Understanding the 3 types of CRM systems

What is CRM software?

At its foundation, CRM software manages and analyzes customer data and interactions to convert leads and drive sales growth. The various tools and functions found within CRM platforms address each step in the customer lifecycle.

There are three types of CRM systems, which are the following:

• Operational CRM. This system streamlines processes for customer relationships and applies them to the overall business process. It aims to generate leads, convert them into contacts and create a customer service infrastructure that retains customers and moves them through the sales lifecycle.
• Analytical CRM. This system enables organizations to better understand customer data and their interactions with the business, whether positive or negative. These large quantities of data further reveal customer behavior and reveal actionable insights into the customer journey.
• Collaborative CRM. This type of CRM bridges the gap between teams and departments to share information, work cross-functionally and create a seamless CX.

The most effective CRM systems can create personalized and memorable experiences that can improve audience growth and customer satisfaction.

1. Operational CRM

An operational CRM system blends all business processes, such as customer service, marketing and sales, into one platform. It aims to help streamline business operations, centralize customer interactions and sales, marketing processes, and service and support efforts in one place. Further, it stores information on customers, leads and employees using a shared platform to better support existing and potential customers.

At its foundation, CRM software manages and analyzes customer data and interactions to convert leads and drive sales growth.

Automation is a critical component of CRM systems, as it lets teams streamline workflows and increase productivity. Common automations in CRM systems include the following:

• Marketing automation. While marketing activities help businesses communicate information about their products and services to their customer base, automation can help find the best way to offer products and approach potential customers in campaign management modules. Marketing automation also helps businesses decide on effective channels -- email, phone calls, ads on social media and more -- to target potential customers.
• Sales automation. Sales automation organizes information to help businesses meet customers' needs and increase sales more efficiently and effectively. It includes various CRM sales modules, such as lead management, contact management and sales forecasting.
• Service automation. This component connects service reps or teams and customers. Its functionality covers many tasks, including setting up inboxes that aggregate customer emails, coordinating live chats and setting up chatbots. Additionally, service automation can delegate tasks to reps through ticketing systems and include a knowledge base or FAQ pages.

Pros and cons of operational CRM systems

An operational CRM can improve organizational efficiency, leading to improved processes, internal cohesion and overall customer satisfaction. However, as with each type of CRM, it depends on proper data entry to achieve its full effect, which can be time-consuming -- especially for small or mid-sized organizations.

When to use an operational CRM system

Operational CRM systems are ideal for helping teams understand customers through the capture and nurture of customer relationships and improve the perception of customers and sales for the company.

Examples of operational CRM systems

• Mailchimp. It positions its platform as marketing CRM software for small businesses. The system aims to help organizations get to know their audience through its platform and find new ways to market to them, particularly through email campaigns.
• HubSpot. This platform combines its marketing, sales, service and CMS hubs into HubSpot CRM to align internal teams, pull customer insights and report on growth opportunities. Startups and large organizations can take advantage of its scalability, depending on business needs and growth.
• Zoho. It can generate and manage leads from marketing campaigns through an omnichannel platform, so teams can connect with leads directly through chat, email, phone and social media. The low-cost price point makes it affordable, with the option to scale as businesses grow.

2. Analytical CRM

The primary goal of an analytical CRM is to transform customer data into trends and actionable insights that the organization can use to improve CX. Data from an analytical CRM can include customer preferences, channels, touchpoints, trends, forecasting and more.

Pros and cons of an analytical CRM system

Analytical CRM systems excel at data mining to manage large amounts of data and develop strategies related to the customer journey. The goal is to increase customer retention and create efficiencies for the sales and marketing departments.

However, while analytical CRM systems can help teams understand a large amount of data, they can also be more technical and difficult to use without dedicated staff. Additionally, the insights gleaned from the data are only as good as the data entered, and inconsistent entries can skew the results.

When to use an analytical CRM system

Analytical CRM systems are best for mid-size and large organizations that gather large amounts of data and want to distill it into trends and insights.

Examples of analytical CRM systems

• Salesforce CRM Analytics. A part of Salesforce CRM, it is an application that helps visualize what's happening in an organization's Salesforce environment with dashboards, graphs and other data visualization.
• Zendesk Explore. This is a reporting and analytics software in the broader Zendesk toolkit. It pulls in data from support and services options to help organizations measure and improve CX.
• Insightly. It suits medium to large organizations that want comprehensive data analysis and integration, along with the ability to track and predict post-sale interactions. It also offers visual dashboards to display collected data.

3. Collaborative CRM

A collaborative CRM, also known as strategic CRM, enables different teams or functional areas in an organization to share data and information. As a result, everyone uses the same knowledge base to make decisions, creating a holistic approach to manage customer relationships. While operational CRM tools often focus on marketing and sales, collaborative CRM systems focus primarily on customer service.

A collaborative CRM system has two components, which are the following:

• Interaction management tracks the touchpoints between a business and its customers through various communication channels, like email and social media. Interaction management helps the organization manage and track each exchange to ensure customers are not over-communicated.
• Channel management uses the information gathered from interaction management to help identify the best communication channel to use for a particular customer.

Pros and cons of a collaborative CRM system

This type of CRM system strives to improve the information shared between the sales, marketing and customer support departments. Because these teams work separately, a collaborative CRM tool can help break down those silos to address customer needs and manage customer relationships effectively.

However, given this system's interdependent, collaborative nature, it's essential to use it correctly. Otherwise, the connection between touchpoints could break down, and the customer experience will suffer.

When to use a collaborative CRM system

Organizations that operate across multiple locations or work in siloed teams can use a collaborative CRM system to streamline how they gather customer information and communicate with them.

Examples of collaborative CRM systems

• Microsoft Dynamics 365. This is a suite of tools from Microsoft that offers actionable insights for teams to manage operations and boost customer relationship efforts. Organizations that already use the Microsoft ecosystem can more easily integrate with the platform.
• Copper. This collaborative CRM system for small businesses can integrate with Google Workspace. It stores customer data in a single location, giving everyone in the organization a central hub to access customer data.
• Monday. This tool prioritizes collaboration to help share data and information. Through file sharing and task assignments, teams work in tandem across marketing, sales and operations.

Key takeaways

Depending on the goals and size of the company, one type of CRM system might be better suited for that organization than the others. Here are some points to consider before choosing a CRM system:

• If businesses prefer marketing, sales and customer service teams to work under one umbrella, with the benefit of automation functions and tools, an operational CRM might be a good choice. For example, a clothing retailer that needs to automate leads and follow-ups with customers for new product releases could benefit from an operational CRM.
• For mid-to-large-sized companies that manage a lot of data, an analytical CRM can structure and organize their team's decision-making efforts. For example, a subscription-based company can use this type of CRM to track customer behavior and purchase history to anticipate if, when or why a customer might churn.
• Teams that need access to shared data while simultaneously prioritizing internal communication would benefit the most from collaborative CRM platforms. Organizations that want to cultivate connections with external stakeholders throughout the decision-making process can use this type of software.

Editor's note: This article was originally written by Sandra Mathis and expanded upon by Zaida Marston.

Zaida Marston is a freelance content writer with more than 10 years of creative writing experience.