What is CRM? How does it work?

What is CRM? How does it work?
4 min. read

Many articles present CRM as an extremely complicated system. We decided to get to the bottom of it and tell you about CRM in lay terms.

CRM, in a nutshell, is a system for smart business management. It helps almost effortlessly to process orders, store information and make workflow as easy as possible for sales, marketing and business owner.

What is CRM system

CRM is a Customer Relationship Management. It can: reduce workflow routine, simplify sales steps, analyse and collect data, keep in touch with customers and make records.

CRM mission

There are five tasks that CRM will cope with better than any employee.

Orders processing

What you get:

  1. One system to store all orders from various resources (website, chat, email, social networks).
  2. Chatbot to response client’s requests immediately. It saves managers time, so they can make customers warm up more effective.
  3. History of each client conversations in one system: messages and comments will be available to managers in the client’s card.

Communication between clients and managers will be more productive, and the client will appreciate that his needs are remembered.

Sales analysis

You can automate the sales funnel, e.g., when the manager sets the deal status:

  1. «For payment», CRM sends an invoice to the client.
  2. «Hung-up», the system sends to the client a reminder email, reiterating cooperation and client’s benefits.
  3. «Singing agreement», CRM automatically sends email with upcoming work stages details.

Employees efficiency

CRM shows sales statistics for managers and business owner. The manager sees how he is meeting the deadline by the end of the month. The business owner sees managers ratings, and can decide who needs to be trained more and who should be rewarded.

Customer base security

In CRM, sellers have access to their customers contacts, not the entire database. It will save your contact database from possible leakage to competitors.

Customer loyalty

With CRM managers process orders and requests efficiently, communicate with clients and send orders faster. When the service and the product are of the same quality, you get:

  • regular customers;
  • positive reviews;
  • new orders — loyal customers recommend you.

CRM goals

CRM may increase your sales, marketing and customer service. All you need is to find the best system for you.


CRM allows you to store all customers data and orders, as well as monitor and analyse purchase funnels and deals steps. Connecting external services allows you to send emails and make call from the service. CRM provides all necessary tools to increase profit.


CRM is a great tool for analytics. It provides simplified data collection, audience segmentation, helps to monitor the effectiveness of advertising channels, as well as calculate the cost per lead and per customer.

Customer service

Managers workload reduces due to processes automation. Service can call and send notifications to customers.

Such features also simplifies head managers workload. It is easier to control reporting documents and monitor each employee results.

Types of CRM

CRM systems differ in three criteria: role, placement and features.

Role: universal and industry-specific.


They have all basic features and they are suitable for any task. They have a simple interface. Third-party services can easily be connected to them. Unfortunately, they do not always have features that particular business needs.


Useful for specific business fields, but they are difficult to adjust,  work slowly and more expensive.

Placement: cloud and «on premise» CRM

Cloud-based CRM is a software that is hosted on the CRM provider’s servers and accessed by its customers through the internet.

Advantages: 24/7 availability, easy integration with other services, do not require updates, technical support is included in the price.

Disadvantages: cost depends on the number of employees.

«On premise» CRM is a software that is located at the client’s premises. Client purchases the license and installs service on PC.

Advantages: all data is on your servers and it is easy to set up.

Disadvantages: you need a full-time employee to service and update CRM, data safety is on you.

Features: individual and batch


When CRM is created for your business only. It takes a lot of money and time. Related to business corporations with unique goals.


These are any other CRM. May require set up to meet specific business needs.

Do you need CRM?

You need CRM if you have sales department that has numerous calls, emails and meetings. Such data should be stored in one system and leads should be constantly generated to build long-term cooperation with customers.

You do not need CRM if you have a retail store, and don’t make calls, emails and and other notifications. You are not aimed at long-term cooperation with clients or your cooperation is based on personal acquaintances.

How to choose CRM

Now let’s discuss selection criteria for your future CRM system.

Choose Cloud-base CRM if you do not have servers, IT specialists on staff and time to set up internal system. Choose «On premise» CRM if you don’t need more than basic CRM features and have programmers in the office.

CRM should automate and simplify whatever slows you down, so simple interface will be useful for quick start.

Think about data safety in advance as any CRM is a dataset of your clients and analytics.

The editing history will help you track all the actions of employees. As a bonus you will get program insurance in case of a significant error or data deletion. It will be possible to return to the previous step of the program when everything worked correctly.

Adjustable features to change interface, access settings for employees, etc.

Integration with other services to transfer data, e.g., add customer cards, contacts, change the status of the deal.

If there is CRM that suits you, but does not have the necessary service for integration, Albato will help you. Albato is a no-code service that can easily connect two or more services you need and transfer data between them.

Important points in choosing  CRM

Information processing

  • Operational

This CRM type has two basic tasks — to process flow of customer requests and control the work of employees. Most useful for sales managers and administrators.

  • Analytical

Instead of storing the entire history of customers requests, this service updates information on sales trends, evaluates the effectiveness and profitability of advertising, predicts financial performance. Such CRM is useful tool for marketers.

  • Collaborative

When CRM systems is based on integration with third-party services. It can provide clients feedback.

  • Combined

Such CRM combines elements of 1, 2 and 3 types. Suitable for large projects where all CRM features are important at the same time.

Data transferring

Pay special attention to the ability of data transferring (at once and automatically). The absence of such module may affect the department efficiency.


Here we are talking about the difference between closed and opened source system for «On premise» CRM only.

Closed source CRM can be bought only from major developers. As a result, you will have a system that can be changed within the limits indicated by the developer.

Opened source use CMS-based products. It provides opportunities for integrating system with third-party resources: website, etc.

CRM pricing

The prices of the product and licenses on the developer’s website are not total cost of CRM.

Total cost will consist of:

  1. «Cloud» system access or copy payments.
  2. Transferring data to the system: a ready-made migration module + preparing data for transferring.
  3. Cost of completion: granting access rights, setting up reports, tasks, etc.
  4. Maintenance.
  5. Troubleshooting during transferring.
  6. System implementation expenses: employee training, verification and control.

How to implement CRM system

It is possible to avoid annoying mistakes during the installation of CRM and during its operation. Create detailed technical requirement:

  1. Describe the processes that need to be transferred: customer base, customer applications, etc.
  2. Select the features, tasks and reports you need.
  3. Specify sales funnel step by step, defining manual and automatic workflow.
  4. Make a list of required CRM features and those that can be excluded.
  5. Test CRM with managers and head of the department.
  6. Determine the term for each stage of CRM implementing.


It was a description of what is CRM, how it works and how to choose it. This tool will help you analyse sales channels and employee results, collect customer data and make personalised offers to them.