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A customer relationship management (CRM) system is an IT technology that allows you to manage the business relationships you have with your customers, service users and suppliers.

What does a CRM system do?

CRM is a software or a tool that provides a central place for storing all your customer data and sharing it with other teams within your business. It allows you to create records and track the history of all your interactions with the customers, including:

• phone calls
• emails
• meetings
• presentations
• service enquiries
• leads
• purchasing habits and preferences

As well as tracking contact history, in most CRM systems you can also:

• add notes
• schedule follow-ups
• assign tasks to staff
• generate reports and sales forecasting

Why have a CRM system?

With all your information collated in one place, it becomes easier to understand and anticipate the needs and behaviours of your customers. This, in turn, allows you to:

• keep customer contact relevant, personal and up-to-date
• modify your business to better serve your customers
• identify new leads and sales opportunities
• win new business

In essence, CRM can help you to recognise the value of your customers and capitalise on improved customer relations. The better you understand your customers, the more responsive you can be to their needs. See more on the business benefits of CRM systems.

Do I need a CRM system?

Not all businesses need a full CRM system. If you are a sole trader or you typically have very few leads and no repeat business, the costs of enterprise-level CRM software may outweigh the benefits. Find tips to help you decide if your business needs a CRM system.

Even the best CRM system will need to be properly managed, if you are to make the most of its features. Without good management, significant challenges can arise - such as creating duplicate records and accumulating vast amounts of incomplete, unnecessary or out-of-date data. It's important to consider the potential drawbacks of CRM systems.