CRM – Customer Relationship Management

“Successful CRM is about competing in the relationship dimension. Not as an alternative to having a competitive product or reasonable price- but as a differentiator.”

– Bob Thompson, CRM Guru

]Over the past 20 years, Customer Relationship Management (CRM) has driven a strategic paradigm shift enabling businesses to tailor their processes around meaningful customer interactions. Always a top tool in Bain’s annual survey on the top strategy tools, CRM can drive some serious value for businesses’ that depend on a strong relationship with their customers.

CRM system and customer data

Typically, at the heart of any CRM program is customer data captured through many of the interactions with customers through advertising, email, direct mail, websites, a point of sale system, personal interactions, customer service, and potentially other touchpoints such as events and social networking. For B2B industries, with higher-touch customer relationships, the customer data is typically in the form of individual contacts with customers, and given the nature and size of the relationship, there may be many different contacts within one customer, representing decision-makers, influencers, and other stakeholders. In B2C industries, companies typically capture customer interactions through a unique identifier, such as an account number, loyalty number, or credit card. As an example, most retailers, with a loyalty program, capture data from shopping transactions, emails and direct mail they send, web interactions, and coupon redemptions.

While creating “one view of the customer” is often the desire of companies, it can also turn into a rat’s nest trying to tie together dozens, sometimes hundreds of disparate systems into one data warehouse. Companies implementing CRM should focus their efforts on developing those systems that have the potential to disproportionately improve interactions with customers.

Companies often create a rat’s nest when they try to capture all the customer data they can for the sake of completeness.

CRM Framework

Relevant interactions

At the core, companies have a pretty basic goal with CRM, which is to improve the relevancy of the interactions a customer has with the business throughout the customer journey. Relevancy can mean a lot of different things, including better targeted and messaged advertising, emails, and direct mail, a personalized website experience, rich personal interactions, or quick and impactful remedying of customer service issues. Improving the relevancy of customer interactions should increase customer acquisition, loyalty, and retention. CRM applies to both B2C and B2B industries.

Customer insight

I’ve always found companies that have a robust CRM system and combine it with different customer segmentations generate incredible insights into the behavior and preferences of their customers. And, in better understanding their customers they can drive not only more relevant interactions across their customer journey, but also use the customer insight to understand the strengths and weaknesses of their products, services, and pricing.

Relationship management

CRM, especially in B2B industries, has a major role to play in relationship management. Many B2B sales and marketing teams, utilize CRM systems, to help manage the interactions with customers. Strong CRM systems, not only allow sales, marketing, operations, and customer service teams to record all of the important interactions with customers, but also helps coordinate and schedule when the next interactions should take place, and what topics should be covered to help drive relevancy. More advanced CRM systems incorporate test and learn programs to allow companies to experiment with different messaging, timing and behavioral triggers and understand their effectiveness.


One of the main initial reasons why companies invest in CRM is to drive marketing, sales, and customer service productivity. Once you tie together marketing, sales, and customer service activities and resources and tie them to actual customer interaction, transactional and behavioral data you can finally understand the productivity of marketing, sales and customer service resources. Productivity metrics tied to CRM can come in many forms, depending on what is important and what function you are trying to understand. Marketing teams typically view CRM systems as helping drive the productivity of spend and resources by enabling an understanding of return on advertising spend (ROAS), lifetime value, media effectiveness, the value per email, effects of coupons and offers, and RFM (recency, frequency, and monetary value) to name a few. While sales teams that embrace CRM are often top-performers, many sales teams view CRM as “big brother,” with visibility into every interaction. I’ve often had trouble getting sales teams to initially adopt a CRM system, but once they do, it is so much easier to manage the team, understand issues and opportunities in the sales funnel, and accurately estimate next quarter’s revenues. And, it is paramount that the customer service team have CRM to help manage tickets, follow-up, resolution, and customer history.

What are CRM best practices?

CRM is one of those tools that can fundamentally and positively focus the efforts of an organization onto the customer. CRM isn’t just an IT system; it is a methodology and mindset that necessitates the right customer-centric culture. Here are some important CRM best practices.

Scrap the Legacy

Having been part of many CRM solutions, often the best answer is to scrap all of the legacy systems, port over the important existing customer data, and start with a new SaaS (software as a service) system like or SugarCRM. As I tell people, “Just rip off the Band-Aid.” The new SaaS systems are typically incredibly easy to set-up and get started on, and as the system improves its features, you get access to them. Furthermore, instead of paying massive upfront costs, SaaS is typically reasonable monthly fees per user or seat.

Map out your Customer Journey to Prioritize your Roadmap

To optimize CRM, you have to optimize each relevant touchpoint with your customers. Map out the customer journey all the way from how they can become aware of your products and services to when they might defect as a customer. Use process mapping tools to outline the where, when and how they flow from a non-customer to a customer and think through what the hot spots of important interactions are that you can affect. Once you do this, then you can better prioritize your CRM roadmap of what capabilities you need to affect customer behavior.

Segment customers by High to Low on Value & Potential Value

There was a lot of insightful work done in the ‘90s on the vast chasm regarding lifetime value between high value and low-value customers. Often, in value segmentation work people will find out their customers reflect the Pareto Principle, and that 20% of their customers are driving 80% of their profits. It is important to overinvest in your high-value customers to retain them and to invest in those customers that you think you can move from low to mid-value to high-value. I once did a large marketing project for a company that sold agrichemicals to farmers. We calculated the share of wallet the company had with the top 100,000 farmers in the US and segmented them by low, mid and high share of wallet. Then, we created loyalty and retention programs for the high share of wallet farmers, and aggressive acquisition programs for those the company had low to mid share of wallet. The programs were extremely impactful in retaining the high share of wallet customers while moving a fair amount of the low and mid-share of wallet customers to a higher share of wallet.

Create the Feedback Loops

CRM can help an organization generate enormous amounts of data on customers. One of the many ways to maximize the effectiveness of all this data is to provide feedback loops. Think about the power of synthesized data on customer issues from a call center fed back to the product development or operations teams or the main reasons why customers don’t choose a product or service gathered by the sales team fed back to the marketing team, so they can further refine the benefits, use cases, and pricing.

Save Customers

One of the highest ROI capabilities within a CRM system is the ability to understand when and why customers defect. When there is a trigger, such as when a customer wants to cancel or return a product, do everything you can to have a conversation or interaction with that customer to understand their issues and try to salvage the relationship and business by reducing pricing, offering a new or different product or service, or any other way to help them. It is always easier and cheaper to retain a customer than to acquire a new one. And, using NPS terminology, you can often turn that customer from a detractor of the brand to a promoter; just by trying to do everything you can to make them a happy customer.


 Learn more about Joe Newsum, the author of all this free content and a McKinsey Alum. I provide a suite of coaching and training services to realize the potential in you, your team, and your business. Learn more about me and my coaching philosophy.
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