CRM, or Customer Relationship Management, is a company-wide business strategy first a software selection second. True CRM brings together information from all data sources within an organization (and where appropriate, from outside the organization) to give one holistic view of each customer in real time for everyone inside your company. This allows employees who are in direct contact with your customers in such areas as sales, customer support, and marketing to make quick yet informed decisions on everything from cross-selling and upselling opportunities to target marketing strategies to competitive positioning tactics and even simple daily communications and interactions with those you communicate with.

Once thought of as a type of software, CRM has evolved into a customer-centric philosophy that must permeate the entire organization. There are three key elements to a successful CRM initiative: people, process, and technology. The people throughout a company-from the CEO to each and every customer service rep need to embrace CRM as a long-term business strategy. A company's business processes must be re-engineered to bolster its CRM initiative, often from the view of, How can this process better serve the customer? Small businesses must select the right technology to drive these improved processes, provide the best data to the employees, and make it easy enough to operate so that users won't resist. If one of these three foundations is not sound, the entire CRM will remain unstable.

It's all about managing relationships.
CRM is a strategy used to learn more about customers' needs and behaviors in order to develop stronger relationships and communicate better with them. After all, good customer relationships are at the heart of business success. There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake. The more useful way to think about CRM is as a process that will help bring together many pieces of information, individual (i.e. sales & service) and group touch-points (marketing and management) into a single view for all of those inside the company.

If customer relationships are the heart of business success, then CRM is the valve that pumps a company's life blood. As such, CRM is best suited to help businesses use people, processes, and technology to gain insight into the behavior and value of customer relationships. This insight allows for improved customer service, increased call center efficiency, added cross-sell and upsell opportunities, improved close rates, streamlined sales and marketing processes, improved customer profiling and targeting, reduced costs, and increased share of customer and overall profitability.

This sounds like a panacea, but CRM is not without its challenges. For CRM to be truly effective, an organization must convince its staff that change is good and that CRM will benefit them. Then it must analyze its business processes to decide which need to be re-engineered and how best to go about it. Next is to decide what kind of customer information is relevant and how it will be used. Finally, an internal team of carefully selected employees/managers must choose the right technology to automate what it is that needs to be automated. This process, depending upon the size of the small business and the breadth of data, can take time. However, in the end, it's this time spent building a solution out of human process and not out of a box that delivers true automation and CRM.