Manage Those Customer Relationships! The Different Types of CRM Software Your Business Can Use

Every company, from startups to mighty multinationals, must worry about customer relationship management.

For startups, most of that focus goes toward customer acquisition. Startups might use anything from profiles on the hottest social media sites to blogging to get targeted visitors onto their site. Once you get someone onto your site, you can start the process of turning visitors into customers.

Once you turn someone into a customer, what then? How do you best retain those customers? How do you maximize customer lifetime value without compromising the bottom line?

Many businesses solve this problem with CRM software packages. Of course, it’s not as simple as grabbing the first CRM system you see.

There are several types of CRM software. Each supports a different approach to customer relationship management.

Just joining the ranks of CRM using companies? Keep reading and we’ll break down the main types of CRM software and give you a few tips on choosing the right one for your business.

Operational

You can think of operational CRM as a method for boosting efficiency in processes related to the customer lifecycle.

Automation is the primary tool used in operational CRM. Its main focus is on customer touchpoints, such as:

• Lead generation
• Conversion
• Information capture
• customer service support

You can break operational CRM down into three broad areas: Sales, Marketing, and Service.

Sales

Sales automation effectively standardizes sales processes throughout the company. The software manages lead generation, keep records on quotes and fulfillment, and even provides sales forecasting.

Marketing

Marketing automation creates standard processes for crucial, but routine, marketing tasks. It can help you manage and segment your contact list. For example, it might help you create segments based on:

• spending thresholds
• demographic information
• location

It can also provide analytics information that shapes where you focus your marketing dollars. For example, if you see a much higher ROI from your email campaigns, you may spend more money developing those.

Service

Service automation focuses on improving the quality of customer service. Again, automation is the key. If everyone works from the same initial script, it improves the odds that every customer will get treated in a uniform way. It also means that calls will get escalated in a predictable way.

The software can also automate core processes like incident management to ensure problems go to the right people. Other areas that fall under service automation include knowledge and service level management.

Analytical

Analytical CRM systems aim for similar goals as operational CRM systems, insofar as they can help you improve processes. The overall approach, however, is very different.

Analytical CRM largely ignores customer touchpoints where you directly interact with customers. It focuses on evaluating data from non-touchpoint sources.

So, for example, the system might use data from a number of channels, including:

• Website traffic
• Purchase history
• Demographic and psychographic profiles
• Even social media

The system applies parameters you set to make wide-ranging recommendations. For example, you might use it to find hidden customer pain points that you can solve. Such an analysis might also provide ideas for future product or service offerings.

Analytical CRM can also help you find opportunities for seasonal or regional marketing campaigns. Christmas offers huge opportunities for sales in Western cultures. Global companies might find opportunities for increased sales by catering to regional holidays.

Collaborative

Collaborative CRM differs significantly from operational and analytical CRM. At one level, it helps you solve the silo problem by forcing departments to share information.

It can also help reduce supply problems by looping in your important vendors. Let’s say they can see that demand will spike based on your customer data. They can prepare accordingly.

This makes customers happier because they don’t lose time or money on delayed order fulfillment.

Collaborative CRM also improves the customer experience by using customers’ preferred communication channels. Some customers prefer phone calls, while others prefer email or even text messages.

Get that wrong and you’ll alienate your customers. Get it right and you remove a pain point before it happens.

Picking the Right CRM

Picking the right CRM can feel daunting. The options address very different needs for often very different kinds of businesses. Here are a few things you can keep in mind as you approach the decision.

Almost any kind of business can use operational CRM software and get solid results. That’s why it’s the most widely used kind of CRM software. Refining processes based on actual customer interactions only improves your customer retention.

Analytical CRM works best for big companies with large customer bases and deep wells of customer data. A B2B company with a dozen customers won’t benefit much from analytical CRM because of your shallow data pool. There’s nothing there for the software to really grab onto.

Collaborative CRM works best for companies that work with a small number of important vendors. It also works well in companies with large, distinct departments that silo information or don’t always play well together.

There are a few other things that can prove relevant. Like many other kinds of software, companies often develop CRM software that serves a specific industry niche. You can read more here on how to pick the perfect CRM software for yours. Software built around your niche can address industry needs that general-purpose software misses.

Look at reviews. No matter how good a CRM looks on paper, actual customer experiences will expose any major flaws.

Parting Thoughts on Types of CRM

Choosing between the types of CRM systems demands more than a recommendation from a friend. Each type of CRM takes a distinct approach.

Operational CRM offers the widest appeal because it starts from customer touchpoints. That makes it useful for everyone from a three-person startup to companies with thousands of employees.

Analytical CRM really shines with larger companies. Since it’s a data analytics-heavy approach, you need a lot of customers to generate enough data to get meaningful results.

Collaborative CRM works best where siloed information or inconsistent vendor performance affect customer relations.

Looking for ways to get more customers into your startup’s sales funnel and CRM system. Check out our post on tips for getting online traffic for startups.