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The beginner's guide to CRM: Customer relationship management

An introduction to CRM software

By Matthew Guay · April 5, 2022
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It's hard to imagine life today without the contacts app on your phone. Phone numbers are hard enough to remember, let alone the email and mailing addresses for everyone you know. So we outsource that to our phones, letting them remember everyone's contact info. All we have to do is say Siri, call Bob.

You need even more help with your business contacts—and your address book app isn't enough. In addition to names, phone numbers, and addresses, you need to track the products people are interested in, what services they've purchased from your company, the company they work for, their preferences...the list goes on.

That's why you need a CRM, a customer relationship management app.

  • What is a CRM?

  • Types of CRM

  • CRM glossary

  • CRM pricing

  • CRM tips

You can use Zapier's pre-built simple CRM template to optimize your sales process with an elegant and personalized CRM tool that fits your business needs. The template includes a form to collect leads, a datasheet to store lead information, and a visual tracker to manage the status of each lead and initiate actions when needed.

What is a CRM?

A CRM is a customer relationship management tool that allows you to organize contact info and manage your relationships with current and prospective customers, clients, and other contacts. It's the modern version of the old-fashioned Rolodex.

A good address book app like Google Contacts lets you list your contacts, add detailed contact info, write notes about each contact, and find emails they sent you in Gmail. You can even organize contacts into groups, perhaps to keep customers in one list and leads in another.

A CRM app will do that and more, thanks to the R in its name: relationship.

CRM apps are sales tools built around relationships. They'll help you find all your contacts who work for the same company and any messages that have been sent about your work with that company. They'll tell you who on your team was in contact with them last so you can get an intro, remind you what to talk about at your next meeting, and even automatically send follow-up messages to help you nurture leads.

The 4 main types of CRM software

All CRMs put leads and deals front and center. Any CRM lets you track potential customers and clients as "leads," add info as you work on convincing that customer to use your product or service, and then turn that lead into a "deal" once they've decided to buy your products or services. CRMs help you log the steps, tracing the interactions that led from the first contact to the finalized deal—and they're crucial for working together in a sales team that otherwise would struggle to know exactly where the deal stood at any given time.

Generally, CRMs can be broken down into four types:

  1. Operational CRM

  2. Collaborative CRM

  3. Analytical CRM

  4. Marketing CRM

In practice, most CRMs are all-in-one tools and can pull in various features from each type, but understanding these differences will help you get a sense of what CRM features are most important for you.

Some CRMs are also more industry-specific, built for companies in a specific business like real estate or insurance.

If you're just looking for lists of CRMs to peruse, we have you covered there too:

  • The best CRM software

  • The best free CRM software

  • The best CRM software for small businesses

1. Operational CRM

A screenshot of Vtiger, our pick for the best free CRM software with affordable upgrade options

On top of regular CRM functions (like storing leads, customers, and deals on one platform), operational CRMs have a big focus on automation, allowing you to streamline business processes for customer relationships. 

Smaller companies can benefit from this type of CRM as they scale because it allows you to automatically track touchpoints throughout the customer journey, from leads first interacting with your content to them moving through the sales pipeline. It lets teams offload a lot of manual work (like data syncing) and focus on building customer relationships. 

2. Collaborative CRM

A screenshot of Copper CRM

All too often, a company's marketing, sales, and customer support teams work in a silo, spread across departments that don't have a joint visual pipeline of leads and customer interactions.

A collaborative CRM gives every team access to up-to-date customer data in one spot in real-time. This includes marketing information (what content a lead has interacted with, for example), any purchases a customer has made, and any previous customer communication with any team member. This type of CRM means anyone can quickly pull up a record of all past interactions and better understand their customers' needs and interests.  

3. Analytical CRM

Zoho CRM Plus, our pick for the best digital marketing tool as an all-in-one CRM for small businesses.

This type of CRM—like the name implies—has a strong emphasis on analytics and reporting. After all, you need to analyze the customer data you gather over time so that you can improve things in your business, like marketing campaigns, sales efforts, and customer support effectiveness. 

Data can help your business paint a better picture of your core customer and answer questions, like which marketing campaigns generate more leads, or what content can lead to a purchase. 

4. Marketing CRM

HubSpot email creation

With all of your contact data in one place, it seems like your CRM could do something with it automatically. And if you have a marketing CRM, it can.

Marketing CRMs typically bake marketing features directly into the software. They then also include automated workflows that help you, say, automatically send an email to a lead the day after they click a link in a marketing email you sent them. Or they could tag a lead as interested when they've opened four of your emails—notifying your team that it's time for the personal touch. These apps tend to be a bit more expensive than their competitors but can also help you close your next sale faster.

You'll find that some marketing CRMs, like HubSpot, are connected to other features like a content management system, which can help you create and manage your website.

What is a lead? The 9 most common CRM terms explained

Now that you understand CRM software, it's time to learn the lingo. CRMs are filled with new terminology that you might not be familiar with if you've never worked in sales: leads, deals, contacts, opportunities, and more. Here are some of the most common CRM terms, along with a quick explanation of each.

  • Contact: In CRM land, contacts are people. Just like in your address book, you'll store the names and personal info of your customers and clients (your contacts). You'll likely also see designations like "company" or "account" in your CRM alongside contacts; these are the organizations you work with, and you'll usually link your individual contacts to a company or account.

  • Lead: Leads are contacts who might want to do business with your company in the future but still need to be nurtured quite a bit before they get there.

  • Opportunity: Turns out that lead was really interested, and you think you're going to be able to sell them your product or service. Now they’re an opportunity: someone actually likely to buy your product. You'll want to list info about what exactly this opportunity is (including potential dollar amounts) and track it in your CRM.

  • Quote: You've worked with a contact, turned that lead into an opportunity, and now you're almost ready to make a deal—so you'll give them a price and the service or products they'll get for it. That's what quotes are for: the place to list the price you gave to potential customers.

  • Deal: Everything worked out, and you've sold your product—or perhaps it didn't, and the opportunity fell through. You'll track both of those with deals (won and lost).

  • Profiles: Typically, these would be the people inside your own company that use the CRM software. Each of them may have a role, or a particular set of permissions in the app—your sales team might not have access to your suppliers list, say, while perhaps only HR can edit details on your team profiles.

  • Campaign: If you use your CRM for marketing, campaigns are your outreach efforts. Each campaign will list the contacts and companies most crucial to that outreach plan, along with results, notes, and more.

  • Tag: Similar to tags in Gmail or metadata on your photos, tags give you a way to add extra info to a contact, deal, or anything else in your company's CRM. This extra data gives you more ways to filter and sort through your CRM.

  • Activity: Activity in a CRM typically refers to anything that's happened in the app—new deals, contacts, opportunities, or perhaps just a message from your colleagues. Activity is usually listed in a feed, so you can review it easily.

CRM pricing: How much will a CRM cost?

CRM pricing is as varied as CRM features.

If you're worried about price, there are plenty of free options available. But as always, free sometimes means awful. We tested dozens of them, though, so check out our list of the best free CRM apps, and take your pick.

When you're ready to upgrade to a more full-featured CRM, you'll typically need to spend from around $5 to $100 per user per month, depending on the app and features you choose. Yeah, it's quite a range. That's why it's important that you know exactly which features are absolute musts, so you're not purchasing a bloated product that has more than you need. To give you an idea of how varied pricing can be—both in terms of pricing structures and actual cost—take a look at our comparison of HubSpot vs. Salesforce.

CRM tips: How do you make the most of a CRM?

Your CRM will help you with customer relationship management only if you actually use it to its full potential.

Turn it into a productivity tool

Don't keep using your address book to manage contacts and your notes app to write down what was said during a call. Once you have a CRM, use it for everything. If the CRM is the place you list everything about your customers, it'll quickly become a core part of your work, saving you time at every step of the process.

Leverage CRM automation

While many CRMs come with automation features to manage your processes better, you can use additional automation tools like Zapier to better leverage your leads and make an even bigger impact. You can do things like add new contacts to your CRM automatically or log calls, meetings, and more to your contact profiles.

It's automation like that, whether built-in or from another app, that lets you rely on the CRM to be the one place that has all of your contact info. You should never feel like you have to go search another app for relevant info; your CRM should be the repository for your team's customer interactions.

Essentially, a CRM shouldn't just give you a place to manage your leads—it should manage them for you, too. Here are a few resources to get you started:

  • The ultimate guide to CRM automation

  • CRM integration: How to get the most out of your investment

  • CRM automation to boost your team's productivity

Experiment with different CRMs for the right fit

It can be tough to pick one CRM for your team. So try a few, see how they fit your work style, and decide which type of CRM your team needs. Then at the end of the free trial period, pick one CRM and commit. That's when the real work of making new leads and closing new deals begins.

Boost your customer relationships—and sales—for good

CRM apps can help you make order out of the chaos of your interactions with people, letting you focus on your customers instead of always trying to find out what was said last. The software can look intimidating, but it's really not that much more complicated than your standard email and contacts apps—and once you learn to rely on the CRM and incorporate automation, you'll find it takes you less time to use than your old email search habits.

Read more:

  • The best ERP software

  • The best real estate CRM

This article was originally published in December 2017, and has since had contributions from Elena Alston.

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