6 Game-Changing Benefits of Customer Relationship Management

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Written By SmarterrMoney.org

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Whatever your product or service, whatever industry you work in, you need your customers. And attracting, delighting, and retaining customers comes down to how well you build and manage those relationships. Every company wants the benefits of solid customer relationships, but not all companies know how to create them.

The customer relationship can be complex, beginning with your first contact and extending far beyond their initial purchase. That’s why many businesses rely on a customer relationship management (CRM) system. It serves as your central database for understanding your customers and what they want and need from you. When teams adopt and consistently use a CRM, they gain incredible insight into sales opportunities and trends.

From increased sales to improved customer service, the benefits of using the right CRM system and tactics are numerous — and will undoubtedly pay off in the long run. In this article, we’ll explain how your CRM affects your overall customer relationships and six of the most essential benefits of customer relationship management.

Customer relationship management and your CRM 

Customer relationship management (CRM) is a business strategy focused on developing strong, positive relationships with customers. It involves collecting and managing information about accounts (like preferences and behaviors) to improve customer interactions and build customer loyalty. 

CRM software helps businesses store, organize, and analyze customer data, which is used to create better marketing campaigns, sales strategies, and product and service offerings. Typically, your sales, customer service, and marketing teams will use your CRM to inform their efforts overall and provide a more tailored experience to individual accounts.

For most companies, managing customer relationships is closely tied to how they use their CRM. But customer relationship management is more than just the data in your CRM. Managing customer relationships encompasses how your team interacts with potential customers, how responsive you are during the sales process, the level of onboarding and support you provide to existing customers, and more.

Combining an engaged and invested team with an intuitive and powerful CRM can improve every stage of the customer lifecycle. Let’s cover some of the most compelling benefits of using a modern CRM to manage and optimize customer relationships.

6 top benefits of customer relationship management

The right CRM tool enables you to create better relationships with your customers. As your customer relationships grow, you’ll see other benefits as well.

1. Streamline customer communication and support across channels  

Even when leads or customers have a designated account manager, they are bound to interact and communicate with other parts of your company. Detailed CRM records are how your team can provide a consistently excellent experience, whether they speak with the customer often or they’ve never interacted. Access to your customers’ data allows for better and faster responses to their inquiries, increasing customer satisfaction and brand loyalty. 

(Image source: TigerLRM)

For example, let’s say a customer is having trouble and contacts customer support. The support representative may never have spoken with this customer before. Without supplemental information, they may have to spend a lot of time gathering basic information about the customer’s use case. Customers cite repeating their information or questions as one of the top customer service frustrations. This can mean the customer has to go through a long, frustrating conversation before getting an answer to their question. 

If the company keeps detailed account records in its CRM, however, the support professional can see at a glance who this customer is, what they use the product for, and what issues they’ve had in the past. With a modern CRM, you can track customer conversations and provide a seamless experience across channels. You can even carry a conversation over from Instagram into a live chat and automatically pull up the account’s information and interaction history.

2. Build customer profiles and create audience segments 

With the data you get from your CRM software, you can build accurate profiles and learn more about each of your customers. This, of course, depends on your team consistently and accurately updating account records. Throughout the customer relationship, you will gather and track data such as purchase history, demographics, interests, and behavior.

(Image source: TigerLRM)

A CRM like TigerLRM will then allow you to analyze the data and create customer segments based on age, gender, location, purchase frequency, and interests. This can help you provide more customized marketing (more on that later).

All this customer data can also be used to build ideal customer profiles (ICPs). Customer profiles help you understand what kind of leads are most likely to convert into customers. This allows your sales and marketing teams to make better decisions about who they spend time, effort, and budget on. This, in turn, can lead to faster sales cycles and higher customer lifetime value. 

3. Increase sales revenue

When you have a deeper understanding of your client base, you can cater your marketing and products to their needs and wants. Careful customer relationship management, both inside and outside of your CRM, helps you understand what features and services matter to them. This information can then be used to develop more effective marketing campaigns or guide product or pricing decisions.

Great customer relationship management also leads to greater customer satisfaction. If you’re taking care of your relationships, customers are more likely to leave positive reviews and recommend your product or service to partners.

With a strong relationship and info about what the customer needs, you can do more upselling and cross-selling. For example, Billie is a razor company that differentiates itself by creating razors with different colors and designs. After customers try their signature razors, Billie can use data from those purchases to inform follow-up marketing.

If you ordered a sparkly pink razor, they might email you with an offer for a matching toiletry set. By tracking customer preferences, they can generate repeat business.

4. Learn from detailed analytics

When you carefully track your customer relationships, the data you collect can provide powerful insights to guide all areas of your business. Along with account details like headcount and deal size, your team should document free trial usage, individual points of contact, industry quirks, preferences, and procurement processes.

(Image source: TigerLRM)

You can use your data to inform your customer profiles, learn which prospects have the highest potential, and learn about your sales cycle. TigerLRM, for instance, can produce reports about sales productivity, sales pipelines, lead generation, and more.

CRM data is also integral to generating accurate sales revenue forecasts. However, the accuracy of sales forecasts and other analytics depends on the accuracy of the data your team inputs and how frequently and consistently they make updates.

5. Increase retention

As we covered, having detailed records (only if consistently used) of your customer relationship helps you better understand their concerns and needs. Increased customer retention is another significant benefit of excellent relationship management. When your sales and customer service teams consistently use your CRM, they’re able to provide better service.

Beyond creating an overall better customer experience, your CRM records also allow you to anticipate and prepare for renewals. You can use your CRM to generate periodic reports of customers whose contracts are ending. Then you can start bringing up renewal as it approaches. Notes in your CRM on a customer’s past complaints or frustrations can even help you prepare for negotiations. 

Building ideal customer profiles and adjusting your sales prospecting appropriately can also reduce churn. When you know which customers are the best fit, you can stop investing time and effort into accounts that are likely to churn due to poor product fit. Developing greater understanding and better customer relationships can help you cultivate a strong base of loyal customers with high lifetime value.

6. Enhance personalized marketing

You can use your CRM to segment customers, which allows you to send more targeted communications. From new feature announcements to content resources to potential upsells and cross-sells, you can speak to customers with targeted and personalized content.

For example, when nurturing a new potential customer, it’s essential to learn what aspects of your product or service they are most interested in. If your business sells email software and you know that an account is interested in upgrading its marketing automation, you can send content and communications on this topic or prepare product demos highlighting your automation features.

Marketing is increasingly moving from a one-to-many approach to a one-to-few or even one-to-one policy. In fact, 67% of consumers said they consider it important for brands to tailor messaging to their needs. Caring for and documenting your customer relationships gives you the information and infrastructure to make your marketing more relevant.

Frequently asked questions 

Here are answers to some of the most common questions about customer relationship management and its major benefits.

Is a CRM a sales enablement tool?

A CRM is a tool frequently used by sales teams to track accounts, customer interactions, and sales trends. Sales enablement tools typically focus on providing training, coaching, and insights to help sales teams improve and close more sales. Most customer relationship management systems are not sales enablement tools.

Is customer relationship management the same as customer success?

Customer relationship management encompasses many elements of the sales and retention process, including customer success. Customer success is the content and service a company provides to help customers use the product effectively. This is just one part of the customer relationship.

What is an example of customer relationship management?

Customer relationship management can take place at any point in the customer journey. After an introductory call, for example, a sales representative might follow up by emailing the lead some content resources related to the topic or product they discussed. This shows the potential customer that the sales rep was listening and wants to keep helping them find solutions.

Another example of customer relationship management is when a user contacts customer support with an issue. The way the company manages this interaction will affect the customer relationship. But so will how the company documents the interaction. If the support representative adds a note about their conversation to the CRM account record, the next colleague who works with this customer will have a better understanding of where the relationship stands and what the customer needs.

What is the “land and expand” approach?

Sales teams use the “land and expand” approach to grow and extend customer relationships. The company nurtures a lead to secure (or “land”) a contract or formal relationship with a client. Then, through excellent customer relationship management, they secure more business (“expand”) with the customer and its affiliates. For example, a marketing agency might win a contract to develop a single campaign for a client and then focus on being hired for more campaigns or on a retainer.