Importance of Customer Relationship Management (CRM)

Anyone who has taken a business course has probably seen the acronym CRM. CRM stands for Customer Relationship Management and refers to ways of keeping track of interactions with customers.  However, it is much more than that. does a nice job of defining CRM:  “Customer Relationship Management (CRM) is a process companies use to understand their customer groups and respond quickly—and at times, instantly—to shifting customer desires. CRM technology allows firms to collect and manage large amounts of customer data and then carry out strategies based on that information. Data collected through focused CRM initiatives help firms solve specific problems throughout their customer relationship cycle—the chain of activities from the initial targeting of customers to efforts to win them back for more. CRM data also provide companies with important new insights into customers’ needs and behaviors, allowing them to tailor products to targeted customer segments. Information gathered through CRM programs often generates solutions to problems outside a company’s marketing functions, such as supply chain management and new product development.”

Forward-thinking companies must learn to embrace CRM to remain competitive.  An article in pointed out, “The ultimate purpose of CRM, like any organizational initiative, is to increase profit. In the case of CRM this is achieved mainly by providing a better service to your customers than your competitors. CRM not only improves the service to customers though; a good CRM capability will also reduce costs, wastage, and complaints.”

In the business world, Pareto’s Principle is often cited.   This principle states that 80% of effects come from 20% of the causes.   This has been translated to:  companies obtain 80% of their business from 20% of their clients.   As the article pointed out this also means:

  • 20% of customers account for 80% of your turnover
  • 20% of customers account for 80% of your profits
  • 20% of customers account for 80% of your service and supply problems

In order to avoid wasting time and energy, relationship building is critical.  To develop these relationships, it is important to have a strong CRM system.  There are plenty of web-based CRMs.  A popular cloud-based CRM is available through  This popular system boasts ease of use stating, “Using Salesforce CRM is as easy as buying a book on That means your employees will actually use it, so it will be a more effective tool for your business.”

Apps are popping up all over to help with CRM. has their own that is good for a sales-based industry. did a nice review of some other top CRM apps that are useful for small businesses.