Skip to main content

What is CRM? Definition + Benefits

Learn what customer relationship management (CRM) means for marketers, and how CRM tools can help you understand audience data and use it to market smarter.

A window showing various hanging plants

Definition of CRM: CRM stands for customer relationship management, or the process of managing interactions with existing and prospective customers during the sales process. Any strategy or approach that uses data to build, improve and manage customer relationships can fall under the description of ‘CRM,’ but the term is most commonly used in reference to CRM software or technology.

What is CRM software?

CRM software or technology is a tool or system of tools that help businesses aggregate, organize, and analyze customer information data to better manage relationships with customers.

When data for potential and existing customers is collected and stored in a CRM system, tracking information across every touchpoint in a customer's journey (details shared through forms, engagement with marketing campaigns, interactions with customer support, buying patterns) can help you cater to their needs, build better relationships, and market smarter.

CRM software can help your business grow, and organizations in all industries are adopting CRM technologies and reaping the rewards; more than 64% of companies say CRM tools are impactful or very impactful.

What does a CRM system do?

In short, CRM (Customer Relationship Management) systems serve as a hub for organizing and making sense of valuable audience data and insights, providing all the tools needed to collect and manage information about people who are important to your business.

This function can look very different across departments. For example, CRM can:

  • Help sales reps quickly see past interactions and purchases before making a phone call.
  • Provide support teams with the background and contact information needed to provide great customer service.
  • Give marketers access to details that will help them target their campaigns.

Organizing and understanding CRM data insights has become a key responsibility for any customer-facing role within a company. But as the importance of audience info grows, so does the amount of details that businesses need to keep track of. With many online channels and multiple ways for customers to engage on each, data often gets siloed in different tools, making it difficult (or impossible) to get a complete picture of your customer and talk to them in a meaningful way.

That’s why businesses of all sizes and across all industries are turning to CRM tools to create a central hub for audience reports—gaining a better understanding of who their customers are and what they want, and building stronger relationships as they grow. CRM software also helps them engage with potential customers, gain time with automation, increase customer engagement and close more deals.

The numbers don’t lie; the average ROI on CRM is $8.71 for each dollar spent, according to Nucleus Research.

Why is CRM important for marketers?

As a marketer, you collect valuable information with each campaign you send and every customer interaction that results from it (including clicks, views, and purchases across new, existing, and prospective customers).

Your customer knowledge is one of the most valuable resources you have for improving your marketing and sales to grow your business. Effectively collecting and organizing your info can tell you everything you need to know about your customers’ preferences: Which products they love, what they’re looking for, the messages that tell them what they need to know, and where you’re still missing the mark.

The sooner you can begin capturing, organizing and making sense of that data through a CRM platform, the sooner you can start using it to improve customer experience and build more—and better—customer relationships.

Do small and midsize businesses need a CRM tool?

CRM isn’t just for enterprise businesses or Fortune 500 companies. In fact, 91% of companies with 10 or more employees use a CRM.

Using statistics to improve customer relationships has become an essential function for businesses of all sizes and niches. In fact, there’s no better time to do contact management than when you’re just starting out.

From the moment you create an online presence for your business, you start gaining access to valuable info about your customers and potential customers. CRM can help you lay a strong foundation for building and tracking relationships with those customers, collecting data about their preferences and setting up marketing automation processes for consistent, personalized touch points over time.

CRM doesn’t need to be a full-time job: Whether you have a small sales team or you’re a solo entrepreneur relying on occasional marketing campaigns to sell your brand, putting your data to work for you can help you stay on customers’ radar, find news sales opportunities and save time. It also allows you to make knowledge-based decisions about where to focus your budget to reach customers on whatever channel they prefer—so however or whenever they’re ready to make a purchase, they’ll think of you.

4 essential CRM features for small and midsize businesses

Of course, if you’re just starting to lay a foundation for managing customer data, it’s unlikely that you’ll need the same CRM features as a large enterprise. Specific CRM needs will vary based on how your online business functions and scales, but there are a few key needs that any small business marketer should keep in mind. These basics of CRM for small business include:

  1. A central hub for audience data. First and foremost, small businesses need a centralized location to start gathering all their customer information: contact information, phone calls, sales activity, customer satisfaction etc. Creating a single source of truth lets you organize customer experiences and insights as you collect them, and identify patterns that reveal things like where most of your audience lives and what messages they interact with most.
  2. A seamless connection to your key marketing channels. Especially for businesses with small or non-existent sales forces, your marketing is an important part of selling your products or services and should be as tailored as possible. Managing audience data in a separate tool from your marketing channels makes it more difficult to turn customer insights into personalized communication, and increases the risk of information getting lost in the shuffle. Identify a few key channels you’ll be using to reach customers, and make sure your CRM tool allows you to seamlessly collect reports from these tools.
  3. The ability to test, learn, and iterate on campaigns. As a growing business, you have a lot to learn about who your audience is and what their preferences are. It’s important to look for a tool that will help you to easily see how your channels perform, gain insights about how your audience is interacting with your marketing, and use this information to adjust your campaigns.
  4. Tools to help you grow._ Once you’ve started collecting audience data and learning more about who you’re talking to, you’ll want to be able to use that information to find and talk to people you should be talking to: potential new customers and improve your customer loyalty. Particularly for small businesses with limited access to budget and resources, audience info is an important tool for making your marketing budget go further—helping you to anticipate who’s most likely to buy and focusing your resources where they’ll count.

Benefits of CRM for small business marketers

Finding a CRM tool that meets the needs of your business (even if it’s just the basic criteria outlined above) can start to yield immediate benefits for small business marketers. Building a solid foundation for CRM allows you to:

  1. Get a better sense of who you’re marketing to. When you create a central location for customer reports, you see a clearer picture of who you’re talking to and can keep track of any changes as your business continues to grow and evolve.
  2. Send the right content to the right people. When you use data to target your messages, it makes it easy to send content that matters to customers (which makes it more likely they’ll keep listening). Particularly for small businesses relying heavily on marketing to position their brand, tailoring messages to specific segments is key to making sure you don’t overload your audience.
  3. Use your data to find new people to talk to. Creating campaigns based on your existing audience knowledge makes it easy to find the people most likely to love what you have to offer, so you can be smarter about targeting your campaigns and getting the most out of your budget and increase your sales productivity.
  4. Find new ways to talk to people with shared interests. By seeing all of your data in one place, you’ll start to notice patterns in who your contacts are and what interests them. And the more you know about audience trends and preferences, the easier it is to think of new ways to talk to your audience and improve your campaigns.

How to choose the right CRM for your small business

Your specific needs for CRM will vary widely based on how your business operates and sells to customers, so you should always take the time to figure out how your strategy will look based on your goals. Here are 4 key questions to ask yourself when evaluating your own needs:

  1. Who will use your CRM tools? Will your CRM tools primarily be used for marketing? By a sales team? Both? Consider everyone in your organization who could benefit from access to customer insights (whether it’s just for visibility, or to use data for a specific purpose) to find a tool that will accommodate what you need.
  2. How much complexity do you need to get started? Keep in mind that you likely won’t build a complex CRM strategy overnight. Find a tool that will allow for a simplified approach, so you can adjust your strategy and add complexity gradually as you learn.
  3. Which marketing channels are you using to talk to your audience? Find a tool that integrates directly with the channels you use most, so that info can quickly be turned into action, and insights are unlikely to get siloed or lost.
  4. Will your CRM scale with you as you grow? Over time, you will find new ways to use your audience reports and automate CRM processes, so it’s important to find a tool that allows you to add this functionality as you’re ready for it. But keep in mind that if there are CRM processes you’ll never need, you don’t want to be paying for (and working around) unnecessary complexity.

Is Mailchimp a CRM?

Mailchimp offers all the CRM tools small business marketers need, allowing them to aggregate, organize, and manage audience data in one place. In fact, many Mailchimp customers already use the platform as their CRM.

Although some Mailchimp users do have more complex CRM needs (which is why there are integrations available for other standalone CRM solutions), for many marketers, the most important function of CRM is collecting and interpreting customer reports to improve campaigns. And Mailchimp provides all the tools needed to meet these goals, so you can get organized and start putting your customer info to work for you—without adding unnecessary (and expensive) complexity to your workflows.

How Mailchimp can help with your marketing CRM needs

Most Mailchimp customers know their campaigns generate helpful data reports, but many don’t realize Mailchimp also provides tools to organize and interpret that info on a higher level. Best of all, many of these tools are free, so they’re a great option for businesses that are just getting started.

Here are a few of the ways that Mailchimp can help you start using reports to improve your campaigns and build better relationships with your customers.

Create a central hub for customer data

Having all of your audience data in one place makes it possible to identify patterns: You can see what’s working (and what’s not), you can figure out what to send, when to send it, and who to send it to. And with Mailchimp as your central hub, you can quickly turn that knowledge into action.

Whether you’re starting from scratch or you have existing info you need to organize, Mailchimp makes it easy to create a single view of your audience. For example, with e-commerce customers, connecting your e-commerce store to Mailchimp automatically imports all of your customer reports into our platform. With this information, we’ll give you a cross-channel view of who your customer is, how they interact with your marketing, and how that leads to purchases. These insights come from data points like their age and geographical location, when they last clicked on one of your campaigns, and when they bought something.

Learn more about how to connect your store to Mailchimp.

Segment your audience for more targeted campaigns

Even though you want all of your customer insights in one place, you’ll almost never want to talk to them all in the same way. That’s why Mailchimp makes it easy to segment your audience based on shared characteristics.

Just by bringing your customer data into Mailchimp, you’ll automatically gain access to pre-built segments based on audience info that’s already in your account, like where your contacts live, how old they are, or which people click on your campaigns most often.

These pre-built segments can be very useful for sending targeted messages, but you can also build your own segments based on what’s useful to you. You can keep your segments simple, or you can create highly complex segments by layering on as many as 5 criteria in your query—so that you can talk to your audience in an even more targeted way. And if you need something even more complex, Mailchimp offers advanced segmentation.

Learn more about segmentation in Mailchimp.

Organize your contact data however you need to

How you need to organize and access information about your audience will vary depending on your business’ needs, what’s important for you to know about your contacts, and how you gather insights. That’s why Mailchimp offers several tools—including segments, tags, and groups—that work in slightly different ways to help you get the information you need when you need it.

Tags are customizable labels you can create for your contacts—like "social media influencer" or "uses coupons”—based on information you know about them. They’re completely flexible: You can tag multiple contacts at once, add multiple tags to a single contact, and use them to create segments or automatically trigger campaigns. Groups, on the other hand, are created through a form field that people fill out to subscribe to your marketing—while tags are assigned by you, groups are self-selected by the people in your audience. But just like tags, you can segment and filter your audience by groups to send them the right messages, based on information they told you about themselves.

Learn more about Mailchimp’s tools for organizing your audience.

Use data to personalize your campaigns

Once you’ve created your unique organizational structure based on what makes sense for your business, you can use your reports to send customers tailored messages that feel like they were meant just for them.

Mailchimp makes it easy to add merge tags into emails to include specific customer information (like their first name or a product they’ve been considering) and allows you to personalize send times based on what time zone a customer is in or when they’re most likely to open an email. If you have a connected store, you can even predict your customers' gender and age range so you know how to talk to them. This makes it simple to send people the messages that matter to them—and makes it more likely they’ll keep listening to what you have to say.

Learn more about Mailchimp’s personalization tools.

Make your data work for your marketing, automatically

Not only does organizing your data make it easy to send targeted messages, you can send those messages automatically. By harnessing the power of your data and our automations, you can upsell to customers with the right recommendations and reward them for their loyalty.

Mailchimp offers several kinds of automated campaigns that can use data to help drive conversions:

Mailchimp will automatically keep track of revenue generated by each automation, so you can see what's working and optimize your strategy. As you determine what’s working, you can continue to prioritize and optimize.

Learn more about Mailchimp automations.

Optimize campaigns based on data

Mailchimp’s optimization tools make it easy to see what’s working (and what’s not) so you can focus your efforts. Understand how messages resonate with your audience, test different elements of your campaign (subject lines, images, and more) to compare results, and get a detailed breakdown of how your campaigns are performing. Our growth, engagement, and revenue reports will help you learn more about the behavior of your contacts and discover what type of content works. And the more you do with Mailchimp, the more data you have to work with.

Learn more about Mailchimp’s optimization tools.

Get smarter with how you target new customers

Mailchimp’s CRM tools are good for more than just optimizing your existing relationships, they can also help you build new ones. With your data consolidated in Mailchimp, you can make data-backed decisions about who to talk to next and where to focus your advertising budget.

For example, when you create Facebook ads in Mailchimp, you’re able to use your data to create a lookalike audience of your best customers and target them with an ad with just a few clicks. By targeting the people who are most likely to appreciate your message or product, you can make your budget go further. And once you’ve got the interest of someone new, you can use everything you’ve already learned to effectively manage and personalize your communication with them and other new people as your audience grows.

Learn more about what you can create in Mailchimp to drive conversions.

How small business marketers use Mailchimp for CRM

As you can see, Mailchimp offers many tools and strategies that fall into the category of building and managing customer relationships as a marketer. Here are a few high-level examples of how different types of businesses might use a combination of these tools to get strategic with their data and accomplish their end goals:

  • An e-commerce marketer might connect their site using an e-commerce integration to sync existing customers, purchase, and store data into Mailchimp. To get started, they could set up a pop-up form to collect information from prospects who visit their site, build a landing page to advertise a sale or promotion, and create a process to import data they collect offline. With all of their customer information in Mailchimp, they can use tags to keep track of where they met customers and what they’re interested in—and that information can then be used for personalized marketing.
  • A business that sells digital products, like SaaS applications, might integrate their solution with Mailchimp to ensure all new and updated user data gets synced over. Using a Mailchimp API wrapper, they can also tag users based on in-app behavior, which becomes a powerful marketing tool. For example, they could set up an automated welcome series for app users to help guide them through onboarding and best practices. To do this, they’d use tags to identify app users, then create a segment based on tag data.
  • A marketer that promotes a content network may use groups to gather information from customers when they subscribe through an embedded Mailchimp form. By understanding customer interests, they’re able to create more relevant content, and by knowing more about who their subscribers are and how they engage, they’re able to improve their approach. For example, maybe their customers are most likely to engage on Sundays, or maybe they all live in the Pacific Northwest. Whatever patterns emerge, they’re likely to spark some new content ideas.

If you do find that you need a more complex and sales-driven process for CRM (often the case for enterprises with a business-to-business focus), keep in mind that Mailchimp offers integration options with stand-alone CRM solutions, so you can share contact and customer data with the platform that works for you. But for most small business marketers, Mailchimp offers all the tools needed to start collecting and organizing contact data, and using it to build better relationships with customers.

You can also read how Mailchimp's free CRM for small business compares to the competition.

Cover of The Science of Loyalty Playbook by Mailchimp in partnership with Canvas8

The Science of Loyalty

Get the full report & adopt new strategies to engage your customers.

What Is CRM? Frequently Asked Questions

What are the different types of CRM systems?

  1. Operational CRM systems collect and leverage customer data to drive automation of marketing, sales, and customer service activities. Some examples of operational CRM processes include scheduling emails and meetings, setting up chatbots, and establishing a customer service ticketing system or knowledge base. Consider this CRM if your sales process is fairly linear, or if eliminating repetitive tasks could help your employees focus on improved customer experiences.

  2. Analytical CRM systems allow companies to use data like customers' interaction history, preferences, and contact information to better understand their behavior and modify business processes to drive desired outcomes. Some examples of analytical CRM processes include data warehousing and data mining, where companies review data in aggregate to discover patterns and gain insight. Consider this CRM if your business is service-oriented or account-based.

  3. Collaborative CRM systems can help your marketing, sales, and customer service teams break out of their silos by cross-referencing data about their customer interactions. This helps provide a more complete picture of each customer's wants and needs, as well as how they prefer to interact with your organization. Some examples of collaborative CRM processes include interaction management, which tracks customer communication across multiple channels, and channel management, which uses that data to help companies make decisions about how to engage with their customers. Consider this CRM if your employees are geographically dispersed, or if your customers’ interactions with your company are primarily digital.

What is the CRM cycle?

  1. Reach: The marketing team drives brand awareness through effective audience segmentation and delivery of compelling campaigns and content.
  2. Customer Acquisition: Getting prospects to take a “next step” such as downloading a document on your website, signing up for a webinar, or filling out a form.
  3. Conversion: This is the fun part! Conversion occurs whenever a lead becomes a customer by completing a purchase, whether it’s through the sales team or via self-service, like an online ordering portal.
  4. Retention: Once you have customers, you need to make sure they stick around. Provide top-notch customer service and support to ensure that customers come back to you again and again.
  5. Loyalty: This doesn’t just mean repeat purchases (although those are great!). Your most loyal customers will expand their stake in your company. For example, they may upgrade to a higher tier of service, or buy a product that complements their original purchase. If you have a CRM system in place, you may be able to help drive these upsells with customized recommendations.

When should I invest in a CRM system for my business?

If you can articulate a clear definition of what a CRM success story would be for your business, you’re already on the right track. Some other signs it’s time to consider a CRM for your business:

  • Your sales team needs help knowing which leads to prioritize.
  • You don’t have a single source of truth for customer data.
  • You don’t have visibility into sales team activity.
  • You spend more time putting together reports than you do analyzing them.
  • You shrug when someone asks you what the next step is for your business.

Depending on the size of your organization, you should also ensure you have buy-in from executives, a dedicated project lead, and (of course) a budget.

Can I grow my business with a CRM?

A recent study by Zoho found that CRMs can improve conversion rates by up to three hundred percent! So you can absolutely grow your business with a CRM – provided you select the system best aligned to your business needs.

Read more about CRM for marketers

How to Manage Your Audience in Mailchimp

Most people know their campaigns generate helpful data reports, but many don’t realize Mailchimp also provides tools to organize and interpret that data on a higher level—to show who you’re talking to (and who you should be talking to). Learn the benefits of organizing all your customer data in Mailchimp, and how to use our audience management tools to build better customer relationships.

How to Build Your Email List

Email marketing helps you build a relationship with your customers. No matter what type of business you operate, email is one of the most important elements of a successful marketing strategy. When people sign up to receive your emails, you can share your story, promote your business, and showcase your products, all while turning subscribers into paying customers. Here’s how to combine pop-up forms and Facebook ads to start growing your audience in a few simple steps.

How to Design Pop-Up Forms that Work

When you create a pop-up in Mailchimp, your forms will be highly customizable, mobile-friendly, and completely free. And, since they don’t require any coding on your part to get started, it’s easy to create a painless signup process for your subscribers in the same place you manage and track all of your other marketing. Learn tips and best practices to help you create effective pop-up forms and use them to grow your audience.

Rewarding Customer Engagement With Pre-Built Segments

When you’re a small business owner, embracing the unknown sometimes comes with the territory. But building a focused and effective marketing plan requires knowing a thing or two about your customers. Learn how Gingiber uses pre-built segments to identify their most engaged customers.

Getting the Most Out of Your Mailchimp Reports

When you know what your campaign data is telling you, you can make better marketing decisions. Good decisions are informed ones—but with a lot of data at your fingertips, it can be hard to know where to begin. That’s why we rounded up 3 simple steps to understand and use your Mailchimp reports to make better marketing choices.