CRM stands for Customer Relationship Management. It is a process or methodology used to learn more about customers' needs and behaviors in order to develop stronger relationships with them. There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake. The more useful way to think about CRM is as a process that will help bring together lots of pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends.

CRM helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers.

It is Design to assist a business in organizing all the data associated with a client - from marketing, to the initial lead, to the sale and any ongoing follow up or support. It builds a full profile of the client which is then accessible to other members of your organization and allows your team to see each others schedules and to network more efficiently through the application.

As with any other aspect of ecommerce, there's a wide variety of CRM software applications available. They can cost anywhere from $0 to literally hundreds of thousands of dollars, depending on complexity. Generally speaking, they can be broken down into two categories; locally and remotely hosted.

Locally hosted - all software is installed on your server
Remotely hosted - the service is run on the CRM companies' server

Let's take a look at the advantages and disadvantages of both.

Remotely hosted CRM services:

Advantages: The CRM provider is responsible for the smooth running of the software and that the application is secure. As you'll have a lot of confidential data stored in your CRM software, this is very important. Any problems that occur in the application are also the responsibility of the provider; as is upgrading, so that can save you money on bringing in developers to troubleshoot.

As CRM software is very complex, by using a remotely hosted service you can benefit by the "buying power" of hundreds, perhaps thousands of other users; i.e. that new features will be added without costing you a fortune; quite often they are free. To build a CRM application from scratch can be a very expensive task for any single company.

Disadvantages: The CRM service can disappear, along with all your records; so it's important to select a reputable company.

This is also important as you don't want your records being used for other purposes. A good CRM service will allow you to backup/export your data.

Locally hosted CRM software:

Advantages: Control over the software and the opportunity to make it work exactly the way you wish.

Disadvantages: Tech expertise required for setup and upgrades and you may need to pay for ongoing support of the application.

Security becomes your responsibility, which can cause a few headaches - especially as is the case with many applications, security patches are rolled out and you need to install them very quickly. As your business grows, your needs from a CRM package will also change and adding these extra features can be quite expensive.

What to look for in a CRM package

As with most other mission critical applications, you need to consider your choice of Customer Relationship Management software carefully. Consider not just your current needs, but the future. To have to change down the track can be stressful and expensive. A few other points to consider