To answer the question, “What is the importance of CRM?” you need to look past the initials, past the term Customer Relationship Management, and think of CRM not as a thing but as a strategy for doing business. Each word in the term is important on its own, and when brought together, they create an ideology of major importance.


CRM is important for a company to provide the best customer service, succeed in sales and support, and both generate and retain its customers. It ultimately has a strong effect on the company's bottom line and customer satisfaction.

What Is CRM?

Customer Relationship Management, or CRM, is a business strategy that focuses on customer knowledge, satisfaction and retention. While the goal of any business is profit, CRM strategies start with the customer and work toward the sale, versus a selling strategy that starts with the product or service and leads toward the customer. Starting with the customer involves collecting and analyzing information to determine who the customer is, what the customer needs and how a business can meet, then exceed, those needs.

Purpose of CRM

To understand the significance of CRM, you need to look at its ultimate goals. Five important CRM goals include:

  • Superior customer service
  • A need-based selling strategy
  • Effective cross-selling
  • Sales staff support
  • Customer generation and retention policies 

Realizing these goals means your business must create a marketing mix that involves product, price, place and promotion unique to each customer you serve.

Adopting the goals of CRM involves a process of studying the customer and the buying process, providing your sales staff with the training and technology required to match products or services with needs, and assisting sales staff efforts to discover ways to add value and profit with cross-selling.

Essential CRM Strategies

CRM involves developing strategies that focus on customers because consumers can have a significant impact on the bottom line. Essential CRM strategies include:

  • Customer retention or win-back strategies
  • New customer generation
  • Personalized selling plans that work to ensure customer loyalty
  • Continued enhancement of the product/service line to provide the right products in the marketing mix

To carry out these strategies effectively requires commitment and communication, along with the technology and infrastructure required to support it.

Implementation of CRM

CRM can bring a company together. Focusing attention on the needs of the customer and making successful implementation of CRM strategies of the utmost importance creates a common goal for all concerned. Implementing CRM strategies, however, requires an investment of both time and money. Technology in the form of a network infrastructure and different types of CRM software are essential for successful implementation, as is training staff to use the software to its fullest potential.

Advantages of Customer Relationship Management

One of the benefits of CRM is that it significantly increases a business’s potential for profit. It increases internal communication, provides ways for employees to work together toward a common goal, makes the selling process easier and more effective, and most importantly, increases customer satisfaction and loyalty. A business that makes a commitment to CRM also makes a commitment to change and evolve as customers move through their life cycle, change their wants, needs, and buying habits, and as business and economic conditions change. This evolution is essential for continued success and profitability.