Let’s face it: CRM software can feel like a two-edged sword. On one hand, it has nifty tools that help boost revenue, create targeted campaigns and track KPIs so you can always be improving. But at the same time, there are a lot of solutions out there. Where should you begin? In this article, we’ll cover the main types of CRM software to give you a better picture of what you may need.
Before we jump in, what is a CRM? It refers to a platform that helps companies with customer relationship management. CRM systems manage all elements of the interaction between a brand and its would-be or current customers.
Basic functionalities include a database, marketing and sales tools, and dashboards for tracking metrics. However, depending on how your business operates, you may require a more specialized CRM to operate at maximum efficiency.
To help you navigate the landscape, we’ll break down the three primary types of CRM systems:
- Operational CRM
- Analytical CRM
- Collaborative CRM
- How to choose the right type of CRM
Understanding the Types of CRM
CRM solutions — and more importantly, their capabilities and benefits — often fall into one of the three types of CRMs listed below. Each come with their own set of common capabilities and advantages, so it’s good to get an overview of what they do and who they’re best for.
1. Operational CRM
This first type of CRM, as the name implies, is all about facilitating your operations. More specifically, your operations surrounding customers. Every interaction your brand has with current and potential customers is possible with an operational CRM.
It specifically covers three core areas — sales, marketing and service — to streamline tasks and enable your teams to deliver top-notch experiences to customers. In that sense, it’s the most across-the-board option.
Features: What It Does
First up, an operational CRM has tools that address the many aspects of the sales process. It can distribute leads to sales reps and give them visibility into which leads are most worth pursuing via lead scoring.
It also handles the time-consuming task of creating records for each new contract, freeing sales reps to spend time selling. And along those lines, an operational CRM will have a content repository for storing and reusing commonly used documents such as proposals.
Finally, operational CRMs help improve processes and workflows by automating routine tasks. This includes everything from scheduling meetings to transitioning leads through the pipeline to generating those valuable sales reports.
Even though they can serve as standalone solutions, marketing automation tools are often incorporated in CRMs. They form another core part of operational CRMs.
Marketing teams have a lot on their plates — run campaigns to generate new leads, nurture current leads till they’re sales-ready, keep current customers coming back for more. Automating those processes means they can be more efficient and productive.
An operational CRM will let you set up complex email campaign sequences. Once the campaign is built, everything runs on autopilot. This is possible thanks to event-based marketing, where each new event in a lead or customer’s journey triggers a reaction from the system.
You’ve probably interacted with such a campaign. For example, if you buy a new book to download to your Kindle, you might get a follow-up email with recommendations of books that are similar. That’s event-based marketing at work.
These sequences can be as simple as a welcome email for new customers or as complex as a multi-stage nurturing sequence with dozens of potential paths based on how the lead reacts (or doesn’t) to each new message.
An operational CRM also helps you automate customer service. One of the main ways it does this is by giving your customers self-service options. This covers things like setting up online autopay or scheduling an appointment from their phone.
Pretty standard stuff, and something people have come to expect. But, it’s only possible if you have an operational CRM in place.
You can also automate service by setting up a help center or knowledgebase where customers can turn first to get their questions answered. Chatbots are also becoming more prevalent and can serve as the first line of contact in your customer service process.
Benefits: How It Helps
With an operational CRM, you can:
- Track critical information — everything from leads to sales KPIs
- Gain insights to boost sales and revenue (e.g., finding the best opportunities to cross-sell and upsell)
- Automate recurring activities, such as sending meeting reminders and assigning leads to the right sales reps
- Manage a range of different marketing campaigns
- Give customers a self-service option
Users: Who It’s Best For
In reality, an operational CRM is good for pretty much any type of business. It facilitates the three core areas of customer interaction — marketing, sales and service. For that reason, it’s particularly helpful for companies with a heavy customer focus.
It’s also good for any business that wants to streamline workflows, organize data and cut down on the time spent doing manual, repetitive tasks.
2. Analytical CRM
A CRM, at its core, is nothing more than a database filled with reams of data from all over your business. Where leads come from, who’s in the pipeline, tickets currently open, number of purchases for each product or service and on and on.
Storing that data is great. But it’s not enough. It won’t do you any good if you can’t put that information to work to enhance your business. That’s like owning Fort Knox but not having a way through the door to access the wealth inside.
An analytical CRM is the key by which you can unlock the vast amounts of data you’ve collected. Only then can you delve into the story the data’s telling to continue doing what’s successful and optimize what’s not.
Features: What It Does
This is the starting point with an analytical CRM. It may sound complicated, but a data warehouse is simply a central place where you integrate and store data from a variety of sources.
Think of it as a way to collect, access and organize all the data generated by every department that interfaces with your customers. Once you have the data in a central repository, you can run analysis and generate reports.
Data mining comes into play once you have a set of data you want to analyze.
Data mining is a bit complex, but the simple version is that it’s a process you can use to make sense of your data and turn it from raw information into useful insights. It has a number of techniques, such as association, classification and anomaly detection that let you find patterns and assign meaning to the data.
For example, you could use classification to create customer segments based on shared attributes. This could be anything from their age or which product they bought to how they found your company (Facebook ad, Google search, etc.).
As you can see, data mining is a powerful tool that can make your marketing smarter.
Online Analytical Processing (OLAP)
According to the official definition, “OLAP is a powerful technology for data discovery, including capabilities for limitless report viewing, complex analytical calculations, and predictive ‘what if’ scenario (budget, forecast) planning.”
It forms the foundation of business intelligence tools, which let you slice and dice data sets so you have the knowledge needed to take action. It’s basically the difference between being a detective in a mystery novel, putting everything together one isolated clue at a time, and being the writer who knows the big picture and sees how all the pieces fit together.
A central part of OLAP is forecasting capabilities. The ability to run different scenarios and predict future demand has a ripple effect across your business. Instead of relying on guesswork, you can make data-driven decisions.
Benefits: How It Helps
If you use an analytical CRM, it will give you insights so rich it’ll feel like you do own Fort Knox. At a practical level, this means you can:
- Improve customer satisfaction
- Know the best times and customers to cross-sell or upsell
- Boost those customer retention rates
- Target prospects, leads and customers with relevant content
- Grow revenue by analyzing what sells and what doesn’t
- Identify your weak spots and work to improve them
- Create detailed customer journeys and buyer personas
- Optimize marketing campaigns
Users: Who It’s Best For
If you’re just getting started with a CRM and don’t have much historical data to sift through, a CRM with strong analytics capabilities might not be the best choice.
On the flipside, if you have data to analyze and want (or need) to uncover those insights, an analytical CRM is a good option.
It’s helpful for those looking to make informed decisions when building business strategies, find out why certain approaches aren’t working or gain a deeper understanding of customers. Furthermore, the more data you have, the more important it becomes to consider using an analytical CRM.
3. Collaborative CRM
Once again, the name is a dead giveaway. This CRM type (also referred to as strategic CRMs) is all about making communication and collaboration more efficient across your teams.
Techopedia defines it as a “CRM approach in which the customer interaction data of an organization is integrated and synchronously shared to enhance customer satisfaction and loyalty for maximized profitability and revenue.”
As you can see, collaborative CRM (also called CCRM) isn’t merely — or even mainly — for internal purposes. The entire goal is to better serve your customers. The means to that end is by giving your teams access to critical information.
That also means it covers similar grounds to operational CRM.
Features: What It Does
The two main features in these types of CRM software are interaction management and channel management. Let’s look at what they do.
Here, the focus is on interactions between your company and customers. This feature allows you to log all the touchpoints a customer or prospect has with your brand to create a 360-degree view.
Once you have this visibility, you can map each individual’s customer journey and understand how, why and where they’re interacting with your company. From there, you can make improvements and base decisions off facts instead of guesses. For example, if you find out customers keep coming to you with the same problem, you can highlight that in your marketing content.
Within interaction management, there are tools that let you group contacts based on various criteria, map behaviors to improve interactions, filter results for more precise views and more.
Customers have a plethora of channels they can choose to connect on — social media, email and phone to name a few.
Your goal is to meet them on whichever channels they prefer. Channel management makes that possible at every stage, whether it’s a prospect reaching out for more info or a customer calling the help desk with an issue.
For large organizations, the concept of channel management can extend to managing an ecosystem of partners, vendors and other parties via a partner relationship management (PRM) solution. You’re more likely to find this functionality in larger products such as Oracle Siebel and Salesforce.
A collaborative CRM also has capabilities that revolve around enhancing internal communications:
- Activity streams for individuals, teams, contact records and deals
- Video conferencing tools
- Integrations with collaboration platforms like Hangouts and Slack, as well as document management tools like Dropbox and Google Drive
- Workgroups for project management
Benefits: How It Helps
Collaborative CRM leads to benefits such as:
- Improved cross-team communication
- Integrated data for a more complete view of your customers
- Consistent support for customers across their channels of choice
- Data-driven interactions with customers
- A holistic approach to managing the entire customer journey
- Messaging based on real pain points
Users: Who It’s Best For
Businesses that heavily depend on cross-department communication can gain a lot from a collaborative CRM, as can those that need to track customers across multiple channels, especially on the digital side.
It’s also helpful for companies that want to increase customer retention and loyalty or gain a better understanding of their customers so they can offer more effective content.
How to Choose the Right Type of CRM
As we’ve seen, the various types of CRMs each have unique features and strengths. But that may leave you wondering, “How does that affect my company?”
What if you want an analytical CRM to make sense of your data, but you also need an operational CRM to help streamline and automate tasks?
If you’re worried you’ll need to implement multiple systems just to get the level of functionality you need, you can put that fear to rest.
Here’s the thing to understand. While it’s helpful to talk about the types of CRM software based on what they do, that’s only one piece of the story.
In reality, many CRM systems, especially the big names like Salesforce or SugarCRM, cover all those bases (and more). CRMs are robust platforms, often with a handful or even dozens of individual modules that cover a huge range of features. The major difference is that some specialize more heavily in one area — analytical CRM, for example.
So it’s not about choosing to gain analytical features at the cost of missing out on collaboration tools. What you need to do is determine which specialization (if any) is the most essential given your needs so you know which area requires deeper capabilities.
With that in mind, how can you know which solution is right for you?
It’s not an easy choice, nor one you should make lightly. Here’s a quick list of what you can do to ensure you make a solid decision, along with some resources we’ve put together to make the process easier for you.
- Assess your needs by laying out a requirements checklist, which can help determine if you need a particular type of CRM and what kind.
- Be aware of different types of CRM needs based on your industry, especially if it’s a small niche like nonprofit.
- Conduct comparisons of different products.
- Ask lots of questions — of your company, of vendors and about the solutions you’re interested in.
- Send RFPs to aid your search (not always necessary, but often helpful).
The right CRM can do a world of good for your business. You owe it to yourself and your customers to get a system that’s a good fit. Never rush your decision, perform your due diligence and keep your overarching goals in mind so you don’t get distracted by all the bells and whistles. It’ll pay off in the end.
Whether a CRM is operational, analytical or collaborative, it contributes key features and benefits to the process of managing the customer lifecycle. Some systems will specialize in one of these CRM types, but many include capability across all three. And the system that’s best for you depends on your company’s specific situation.
That can make it difficult to pick out which platforms fall under which type when surveying the market. But you don’t have to go it alone. Our free CRM comparison report can help you get a feel for what’s on the market and serve as a launching point on your search for the perfect CRM.
No matter which types of CRM tools are most critical for your company, you can be sure of one thing. Implementing the right system will help you better attract, convert, retain and serve your customers.
Which type of CRM do you think is most valuable for your company? Are you having difficulty knowing which one would be best for you? Let us know in the comments!