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How to create a CRM database

By Bryce Baer

Published March 31, 2020
Last modified July 14, 2020

It has never been easier for companies to connect with their customers. Between social media, email, phone, messaging apps, and live chat, companies can quickly and easily engage their customers in the channels that are most important to them. This omnichannel ecosystem provides considerable benefits to customers and companies alike, and a key tool that optimizes this support environment is the CRM database.

CRM, or customer relationship management, employs databases that are used to automatically collect, store, and analyze all the information that a company collects about its customers, whether it’s a post on a social media account, a purchase made at an online store, a help desk call, or participation in a webinar. The CRM database then makes all of this information available in one customizable dashboard.

Here’s what CRM does best: it makes it easier to connect the dots between sales, marketing, and support, it helps organize sales leads into one place, and most important, it provides the kind of global view of the customer experience that fuels retention and loyalty efforts. In this article, we’ll explore the finer details of the CRM database, including how to create one and ultimately maximize its effect on your business.

What is a CRM database?

CRM databases have evolved a lot in the past 30 years. Originally, CRM was a place that managers could go to understand their company’ s sales pipeline. Oftentimes this information was kept in a simple tool like a spreadsheet, which helped sales reps and executive management plan ahead for the next quarter or year. Modern CRM systems have since evolved into sophisticated software databases that can connect to every tool that a company uses to engage its customers. CRM databases make it easy to improve the customer experience, while giving the company the tools to increase sales and give their customers exceptional support.

A CRM database collects every interaction that a business has with its customers in one place and then makes all of that information available to the company in one customizable dashboard. This means that support agents don’t need to log in and out of multiple systems, copying and pasting account numbers into different software tools to get basic information about a customer. With CRM, all of the data created about customers across disparate tools, accounts, and systems is automatically stored in the database and easily accessible to everyone on the team.

CRM also helps companies make sense out of all the data they’re collecting about their customers, with deep, actionable analytics that help them understand the customer journey and how to make them happy. This can take the form of evaluating the efficacy of marketing automation campaigns, finding valuable cross-sell opportunities, or identifying ways to improve the speed and efficiency of its customer service reps or sales team. Companies can create customized reports based on the KPIs that are most important to it and its workflow. And of course, just like the CRM of days past, it can provide valuable insights into a company’s sales pipeline, helping to guide a company’s planning and projections.

Why do you need a CRM database?

There are a number of things that companies should consider when evaluating if a CRM solution is right for their business. First, does the business need help with lead management? CRM can be very helpful for companies that have a high volume of leads, because it creates timelines for each contact that are easy to track. CRM also allows companies to set automatic reminders for each contact so prospects are assigned to specific salespeople and nothing slips through the cracks.

CRM can also be incredibly helpful for organizations whose sales leads have multiple touchpoints inside a company, or have long, complex sales cycles. If a customer is in touch with sales, support, and product, a CRM system will help companies make sure—by providing a 360-degree view of the customer—that they’re not duplicating work or inconveniencing a lead by asking for the same information multiple times.

Data-driven companies also have a lot to gain by considering a CRM database. By bringing all of a company’s data sources into one place, CRM can run actionable reports on just about any aspect of a company’s business, from sales forecasts to customer satisfaction metrics, like Net Promoter Scores℠ and CSAT.

CRM solutions are also valuable for companies that want to run marketing automation, like email marketing campaigns. CRM makes it easy to do everything from sending newsletters to a company’s entire customer base to implementing sophisticated segmentation for highly targeted offers.

What are the core elements of building a CRM database?

CRM can be a powerful addition to almost any organization, but its impact will only be as good as the data that is put into it, and the way it is used within an organization.

The first core element of a CRM system is people management. As noted previously, CRM makes it easy to deploy people in an organization to solve customer problems, follow up with sales leads, or manage marketing automation campaigns. But CRM software also enables managers to assign and track work for everyone on the team, as well as provide transparency about the state of projects, sales cycles, and more.

Contact management is also a critical element of customer relationship management platforms. By storing all of a company’s contacts in one place that is updated automatically, it’s easy for the entire company to have fast access to some of its most critical information. When sales reps can spend more time working with customers and less time updating contact info, they’re able to close more deals, faster.

Another element of CRM software is lead management. As leads are entered into the system, CRM makes it easy to automatically assign salespeople, define next steps, and track their progress. It also makes it easy to stay on top of next steps for leads that may have multiple touchpoints at a company. With CRM there’s one centralized place for updates, so multiple team members aren’t constantly searching for new information.

Sales task automation is another core element of CRM databases. By automating many of the business tasks associated with sales, such as order processing, information sharing, order tracking, and contact management, sales task management helps sales teams run smoothly and efficiently, enabling a stronger focus on customers, not on administrative tasks.

Customer service is also a core element of CRM databases. Since CRM brings in every interaction with a customer into a unified dashboard, customer service agents have everything they need to solve customer problems—no need for logging in and out of different systems to get information like account numbers, order history, or previous interactions with service and support. That means customers aren’t waiting impatiently while a support rep scrambles to get the full picture—and, importantly, it eliminates the need for consumers to repeat themselves, especially if they get transferred to another team member.

CRM databases can also play a key role in enabling marketing automation. By giving marketers powerful ways to segment their customers—and, crucially, integrating with common tools like MailChimp—CRM helps businesses conduct and measure the success of programs like email marketing campaigns.

Finally, reporting and analytics are a central component of CRM systems. Companies can use CRM to create dashboards and reporting based on their own unique KPIs and business requirements. From tracking customer service ticket resolution times to understanding a company’s entire sales pipeline for the year, CRMs make it easier to improve customer relationships.

How do companies benefit from creating a CRM database?

One of the biggest benefits that companies can expect from using a CRM database is a centralized database for its sales organization. By eliminating the need for individual sales reps to do the tedious work required in maintaining their own personal databases, CRM automates the process and makes it easy for anyone in the company to get the latest information from the CRM dashboard.

CRM also makes it simple to manage communications with all customers and potential customers in one place. Companies that use CRM are able to see the company’s entire history communicating with each customer with the click of a button. The CRM database also makes relationship management simple, with the ability to set reminders and assign agents to keep deals moving, while providing managers the transparency to make sure leads are being followed up on.

Automating data entry is another benefit for companies that implement a CRM solution. Reps and agents don’t need to update information about their calls or emails with clients into a different system. Everything is logged automatically in the CRM solution, freeing up employees to do higher value work to close deals and solve customer problems.

CRM benefits also include powerful ways to organize all of a company’s contacts. The CRM makes it easy to see whether the customer has visited a web site, contacted support, requested a demo, as well as notes from agents who handled previous interactions. The CRM also makes all of this data searchable, no matter where a customer is in the pipeline.

Another important benefit of CRM systems is the ability to easily segment a company’s customers. When marketing teams can segment their customers, they’re able to deliver email marketing campaigns that are more personalized and effective. With CRM, segmentation by demographic and geographic information is possible, along with more nuanced information, like how long it’s been since the customer visited a web site or whether they’ve looked at a specific offer.

CRM also gives businesses the ability to create sales reports, which help them manage their pipeline with customized dashboards that are fine-tuned to track a company’s most important KPIs. CRM reporting provides the kind of data that enables managers to understand the work that’s happening to close deals, while also providing insight into revenue projections for leadership.

Companies that use CRM also benefit from the ability to streamline communications across many disparate teams. Since everyone is working in the same CRM dashboard, whether they’re in sales, service, support, or management, it’s easy to assign work, track progress, and collaborate with teammates to solve customer problems, keep deals moving, and discover new opportunities.

Another benefit of CRM for growing companies is the ability to keep the same software as the business grows. Because CRM is versatile—especially cloud-based, software-as-a-service (SaaS) versions—companies can add features and functionality not just as customer expectations and needs change but as business software evolves, whether that’s new shipping software, social media outlets, or accounting tools.

What can a CRM database be used for?

CRM systems’ flexibility means they’re eminently customizable, providing the kind of pliability that allows them to fit into the workflows of companies ranging from global enterprises to entrepreneurial startups. By consolidating customer information into a single environment and providing workflow customization, CRMs can, for example, help a sales team create a repeatable sales process for greater efficiency. By having a playbook for how to close deals, and a tool that automatically updates every contact with customers without any manual data entry, sales teams can focus more on building relationships and less on rote work.

While employees can work more efficiently with a CRM, their supervisors can also use the tool to help manage their teams. Those leaders can turn to a CRM for help with assigning work, gaining visibility into progress, and track metrics without needing to ask for laboriously created reports from other teams.

Meanwhile, CRM is also an effective way to manage customer service organizations. By giving support agents access to all of a customer’s information in one place, it’s easier for customer service and support teams to solve customer problems without having to shuffle customers between different teams—a key pain point that leads to lower customer satisfaction—or log in and out of disparate systems to get info about things like shipping, order fulfilment, or past service calls. And CRM databases also aid support teams in providing proactive service by automating some of those common customer queries, such as the status of an order or return.

How does a CRM help you organize customer data?

One of the most impactful features of customer relationship management software is its ability to help a business organize its customer data. Customer data can come from dozens of sources within a company, whether that’s a website visit, a call to a support team, a request for a demo, or a delivery address from an online order. The result is usually a chaotic blend of different kinds of data, coming from a number of different software solutions, spreadsheets that are managed manually, and email inboxes. CRM helps bring order to the chaos.

When a business deploys a CRM platform, one of the most important things it does—if it wants to make the most out of the solution—is develop a thoughtful CRM strategy. That takes understanding the customer journey: the steps (and pain points) that begin with someone being a potential customer to when they become a customer—and, ultimately, a repeat customer. The customer journey documents the ways a customer finds the business, how the customers learns about the company, decides to become a customer, gets support from the company, and later re-engages with it.

When a company understands the customer journey as part of its CRM strategy, it uses this information to define the kinds of information that is stored in the CRM database. This could be metrics like purchase history, demo requests, customer support contacts, and more. The CRM then connects to the various systems a business uses to manage these touchpoints and combines them into one 360-degree holistic view of customers that can be searched, segmented, and updated in real time without manual data entry.

Tools needed to create a CRM database

CRM databases are sophisticated pieces of software; creating a custom CRM database from scratch requires extensive software engineering skills and expensive onsite servers for hosting. While creating your own on-premise CRM database is an option, note that it requires a team of IT professionals to administer the service, add features over time, and manage security to keep customer data safe.

That said, popular CRM database software packages already exist that can serve the needs of the vast majority of businesses. For most companies, it is easier to work with a service provider to either purchase and install licenses of CRM database software, customize an open source database, or use a cloud-based CRM.

Open source CRM systems are software solutions that are available online and are downloaded and installed on a company’s own servers. One of the benefits of open source CRM is how it enables companies to build and customize the solution for specific use cases. It also provides total control of customer data and is inexpensive, with many free options available.

Of course, like any free solution, you get what you pay for with open source CRM. Many solutions only offer basic functionality and require substantial work to customize. With open source CRM, companies must install, manage, and customize the CRM system themselves, which requires expensive hardware and dedicated IT professionals to manage the solution. Open source CRM solutions also require companies to manage their own data security measures to keep their important customer information safe.

On-premise is another type of CRM that businesses can evaluate. Like open source solutions, on-premise solutions reside on a company’s own servers. On-premise solutions also require dedicated hardware and IT staff to manage, operate, and maintain the CRM software. Unlike free open source CRM systems, on-premise options can be much more robust and feature rich. On-premise solutions are also the most expensive CRM options, as they require a large upfront payment to purchase the software.

Cloud-based CRM is a great option for companies looking to quickly and easily get up and running with CRM, without having to manage the actual software themselves. Cloud-based CRM solutions are run by service providers and offered to companies in a SaaS model.

With cloud-based solutions, the CRM system runs on the provider’s servers. That means companies do not need to worry about maintaining their own servers or having a team of IT professionals to manage the system. Cloud-based CRM companies also have large teams of security experts that constantly monitor the system, which also features many layers of enterprise-grade security protocols and measures.

With cloud-based CRM, companies simply log into the system from anywhere with an internet connection and begin working. And unlike on-premise services, which require a large upfront expense, SaaS solutions let companies pay as they go with a monthly fee to use the service. Another benefit of web-based CRM is that companies can add or remove features and functionality as their companies grow and evolve.

Every company is different and their specific CRM needs will similarly vary. However, it is important for businesses to develop a CRM strategy as they are evaluating potential CRM providers. The more a company knows about its customer journey, the tools it needs to integrate into the CRM database, and the kinds of reporting and analytics are important to it, the easier it will be to evaluate different vendors.

Another key consideration for any company that is evaluating different CRM database software packages is security features and resources. Customer data in CRM systems can be an attractive prize for hackers, so it’s critical that companies consider who will be managing and monitoring the CRM security protocols.

When exploring different providers, it’s also recommended that businesses seek references from similar companies who have successfully implemented a CRM database, as customer stories and case studies can be an excellent guide.

Net Promoter and NPS are registered U.S. trademarks, and Net Promoter Score and Net Promoter System are service marks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.

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