Importance of CRM: Why it Should Top Your Business’s Day 0 Checklist

Customer Support

In my first year of law school, it came as a shock to me that certain bar rules prohibit lawyers from promoting themselves. In fact, the only source of marketing that is available to me is word of mouth.  

My relationship with my clients is the deciding factor for what lies ahead for my startup. But I believe that this customer relationship factor is not limited to my startup. 

The changing dynamics of the modern market and consumer psychology have increased the need for businesses to manage and maintain customer relationships.

Let’s understand what customer relationship management (CRM) is and why it is important for any business.

Table of Contents

What Customer Relationship Management (CRM) is Not? 

The traditional definition says that CRM stands for customer relationship management and it entails within itself all the strategies, software, and techniques that businesses deploy to manage their relationship with customers. 

Although that’s not it. CRM doesn’t only mean developing a website, a customer care service, and automated chats. It goes beyond all this. 

For a business to efficiently engage in relationship management, they need to understand consumer psychology, choices, dislikes, habits, culture, traditions, and other related aspects. 

The stereotypical perception of CRM is that businesses need to respond efficiently to the customer, but the right way is to understand your customer effectively. 

How did CRM come into existence? 

Seth Godin is a profound speaker of consumer rights. He is a firm believer in the principle that the consumers should be the one driving the market rather than the businesses. 

He often says, don’t find customers for your products, find products for your customers.

The principle of caveat venditor replaced the earlier philosophy of caveat emptor. There are multiple factors that led to increased dominance of consumers in the market, some major ones are:

  • Increased competition 
  • Rapidly changing consumer psychology 
  • Better availability of data 
  • Demand for quality products over quantity 

Importance of CRM in Business

Although, there are numerous benefits of managing CRM; it will be beyond the scope of this reading.

But, here is the list of some very imperative benefits of CRM.

1. Promotes consumer learning 

Businesses often deploy CRM tools that help them learn about their customers. This is done with the intent to develop products according to the requirements of customers. 

A business will face a lot of struggle in regards to product market fit if it tries to operate without consumer data. This is where and why customer relationship management is important. CRM tools enable a business to collect data for future business development strategies. 

80% of consumers believe that customer experience is as crucial as a company's products or services. 

This shows the importance of learning about your customers and serving them with consistency. 

2. Aids resource optimization 

The scarcity of resources and the difficulties in acquiring them, lead businesses to engage in techniques that will help them retain these resources.

The data that the CRM tools collect help businesses arrange their resources in an optimized manner. 

3. Enhances customer satisfaction 

We all are aware of the sales principle that customer satisfaction is the key. CRM tools collect the preferences of one’s target market. This data is further used to develop products and services according to your customer preferences. 

This leads to higher customer satisfaction because of the supply of goods according to the consumer’s choice. 

75% of the customers want to be consistent with their choice of product and service.

The Keen Folks

It reiterates the importance of CRM for customer satisfaction. An effective CRM will lead to consistency in business operations. 

4. Increases sales 

On the face of it, it is usually perceived that sales are the ultimate goal of any business. More often than not, businesses operate with the same perception. Even if that’s the case, it is pivotal that you invest in CRM activities.  

There is an improvement of 29% in sales of the companies who implement CRM software.


This data is enough to understand the need of CRM. Although, we always recommend that you look beyond business sales. 

As a business, you should practice CRM activities with the aim to build a loyal customer base. 

5. Strengthens customer service

There is no denying the fact that efficacious customer service leads to higher success for the business. 

Efficient customer relationship management leads to effective customer service planning.

As a business, when you know the choices and behavior of our consumers, you can serve them in a streamlined manner. 

These customer service mechanisms are developed with the assistance of the data generated through CRM tools. 

6. Boosts productivity

A data-driven approach is always the right way to proceed with your business.

CRM tools are one of those ways to collect the data that helps you develop that kind of approach. 

7. Improves customer retention

The modern-day customers are looking for building a relationship with the business that goes beyond the products and services. The two major factors that are driving the purchase decisions are the prices and the brand attributes. 

Therefore, the only way businesses will be able to retain customers is through keeping their prices in check and their characteristics in accordance with their customers’ choices. 

In a recent survey conducted by NielsenIQ during and after the pandemic, it was found that – 59% of Newly Constrained consumers and 53% of Insulated Cautious consumers, are driven by the lowest price when it comes to their preferred brand options. 

The data said that consumers are only choosing brands that resonate with their identity and have similar brand attributes. 

8. Gives access to meaningful data

One of the things that we can understand by building on the previous point is that customers are now prominently using data to make their buying decision.

The vast availability of technology and data has enabled them to have data in regards to your brand as well as your competition. 

Whenever they feel like your brand is not resonating with them; they will move on to the better option. This is why it becomes crucial for you as a business to always invest in CRM activities and learn about your customers regularly. 

What are the Types of CRM?

CRM isn’t a universal approach that each business can apply directly. Every business has its separate way of operation and thus requires a different CRM approach.

Here are a few major types of CRM that you can choose from. 

You may choose a combination of these techniques that supports your business needs. 

1. Operational or automated CRM

Operational CRM focuses on creating a smooth system by aligning your marketing, sales, customer service, and outreach program in an automated manner. 

One of the biggest advantages of automated CRM is that it allows you to create a customer journey. This offers a positive experience to your customers as well as your team members. 

Another crucial advantage of having an automated CRM mechanism is that it provides value for money. Not only does it allow you to identify tedious and overlapping tasks, but it also helps you eliminate those asks, thus saving your resources and time.

For example: British Airways (BA) includes CRM Teradata in Integrated Commercial Warehouses (ICW) to reduce the cost of running a North American campaign. This enables them to reduce their costs and serve their 45 million customers immaculately. 

2. Analytical CRM 

As the name suggests, this type of CRM is a heavy data-centric approach that businesses use to serve their customers. Analytical CRM uses the mechanisms to systematically collect customer data and conduct data analysis on the same. 

The customer data in this type of CRM includes contact, consumer preferences (online and offline), time, and behavior.  

One of the unique things about analytical CRM is that customers aren’t aware when their data is being collected. Thus, it allows businesses to collect raw and concrete data about their customers’ choices. 

For example: IKEA partnered with Microsoft for collecting real-time customer data so that they can create a smooth buying experience for their consumer. The DIY system of IKEA is driven by the help of the data collected by Microsoft Dynamics 365. 

3. Collaborative CRM 

In my opinion, this is one of the best forms of customer relationship management and data collection. The idea behind this type of CRM is that the data is collected on a singular platform and shared across all departments. This allows everyone to perform strategic, product, and customer analysis. 

This is a kind of cross-departmental customer relationship management. It includes data regarding interactions through chat, websites, email, and voice response systems. These are all integrated with the back office processes, like billing, invoicing, marketing, advertising, finance, and planning.

The major advantage of this approach is that it reduces cost, promotes better sync of business operations, and keeps the team on the same page. This leads to efficiency in functioning of the business. 

For example: Cisco uses advanced technology specialists that can develop CRM programs for real-time collaboration. They have CRM solutions that enable real-time cross-departmental collaborations. 

How to conduct customer relationship management? 

While each business takes a unique approach towards customer relationship management, there are a few factors which no one should miss.

1. Build dedicated teams and have cross-department collabs 

One of the best ways to implement CRM functions in your business is to create a dedicated team for the same.

As a business, it will always be in your favor if you have personnel who will specifically focus on CRM and also manage the data sharing with all the other departments.

This will enable your business to focus on the other core activities as well as develop a centralized CRM mechanism. 

#TCCRecommends: Consider adopting a revenue operations strategy to have a seamless collaboration between departments.

2. Deploy an automation software 

CRM software is one of the most popular ways of conducting relationship management for your business. These software allow you to automate your CRM tasks. 

Advanced automated software has a set of tools and capabilities for creating, tracking, and managing great customer journeys.  

The first step for this software is to collect the data about the leads, and then share the same with all the departments of the business. This allows these departments to conduct their functions smoothly and offer personalized services to their customers. 

Manager complimenting everyone on a good CRM report.
Sales reps who are still using old CRM

3. CRM outsourcing 

There are multiple ways in which you can outsource your CRM. As an enterprise, you can hire someone else to host your software, which can be developed either in-house or purchased from a provider.

You can also choose to hire other agencies to run your whole CRM department or specific functions within it. 

It is expected that the market for CRM outsourcing will grow to $21 billion by 2025.

The key consumer countries for the same will be the UK, USA, Australia, Germany, and Canada. 

Best 5 CRM Software TCC Swears By

In our experience of 20 years, we have worked with countless CRM tools for different purposes.

Of which, these are a few we love and feel would work for majority of businesses.

What’s in the future for CRM? 

There will come a time when the “CRM software” per se will become obsolete.

The future of CRM is machine learning and AI. The predictive analysis capacity of machine learning is something that businesses are counting on. 

One of the facets driving this is the availability of data points with almost every consumer.

Machine learning gives extra insight into the data you’re already gathering so it enables you to “automate” your strategies. Thus, saving your resources and time. 

In Conclusion

Customer is king.

If you are not following it yet, consider this as a reminder to start.

We, at TCC are familiar with the importance of building long-term relationships with customers and partners alike.

This is why The Clueless Company always provides support to businesses in regards to relationship management activities. 

To know more about us or our services, book a free consultation call