Do you remember the days when all business information was stored in a Rolodex? Before the days of email and personal computers, when business owners needed to find contact information for a customer, they’d pull out their Rolodex and begin flipping through index cards with info written on them.

Although mainframe computers came into use as far back as the 1950s, it wasn’t until the 1980s that small businesses gained access to personal computers in the workplace. The possibilities created by the introduction of digital technology seemed endless.

One of the first and most obvious applications for computers in business was contact management. Instead of pulling out a heavy Rolodex and searching through files to find customer information, entrepreneurs could store those digits inside their computer. The very first customer management softwares were basically just digital Rolodexes.

The thing is, although technology has evolved rapidly since then, many businesses still aren’t using their CRM software for much more than that.

What is CRM? It stands for Customer Relationship Management. The term was originally coined in 1995 to refer to software used to manage business contacts and sales opportunities. It was almost called Customer Information Management (CIM), Customer Information Systems (CIS), or Enterprise Customer Management (ECM). But the term CRM won out and is now a widely used phrase. In fact, it is so widely used — and even overused — that many business owners are now unsure what it means.

The Solution to Both Your Customer’s and Your Team’s Problems

The most important part of the CRM acronym is R: relationships. According to a Harvard Business Review article, “Despite the ‘R’ in CRM and the $11 billion spent on CRM software annually, many companies don’t understand customer relationships at all. They lack relational intelligence—that is, they aren’t aware of the variety of relationships customers can have with a firm and don’t know how to reinforce or change those connections.”

Without this relational intelligence, CRM software cannot benefit businesses. The key to building this relational intelligence is data.

To illustrate the role of data in your customer relationships, just think back to the last time you had to call a business’s customer service line to get support for an issue. We’ve all been there — having to repeat our information over and over, being handed off from person to person, and getting sales pitches for products you don’t need instead of solutions for the problem at hand.

These interactions can be needlessly painful for customers. It’s not uncommon for people to hang up out of frustration when a misguided rep isn’t able to understand the problem and offers irrelevant solutions.

Poor customer handoffs like this can have drastic effects on customer retention. Research by Accenture shows that 52% of consumers have switched companies in the past year due to poor customer service.

68% of customers automatically delete irrelevant emails and 54% unsubscribe.

Disjointed communication also has impacts that reach far beyond customer service. Not only does it damage a business’s ability to retain customers, it also hampers its efforts to attract new ones. Some customers simply ignore mistargeted marketing efforts. According to a study by Janrain and Blue Research, 68% of customers automatically delete irrelevant emails and 54% unsubscribe.

However, other customers react far more negatively. 45% categorize mistargeted marketing emails as “junk” or “spam,” 29% became less likely to buy products, and 10% never so much as visited the website again.

Without accurate data that’s organized and accessible within a CRM, it’s difficult or impossible to send relevant, well-targeted messages to prospects and leads. The consequences of not doing so are expensive.

The Link Between Data and Relationships: Creating a Single Customer View

Even though the meaning of CRM is Customer Relationship Management, many business owners still fail to see the connection between relationships and data.

You might be wondering how data could possibly solve the challenges we discussed. Isn’t big data part of the problem? Instead of viewing customers and leads as human beings, database marketing just lumps them together as meaningless, impersonal numbers, right?

Although data can certainly be part of the problem when not used intelligently, it’s actually the key to a lasting solution. In the same way you show your friends and family that they matter to you by remembering their favorite foods and calling them on their birthday, storing and leveraging data so you can remember your customers’ preferences also shows them that you care.

If the business with nightmare customer service had used its CRM effectively, you’d never have to repeat information about yourself. From the time you first filled out a form on the business’s website before you became a customer, you’d receive the exact communications and interactions you were expecting. After receiving helpful marketing messages with content relevant to your interests and needs, at just the right time you’d receive clear information on how their product or service can add value to your life. If you spoke to a member of the sales team, he or she would come prepared to the conversation armed with helpful solutions for the problems you were facing. If you needed to speak with a different sales rep, the handoff would be handled seamlessly, and the new person serving you would already know your background information and be prepared to offer insight.

After becoming a customer, all the information you shared during that sales conversation would be used to tailor your experience and serve your needs.

If you had a customer service request, you’d need only provide your name or account number, and the rep you’re speaking with would be able to find the entire history of your interactions with the company.

This type of unified approach to customer data management is called a “single customer view.” It’s defined as “an aggregated, consistent and holistic representation of the data known by an organization about its customers.” What this means is that all the data available about each customer is brought together into a single place.

In your CRM, this “place” is the contact record. Anyone within your organization can see all the data points available for a single customer by pulling up their contact record. This makes for more seamless handoffs between departments, more insight into each customer’s unique needs and preferences, and better brand loyalty and customer retention. With a single customer view powered by a CRM software tool that makes it easy to capture data and use it, it becomes far easier to treat every customer and lead who crosses your path as a human being with unique wants, needs and concerns.

Putting Your Data to Work With Automation

Of course, having all the information about each customer at hand inside your CRM is still akin to the digital Rolodex — it’s just a far sleeker version. Customer relationship management shouldn’t be just about storing and searching for data. When your data is all in one place, with a well-organized single customer view, it paves the way for you to do a lot more to build those relationships than you might think is possible.

By combining the power of your CRM with automation, you can actually grow relationships with customers by consistently managing an unlimited number of interactions as your company grows.

Here’s an example to explain how a CRM and automation make this possible. Let’s say you are a wedding planner. When leads come to your website, you offer them a free wedding planning workbook to download in exchange for sharing their email and the date of their upcoming wedding. Based on the date, you send them automated emails that contain helpful planning information that is targeted to the planning phase they are in: Eight months before, you send information on selecting a venue, photographer, caterer, etc.; four months before, you send information on choosing their music, planning their seating arrangement, and so on.

By sending timely information that’s highly relevant to what they’re already focused on, you can build a valuable relationship with them to turn more leads into customers. For clients who choose you to be their wedding planner, you could continue to use your CRM and automation together to follow up with them after the wedding date. You could ask them to leave you a testimonial or online review one month after, or send them a gift on their one-year anniversary. This will lead to more brand advocacy and potential referrals.

The best part is, all of this can happen without you working to remember each prospective bride’s wedding date or manage sending these emails. After setting it up once and putting the automation in place, it can run in the background while you focus on other marketing efforts.

Automation is a highly powerful tool that can be used strategically to develop relationships with customers, but it can also do damage to your reputation and customer relationships if it’s not used in tandem with a well-organized CRM. The secret is to use your CRM as the backbone and the brains behind your automation strategy. All your customer data lives in your CRM — and when your automation is fully based on that database, you can use it to build real relationships instead of sending irrelevant messages or creating unhelpful interactions.

About Megan Monroe
Associate Editor Megan Monroe is a graduate of Santa Barbara’s Westmont College where she studied Philosophy and Communications. After working for several local small businesses (where she gained firsthand experience with the frustration of manual segmentation and follow-up), Megan joined the Ontraport Growth Team. When she isn’t writing marketing copy, social media posts or educational guides for entrepreneurs, she enjoys taking advantage of the Central Coast's amazing wineries and cooking without following a recipe.