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CRM: A guide to the basics

Lawrence Andrews
Sales technology

The term ‘CRM’ or Customer Relationship Management dates back to the 90’s but with a huge explosion in vendor and software options in the time since it can still be a confusing area. We provide a guide to the basics.

What is CRM?

In its broadest sense, CRM or customer relationship management covers the strategies, organisational setup, processes and technologies that a business employs to manage its relationships with its customers and potential customers.

However, it’s most often referenced in the context of CRM technology following the proliferation over the last decade of cloud based, software as a service (SaaS) CRM systems, platforms and tools.

As it relates to relationships with customers and potential customers it plays a fundamental role in managing the overall customer experience delivered by a business across the full customer lifecycle.

CRM intersects marketing, sales and customer support functions and therefore has become a foundational capability of any business.

What is CRM software?

CRM software, sometimes referred to as CRM systems, CRM platforms or CRM tools is the technology that enables the management of customer relationships. It’s an obvious statement but it highlights the important distinction between CRM software and a CRM solution.

CRM software provides the practical tools for businesses to manage, track and analyse all interactions with their customers and potential customers.

It provides businesses with features and capabilities that they can leverage to bring to life their CRM strategy through the design of their organisation, their business processes and by extension their customer experience.

A CRM solution is what’s needed to understand, design and apply these features to genuinely digitise management of customer relationships within a business.

Most small and medium sized businesses (SMEs) either have CRM software or have at some point experimented with it.  A much smaller proportion have an effective CRM solution in place.

What are the goals of CRM?

The most common barrier to an effective CRM solution is a lack of definition and agreement of the goals for customer relationship management within a business.

One way to think about these is to consider whether customer acquisition, sales conversion or customer retention represents the greatest challenge to your business right now.

From there you can break down some of the primary goals for a Day 1 CRM solution but also prioritise other goals based on their relative value or importance.

These secondary goals can then be used to create a longer term roadmap to continue to develop customer relationship management capability within your business.


  • Increase lead generation
  • Increase sales volumes
  • Increase average sales order value


  • Shorten the sales process
  • Increase sales conversion rates
  • Reduce cost of acquisition of new customers


  • Improve customer satisfaction
  • Increase customer retention
  • Increase customer lifetime value
  • Reduce cost of service

It’s important to remember that not all the goals will be mutually exclusive but it is essential to complete this exercise to provide a focus for initial investment, software vendor selection, solution design and implementation.

Traditionally small and medium sized businesses have been pushed down the road of expensive software implementation projects as if they were enterprise clients. Failing that they have just been sold software and left to work it out.

A goal based approach is the key to the middle ground that allows small to medium sized businesses to build a strategic capability over a period of time and at a rate of investment that acknowledges and aligns with the practicalities of running and growing a business.

What are the benefits of CRM?

The core benefit of CRM platforms that underpins almost every other is that they provide a centralised, 360° view of all business contacts (leads, customers, suppliers, partners) and a record of all interactions with those contacts.

This data provides the foundation for the tools and features provided by CRM platforms that enable other commonly communicated benefits of CRM:

  • Increased revenue through increases in sales and improvements in conversion rates
  • Cost savings through improvements in operational efficiency
  • Higher levels of customer satisfaction through improved customer experience
  • Optimised customer experiences through better data, analytics and insights
  • Better internal collaboration and coordination through ease of use of CRM tools

If you were to google benefits of CRM you could add many more to this list but these are often closely linked to specific features of software that software vendors are selling!

Considering cause and effect relationships provides a way to simplify this picture and tie CRM investment decisions back to fundamental KPIs that have a direct impact on the performance and respective growth rate of any business.

What are the components of a CRM?

A proliferation of software vendors has led to the inevitable explosion of terminology. No better illustrated than the way vendors describe their software features.  Each promotes slight variations of similar features in order to attempt to differentiate themselves. Or they position their offerings in a way that highlights their respective strengths and masks their weaknesses.

This makes the marketplace almost indecipherable and increasingly difficult for small to medium sized businesses to assess. Here at LMR Labs we’ve defined a framework to assess CRM software which comprises of 8 CRM solution components:

  • Contact Management
  • Account Management
  • Deal Management
  • Sales Forecasting
  • Sales Team Management
  • Activity Management
  • Products and Quotes
  • Analytics and Reporting

We have similar frameworks in place for sales and marketing automation all of which can be reused by SMEs also looking to understand the marketplace.

You can read more about this in our article ‘Feature blindness: Making sense of CRM and automation tools’. If you don’t want to do this analysis yourselves you can also read our analysis here: ‘CRM and automation: Key players in the SME space’.

How does CRM support business growth?

Increased sales is CRM’s primary contribution to business growth.

This is driven by the hypothesis that better relationships will result in more sales:

  • Improving relationships with potential customers will lead to improvements in customer acquisition and increases in sales.
  • Improving relationships with existing customers will lead to improvements in customer retention and increases in customer lifetime value.

Operational efficiency improvements are a secondary driver of business growth. However when designed and implemented correctly sales should have the biggest impact.

You can read our analysis of the high-level business case for the implementation of CRM and sales and marketing automation solutions here: ‘Increase automation and increase revenue’.

What are the drawbacks of a CRM?

Whilst the potential upsides of CRM solutions are significant and numerous there are potential drawbacks that any buyer should be aware of.


Upfront investment is required to design and implement the CRM solution. Whilst SaaS CRM providers offer monthly pricing models, which are increasingly affordable for businesses of any size, some upfront CAPEX investment is still required. This step is often skipped but in practice this limits the ability of the software to genuinely contribute to business growth and reduces return on investment.

New Overheads

Building a strategic CRM capability and capitalising on the opportunity this creates may mean accepting new overheads. Whilst a good CRM solution will enable some productivity gains, it's ultimately about managing customer relationships better to increase sales. Businesses should be aware that new processes and therefore new overheads may be necessary in order to actually be better that weren’t in place before.


Teams and individuals will have to change the way they work. Whilst CRMs offer features that help individuals and teams be more productive it also relies on consistency of process. No longer can people just do things their own way. The ability of your teams to embrace the change needed is an important consideration. Depending on your current organisational setup the level of change required could be minimal but it could also be significant.


CRM solutions will only succeed if people embrace them. Businesses won’t realise the benefits of CRM if they don’t plan in time and budget for adoption. To facilitate this the design of any CRM solution should consider how CRM tools and features integrate and work in harmony with core business processes. In addition, definition of how the solution overlays onto a business’s organisational setup and affects roles and responsibilities is critical. The solution will live and die by the quality of the training and support given to the  individuals and teams impacted.

Vendor Alignment

You will need to choose a technology vendor and then trust in them. Deep consideration is understandably given to CRM technology choices because of the significant influence this has on the success of a business as well as its exposure to future costs. There is often reluctance to be dependent on individual vendors or tools but not committing is worse!

You can still minimise strategic dependency on a particular technology by focusing on the organisational and process aspects of the solution, as well as orienting the solution design around a clear set of goals for CRM. This doesn’t mean you want to be swapping out CRM technologies on a regular basis but it does mean your CRM capability retains a level of independence from you the software vendor, giving you more flexibility to pivot if you need to.

Operational Issues

Watch out for unintended negative negative behaviours as a result of the introduction of new CRM tools. Whilst better internal collaboration is a commonly cited soft benefit of almost any business technology, new tools can actually facilitate anti-collaboration.

For example, team members commenting on individual tasks and assigning back and forth in a tool can become less efficient than calling someone up and working together directly. Collaboration features can be ‘gamed’ to reduce workload and accountability. Over time this can significantly reduce productivity and negatively impact relationships.

Whilst this needs to be recognised as a risk it’s also easily avoided by not introducing overly rigid roles and processes during CRM implementation, and providing teams with the right leadership and training.

What are key challenges when implementing a CRM?

Considerations when implementing a CRM solution are similar to any technology project, albeit with some nuances.

  • Leadership - CRM crosses marketing, sales and service and any other business function that interacts with customers. At any scale it's a transformational project that needs a strong, senior leader to act as its figurehead. For SMEs we always recommend that the business owner or Managing Director fulfils this role and publicly give the project team the necessary latitude to design and implement a strategic solution.
  • Goals - Setting realistic goals is important for a CRM implementation of any size. For SMEs there’s unlikely to be the budget or justification to build and launch a comprehensive fully functional solution on Day 1. For this reason agreeing the primary goals for a first launch or first phase of a new CRM solution is crucial.
  • Roadmap - If you can’t do everything at once, and to be honest you probably shouldn’t anyway, you should build a roadmap. This provides a step by step plan to build and develop a strategic CRM capability over time. This should be oriented around progressive achievement of business goals and incorporate decision points to review investment at each step.
  • Communication - Technology and technology projects retain a perception of being complex and not always very useful. This means they are often met with scepticism. The reception of almost any technology project is greatly improved by open and transparent communication with the teams involved and affected. Use the goals and roadmap to tell the story of what you are doing and why you are doing it. Keep people up to date on progress.
  • Solution Design - Your CRM solution design sits at the intersection of your organisation design, your core business processes and the technical capabilities of the CRM system you’ve selected. The solution should represent the optimal way to achieve the CRM goals through adaptation of all three. To get the most out of your CRM solution you should be open to change in all areas and not force excessive compromise in one area just to satisfy another.
  • Integrations - Technology solutions don’t tend to exist in isolation and there are likely to be other business systems that manage critical data and facilitate certain business processes. When selecting a CRM vendor and designing a CRM solution consider requirements for the flow and synchronisation of data between different systems. Many CRM vendors now offer pre-built connectors between common business tools, or these are supported by 3rd party integration tools such as Zapier or Make (Integromat). If this isn’t the case make sure you validate that such integrations are possible.
  • Data Import - Whether you are implementing your first CRM or replatforming you will have customer data that either needs to be migrated or imported into your new CRM system. When selecting the vendor check whether or not there is a prebuilt connector to enable migration as this can be a significant time and cost saver. If not ensure that there is a straightforward method to import data or that system itself.
  • Training - Success of any CRM implementation is dependent entirely on whether the eventual solution is effectively used and adopted by end users within the business. The solution in terms of changes to roles and responsibilities and core business processes need to be well defined but most importantly end users need to be given the training and support to allow them to succeed. Budget for this and factor in onboarding and ramp-up times in any return on investment calculations

Why are CRMs critical?

At its heart, customer relationship management is simple. It’s the management of customer data and the use of this customer data to improve relationships through better targeting and a more personalised customer experience.

The complexity and success lies in how this is achieved. The different strategies and channels used to reach and interact with customers and potential customers. This is where sales and marketing automation comes in.

Increasingly we see CRM tools evolve to offer more sales and marketing automation features as the demand for these increases. We see sales and marketing automation tools build back to ensure they have the CRM foundations they need to continue to develop and innovate their own capabilities.

But what can we learn from the market as a whole? According to a Statistica study the global CRM market is expected to grow to 49.6 billion dollars by 2025, a compound annual growth rate of 1.7% from 2020 - 2025. According to another study by Mordor Intelligence the current marketing automation market was estimated at 3.6 billion dollars in 2020 with a forecast CAGR of 17.7% through 2021 - 2027.

What this tells us is that whilst marketing automation might be a hot topic, CRM remains the backbone of any scalable sales and marketing system.  For SMEs operating in an era of rapid digitalisation it's therefore critical that they have an established CRM foundation. For any SME with aspirations to apply sales and marketing automation to take their sales and business growth to the next level this is a necessity.

You can read more about sales and marketing automation and how it can used to take your business to the next level in our article: ‘What is sales and marketing automation and why bother?’