CRM stands for Customer Relationship Management, which is a business management system designed for businesses to use for the tracking and development of customer relations. It is also a system used to document, store, retrieve and analyze all aspects of customer relations within a company. These customers may involve clients, vendors or other partners involved in or with the business. An effective CRM program takes into account all aspects involved in every part of customer relations to make sound and profitable business decisions.

CRM can be broken down into three main components that address the many varied aspects of customer relations which are highly beneficial to successful business practices. These are known as operational, collaborative and analytical CRM. Each area addresses different needs within the business, all related to customer relations, and has a different set of purposes and functions with customer relations management. A successful CRM program addresses all of the areas of customer relations within these three sections efficiently and effectively. This in turn greatly increases customer satisfaction and retention, which enhances the potential for success of the company.

Operational CRM addresses the many varied aspects of daily operations to streamline processes and improve efficiency. Sales and marketing are essential components to operational CRM as is customer service and front office operations. Any interactions made with any customer or vendor in relation to the business is well documented within a software system for easy retrieval later. This information can then be accessed by anyone in need of it at any time, whether in other departments or at distant offices. This ensures a higher level of customer service and promotes efficiency and accuracy.

Collaborative CRM involves the direct interaction with the customer base for necessary feedback and is also the area of customer relations that handles any issues or problems that may come up in the area of customer relations. This includes many different forms of communications with customers and, internally within the company, such as emails, face-to-face communications and automated phone systems.

Analytical CRM is used for the analysis of all areas of information collected as it relates to customer relations. This is useful in analyzing the effectiveness of marketing procedures, evaluating selling techniques and gathering data on customer retention. This area of CRM is also a useful tool for gathering information on customer behavior. Information gathered and analyzed in this aspect of CRM is valuable in making business decisions that will enhance the quality of customer service and develop practices that will create a wider and more loyal customer base.

Customer Relationship Management (CRM) can be a highly effective system if set up with the right technology and programs that ensure high data quality and accuracy of information that is easily accessed for the purposes needed. A good CRM program can be a great asset to a company. If implemented correctly, it is highly beneficial in creating superior customer service, streamlining business processes and developing products and services to best suit a particular customer base. It can also be used to make sound financial decisions and increase profitability for a business.