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The Importance of CRM for Business Growth

Customer Relationship Management (CRM) – Customer relationship management (CRM) is a crucial aspect of business that involves fostering good relationships with customers and ensuring their satisfaction.

It is a strategy, activity, and technology used by companies to build strong relationships with customers or potential customers.

What is CRM?

CRM can be defined as a tool that generates a simple user interface to collect customer data.

This data helps companies understand how to approach each customer based on their personality traits.

It doesn’t always require expensive specialized tools to implement CRM.

Businesses, regardless of their size, can build good relationships with customers through various methods such as social media, websites, phone calls, chats, emails, and various marketing tools.

The Importance of CRM

CRM is vital for the growth of a business as it increases profitability in sales.

It also plays a key role in generating customer loyalty, which increases the likelihood of repeat orders. Having loyal customers translates to higher profits.

Read more: CRM Benefits: 14 Biggest Advantages of Using a CRM System

Apart from monetary benefits, CRM offers other advantages as identified by Forbes:

Learning Material

CRM allows business owners to understand their customers, including who they are and why they purchase or use their products or services.

By analyzing customer purchase history, businesses can learn how to meet their customers’ needs more effectively.

Effective use of CRM enables businesses to offer what their market desires without guesswork, leading to quicker growth in profits.


CRM tools typically have functions for storing and archiving customer data, including purchase history, analysis, and campaign records.

Comprehensive data archiving simplifies the understanding of CRM results by presenting data in a more accessible format.


The data generated by CRM software helps businesses identify the most appropriate approach for their customers.

This allows businesses to optimize their strategies and tailor their interactions to each customer’s characteristics.

Read more: ERP and CRM Software: Understanding, Benefits, and Differences

Measuring Customer Relationship Management (CRM)

For efficient results, according to MyCustomer, there are three departments associated with the influence of a customer relationship management system: sales, marketing, and service.

These departments can be measured using specific metrics to improve and achieve desired outcomes.


  • Number of prospects
  • Number of retained customers
  • Close rate (sales agreement rate)
  • Renewal rate
  • Number of new customers
  • Sales revenue through calls
  • Number of sales opportunities
  • Revenue from new sources
  • Open opportunity rate
  • Sales cycle duration
  • Number of proposals given


  • Number of created campaigns
  • Response rate to campaigns
  • Number of buyers from campaigns
  • Revenue generated from campaigns
  • Number of new customers from campaigns
  • Number of customer referrals
  • Web page views
  • Time per website visit
  • Customer lifetime value
  • Cross-sell ratio
  • Up-sell ratio
  • Email growth ratio


  • Number of cases encountered
  • Number of cases successfully handled per day
  • Average handling time
  • Average number of services provided per day
  • Time from complaint to resolution
  • Number of repeat customer contacts
  • Average service price
  • Unanswered calls
  • Average time to resolve issues via phone

Choosing Customer Relationship Management Metrics

Once businesses understand the importance of CRM, it’s essential to determine the most relevant metrics for their specific needs.

To determine suitable metrics, businesses can follow these steps:

Establish and measure business goals:

clear business goals to understand how CRM can be maximized. Determine whether CRM will increase profits or reduce operational costs.

Measure the revenue expected within a specific timeframe, allowing CRM to provide the best solutions to achieve those goals.

Formulate CRM strategies and tactics

Define strategies and tactics to achieve the goals identified in the previous step.

By formulating these strategies, businesses will know how to approach customers with different characteristics.

Define appropriate CRM calculations

This can be done through calculations in customer service, such as measuring the number of calls handled by each person.

It can also be demonstrated through customer feedback using the Net Promoter Score (NPS) form. With specific numbers, businesses will have a clearer understanding of the next steps to take.

Monitoring these metrics can prevent businesses from falling short of their objectives.

Connect CRM goals, strategies, and metrics

For example, if your business goal is to increase profits by 10%, your strategy could be to enhance service or solutions for customers rather than just selling products.

By aligning CRM goals, strategies, and metrics, businesses can ensure a cohesive approach.

Here are some popular CRM software options along with their pros and cons:

1. Salesforce

  • Pros: Highly customizable, robust feature set, scalable for businesses of all sizes, extensive third-party integrations, strong analytics and reporting capabilities.
  • Cons: Expensive, steep learning curve, may require additional development or consulting services for advanced customization, can be overwhelming for small businesses.

2. HubSpot CRM

  • Pros: Free option available, user-friendly interface, seamless integration with other HubSpot tools, good for small businesses or startups, basic contact management features.
  • Cons: Limited features compared to paid CRMs, may require additional paid upgrades for advanced functionality, limited reporting capabilities.

3. Zoho CRM

  • Pros: Affordable pricing plans, comprehensive feature set, wide range of integrations, customizable and scalable, automation capabilities, suitable for small to medium-sized businesses.
  • Cons: User interface can be overwhelming, some features may require technical knowledge, customer support can be slow at times.

4. Microsoft Dynamics 365

  • Pros: Seamless integration with other Microsoft tools, scalable for enterprise-level businesses, robust features for sales, marketing, and customer service, strong reporting and analytics capabilities.
  • Cons: Expensive, complex setup and customization, may require technical expertise, can be overwhelming for small businesses.

5. Pipedrive

  • Pros: Intuitive and user-friendly interface, focuses on sales pipeline management, customization options, good mobile app, suitable for small to medium-sized businesses.
  • Cons: Limited marketing and customer service features, lacks advanced automation capabilities, reporting capabilities may not be as robust as other CRMs.

6. Freshsales

  • Pros: Affordable pricing plans, easy-to-use interface, built-in phone and email features, lead scoring and tracking, suitable for small to medium-sized businesses.
  • Cons: Limited customization options, advanced features may require higher-priced plans, limited third-party integrations.

7. Insightly

  • Pros: Affordable pricing plans, robust contact and project management features, good for small businesses, integration with popular business tools, mobile app available.
  • Cons: Limited marketing automation features, reporting capabilities may be basic, may lack scalability for larger businesses.

It’s important to note that the suitability of a CRM software depends on the specific needs and requirements of a business.

It’s recommended to evaluate multiple options, consider your business size, budget, required features, and scalability before making a decision.

Read more: CRM Software List: The Best of 10

FAQs About Customer Relationship Management (CRM)

Here are some frequently asked questions (FAQs) about CRM along with easy-to-understand answers:

Q: What is CRM?

A: CRM stands for Customer Relationship Management. It is a strategy, activity, and technology that helps businesses build and maintain strong relationships with their customers.

Q: Why is CRM important for businesses?

A: CRM is important because it allows businesses to understand their customers better, meet their needs effectively, increase sales, and build customer loyalty.

Q: What are the benefits of using CRM?

A: Using CRM has several benefits, such as improved customer satisfaction, increased sales and profitability, better marketing campaigns, enhanced customer retention, and streamlined business processes.

Q: Can small businesses benefit from CRM?

A: Absolutely! CRM is not limited to large businesses. Small businesses can also benefit from CRM by building good relationships with their customers, improving sales, and enhancing customer loyalty.

Q: What features does a CRM software typically have?

A: CRM software typically includes features such as contact management, lead management, sales and opportunity tracking, customer communication tracking, task and activity management, and reporting and analytics.

Q: How does CRM help with customer satisfaction?

A: CRM helps with customer satisfaction by allowing businesses to understand their customers’ preferences, purchase history, and interactions. This enables personalized interactions and tailored solutions, leading to improved customer satisfaction.

Q: Is CRM only for sales teams?

A: No, CRM is not limited to sales teams. While CRM is commonly used in sales departments, it can also benefit marketing, customer service, and other customer-facing teams. CRM helps different teams collaborate, share information, and provide a consistent customer experience.

Q: Can CRM software integrate with other business tools?

A: Yes, many CRM software options offer integrations with other commonly used business tools such as email marketing platforms, productivity tools, customer support software, and accounting systems. Integration allows for seamless data exchange and enhanced productivity.

Q: Can CRM software be customized to fit specific business needs?

A: Yes, most CRM software options offer customization features. Businesses can customize data fields, workflows, and automation rules to align with their specific processes and requirements.

Q: How do I choose the right CRM software for my business?

A: To choose the right CRM software, consider factors such as your business size, budget, required features, ease of use, scalability, and customer support. It’s important to evaluate multiple options and even try out demos or free trials before making a decision.

Remember, CRM is a valuable tool for businesses of all sizes and industries, helping them build stronger relationships with their customers, increase sales, and drive growth.

In conclusion, CRM or customer relationship management is an essential aspect of any business.

It helps build strong relationships with customers, increases profitability, generates customer loyalty, and provides valuable insights.

By measuring the relevant metrics, businesses can optimize their CRM efforts and achieve their desired goals.

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