipelines, different solutions offer a variety of different features and functionality.

Based on their area of focus, CRMs can generally be divided into one of the four following categories:

  1. Collaborative CRMs
  2. Operational CRMs
  3. Analytical CRMS
  4. Robust CRMs
Collaborative CRMs

Collaborative CRMs

Collaborative CRMs focus on streamlining communication, collaboration, and information sharing across the entire organization. This is especially important in larger organizations where you need to ensure a free flow of information between your sales, marketing, and customer support departments in real time.

Given that a collaborative CRM functions as a central data repository, every member of the team will have easy access to up-to-date information on each customer. For example, a customer support rep will be able to see all the conversations a customer has had with the sales department, review all of the marketing messages that they interacted with, and see the full email thread that another agent had with them – ultimately tracking the complete customer journey.

This lets you provide each prospect or customer with a unified, streamlined customer experience – CX – which can drastically improve both conversion and retention rates.

Operational CRMs

Operational CRMs

Operational CRMs focus on streamlining lead generation, lead management, sales, and marketing processes. The idea is to fully visualize every step of the customer’s journey and efficiently handle every interaction across all touchpoints with your business.

This is done through automation and includes automatic lead scoring, assigning leads to specific sales reps, segmenting the audience based on their interests and interactions with your business, and sending them personalized email campaigns.

An added benefit is that everyone in your team can clearly see what stage of your funnel every prospect is in. They also have defined processes to follow, and they will know exactly what the next steps are for each existing and potential customer.

This helps improve productivity, grants everyone in the organization much-needed visibility of the pipeline and prospects, and allows you to tweak every aspect of your business to maximize profits.

Analytical CRMs

Analytical CRMs

Analytical CRMs allow you to utilize all the data you’ve gathered on your customers to create in-depth reports and gain valuable insights. These insights show you exactly what you need to focus on to improve your processes and marketing efforts to generate more sales.

You can also identify trends in customer behaviors, discover roadblocks and potential buying objections, gauge the performance of all your marketing channels and initiatives, and see exactly what contributes the most to successful sales and customer retention.

This eliminates the guesswork and lets you make data-backed business decisions with confidence. This will ultimately improve customer satisfaction and, consequently, contribute to your bottom line.

Robust CRMs

Most modern management CRM tools offer all of the functionality that we’ve outlined above, so you can use them to facilitate team collaboration, streamline your workflows, optimize processes, and monitor every aspect of your business.

While the sheer number of features that robust CRMs offer may feel a bit overwhelming at first, having the toolset to hand more than pays off in the long run.

With all the information you need at your disposal, you can optimize every aspect of your business, monitor every interaction between leads and customers and your business, and leverage the data to maximize sales — all from a single application.

Read More: The Types of CRMs Explained

Examples of CRM Software in Practice

If you’ve never used CRM software before, you’re probably wondering exactly how it can help you centralize all customer communications, streamline your sales processes, and save time with sales automations.

To help you better understand how CRM software works in practice, let’s take a look at a few examples of the core features of the Monday.com Sales CRM, the best CRM software on the market:

Data Organization

Data Organization 

With Monday.com’s CRM software, you can easily import all your existing contact information from your Excel spreadsheets to provide a clear overview of all your prospects and customers. You’ll see the owner of each account and task, the type of contact, and the task priority.

Monday CRM Data Organization

Since everything is color-coded as with the best free PM tools, you can see exactly where every contact is in your funnel at a glance.

You can also add a form to your website or landing page to automatically input data for new leads. Alternatively, you can enter the information manually if you reach out to prospects on LinkedIn, for example.

Centralized Communication

Centralized Communication

Once you click on any contact, you’ll be able to see all the notes left by your team members and a summary of all previous calls and emails exchanged. You can then reach out to the prospect, add tasks for your sales reps, change task owners, or schedule meetings.

Monday.com what is CRM software

With all the info and tools you need in one place, it’s easy for any customer service agent or sales representative to engage a lead, prospect, or existing client in a meaningful way.

Sales Automations

Sales Automations

CRM software like Monday.com can also save you valuable time through automations. For example, you can create instant notifications whenever a prospect opens an email, or you can automatically segment leads when certain conditions are met.

Monday.com sales automation

There are many more use cases for the CRM software Monday provides, but this hopefully gives you a better idea of how impactful CRM software can be for your business.

Read More: The Key CRM Features Small Businesses Need

The Top CRM Software Solutions in 2024 Ranked

If you’re sold on CRM software and want to see the available options, here’s a shortlist of the best CRM providers in 2024:

  1. Monday CRM — Overall the Best Sales CRM in 2024
  2. Salesforce — Full Suite of CRM Salesforce Solutions for Every Aspect of Your Business
  3. Pipedrive — Easy CRM With Kanban Boards and a Drag-and-Drop Interface
  4. HubSpot — Free CRM With a Range of Time-Saving Features
  5. Act! — Best CRM for Advanced Marketing Automations
  6. Oracle NetSuite CRM — Minimalistic CRM With a Great Mobile App
  7. Zoho CRM — Fully Customizable CRM With Over 800 App Integrations
  8. Freshsales — Collaborative CRM With Predictive Lead Scoring
  9. Maximizer — Simple CRM That’s Incredibly Easy to Deploy
  10. Zendesk Sell — Unified CRM Platform That Provides Full Pipeline Visibility

Conclusion

This guide hopefully helped you get a better understanding of CRM software and all the benefits it can provide for your business, going from a simple CRM definition to a path to success – as well as providing a shortlist of the 10 best CRM solutions on the market.

FAQs

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Aleksandar Stevanovic
Software Reviews Expert
Aleksandar Stevanovic
Software Reviews Expert

Aleksandar Stevanovic spent 10 years honing his craft as a freelance content writer. He has a degree in Economics, and extensive experience in software, crypto, and cybersecurity industries. He covers a multitude of topics, writing factual and informative articles, helping individuals better understand the intricacies of the online world. Over the last two years, his research focus shifted more towards tech and software content, as evidenced by his publications on CEX.IO, Business2Community, and Techopedia. He believes in simplifying complex topics and bringing them closer to like-minded individuals. His work is as detail-oriented as it is creative, and is designed to…