Let’s face it: CRM software can feel like a two-edged sword. On one hand, it has nifty tools that help boost revenue, create targeted campaigns and track KPIs so you can always be improving. But at the same time, there are a lot of solutions out there. Where should you begin? In this article, we’ll cover the main types of CRM software to give you a better picture of what you may need.

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Article Roadmap

• What Is CRM?
• Operational CRM
  • Features
  • Benefits
  • Who it’s best for
• Analytical CRM
  • Features
  • Benefits
  • Who it’s best for
• Collaborative CRM
  • Features
  • Benefits
  • Who it’s best for
• Selecting the Right CRM Type
• Other Key Considerations
• Final thoughts

What Is CRM?

CRM or customer relationship management is a platform that helps sales, marketing and customer service teams improve client relationships and customer experiences. CRM systems manage all elements of the interaction between a brand and its would-be or current customers.

In the current hyper-competitive global marketplace, customers have endless options to purchase from. They often move between various communication channels like emails, texts, calls, social media and websites, making it hard for brands to keep track of relevant customer information.

Buyers’ journeys have truly grown in complexity over the years, posing a new set of challenges to businesses. CRM systems help keep up with the modern consumer by organizing vast amounts of valuable customer data in a centralized platform and harnessing all possible touchpoints.

Basic CRM functionalities include lead management, automation tools and dashboards for tracking metrics. However, depending on how your business operates, you may require a more specialized CRM to operate at maximum efficiency.

Now that you have a good understanding of what CRM systems are, let’s dive into the different types of CRM systems below!

Types of CRM

CRM solutions — and more importantly, their capabilities and benefits — often fall into one of the three types of CRMs listed below. Each comes with their own set of common capabilities and advantages, so it’s good to get an overview of what they do and who they’re best for.

1. Operational

This first type of CRM, as the name implies, is all about facilitating your operations. More specifically, your operations surrounding customers. Every interaction your brand has with current and potential customers is possible with an operational CRM.

It specifically covers three core areas — sales, marketing and service — to streamline tasks and enable your teams to deliver top-notch experiences to customers. In that sense, it’s the most across-the-board option.

Key Features

Sales force automation, marketing automation and service automation are the main features of operational CRMs. Let’s take a look at what they do.

Sales Force Automation

First up, an operational CRM has tools that address the many aspects of the sales process. It can distribute leads to sales reps and give them visibility into which leads are most worth pursuing via lead scoring.

A lead score sheet in a CRM.

It also handles the time-consuming task of creating records for each new contract, freeing sales reps to spend time selling. And along those lines, an operational CRM will have a content repository for storing and reusing commonly used documents such as proposals.

Finally, operational CRMs help improve processes and workflows by automating routine tasks. This includes everything from scheduling meetings to transitioning leads through the pipeline to generating those valuable sales reports.

Marketing Automation

Even though they can serve as standalone solutions, marketing automation tools are often incorporated in CRMs. They form another core part of operational CRMs.

Marketing teams have a lot on their plates — run campaigns to generate new leads, nurture current leads till they’re sales-ready, keep current customers coming back for more. With these types of CRMs, you can automate processes to make them more efficient and productive.

An operational CRM will let you set up complex email campaign sequences. Once you’ve built the campaign, everything runs on autopilot. This is possible thanks to event-based marketing, where each new event in a lead or customer’s journey triggers a reaction from the system.

Example of an email sequence in a CRM system.

You’ve probably interacted with such a campaign. For example, if you buy a new book to download to your Kindle, you might get a follow-up email with recommendations of books that are similar. That’s event-based marketing at work.

These sequences can be as simple as a welcome email for new customers or as complex as a multi-stage nurturing sequence with dozens of potential paths based on how the lead reacts (or doesn’t) to each new message.

Service Automation

An operational CRM also helps you automate customer service. One of the main ways it does this is by giving your customers self-service options. This covers things like setting up online autopay or scheduling an appointment from their phone.

Pretty standard stuff, and something people have come to expect. But, it’s only possible if you have an operational CRM in place.

You can also automate service by setting up a help center or knowledgebase where customers can turn first to get their questions answered. Chatbots are also becoming more prevalent and can serve as the first line of contact in your customer service process.

Primary Benefits

With an operational CRM, you can:

• Track critical information — everything from leads to sales KPIs
• Gain insights to boost sales and revenue (e.g., finding the best opportunities to cross-sell and upsell)
• Automate recurring activities, such as sending meeting reminders and assigning leads to the right sales reps
• Manage a range of different marketing campaigns
• Give customers a self-service option

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Users: Who It’s Best For

In reality, an operational CRM is good for pretty much any type of business, especially ones with linear sales processes. It facilitates the three core areas of customer interaction — marketing, sales and service. For that reason, it’s particularly helpful for companies with a heavy customer focus to gain a high-level view into customers’ lifecycles.

It’s also good for any business that wants to streamline workflows, organize data and cut down on the time spent doing manual, repetitive tasks.

Limitation: This solution helps improve organizational efficiency and customer satisfaction. But as with many types of CRMs, the system’s success depends on proper data entry, which can be a time-consuming process, especially for SMBs.

Marketing Automation in Salesforce Sales Cloud.

Example: Salesforce Sales Cloud
Salesforce Sales Cloud is an all-encompassing solution that helps businesses optimize their sales, marketing and service processes. You can automate tasks like deal discounts approvals, proposal drafting and auto-filling orders for a smooth pipeline transition. Activity timeline lets managers, sales reps and agents access up-to-date customer information.

2. Analytical

A CRM, at its core, is nothing more than a database filled with reams of data from all over your business. Where leads come from, who’s in the pipeline, tickets currently open, number of purchases for each product or service and on and on.
Storing that data is great. But it’s not enough. It won’t do you any good if you can’t put that information to work to enhance your business. That’s like owning Fort Knox but not having a way through the door to access the wealth inside.

An analytical CRM is the key by which you can unlock the vast amounts of data you’ve collected. Only then can you delve into the story the data’s telling to continue doing what’s successful and optimize what’s not.

True to its name, analytical CRM helps analyze several key business components like:

• Customer Analytics: Identify recurring customer patterns and profitable segments. You can deep dive into customer behavior by assessing portfolios and profiles.
• Market Analytics: Tap into viable marketing opportunities before creating campaigns. Manage and measure performance for multiple geographical levels, product types and brands.
• Sales Analytics: You can accurately forecast sales revenue and volume by analyzing sales behavior.
• Service Analytics: Get all the answers you need regarding complaint management, product quality and customer satisfaction. It also provides insights into service revenue and costs.
• Channel Analytics: It lets you discover customers’ preferred communication channels.

Key Features

Data Warehousing

This is the starting point with an analytical CRM. It may sound complicated, but a data warehouse is simply a central place where you integrate and store data from a variety of sources.

Think of it as a way to collect, access and organize all the data generated by every department that interfaces with your customers. Once you have the data in a central repository, you can run analysis and generate reports.

Data Mining

Data mining comes into play once you have a set of data you want to analyze.

Data mining is a bit complex, but the simple version is that it’s a process you can use to make sense of your data and turn it from raw information into useful insights. It has a number of techniques, such as association, classification and anomaly detection that let you find patterns and assign meaning to the data.

For example, you could use classification to create customer segments based on shared attributes. This could be anything from their age or which product they bought to how they found your company (Facebook ad, Google search, etc.).

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One example of how to segment opportunities for greater insight.

As you can see, data mining is a powerful tool that can make your marketing smarter.

Online Analytical Processing (OLAP)

According to the official definition, “OLAP is a powerful technology for data discovery, including capabilities for limitless report viewing, complex analytical calculations, and predictive ‘what if’ scenario (budget, forecast) planning.”

It forms the foundation of business intelligence tools, which let you slice and dice data sets so you have the knowledge needed to take action. It’s basically the difference between being a detective in a mystery novel, putting everything together one isolated clue at a time, and being the writer who knows the big picture and sees how all the pieces fit together.

Businesses have multiple categories of data, subsequently broken down for reporting and analytical purposes. The data at hand also consists of several dimensions. For example, sales-centric statistics have different variables based on time, location, product and more. Rather than analyzing each dimension individually, OLAP enables you to conduct a multidimensional analysis on large volumes of data at high speed.

A central part of OLAP is forecasting capabilities. The ability to run different scenarios and predict future demand has a ripple effect across your business. Instead of relying on guesswork, you can make data-driven decisions.

Primary Benefits

One of the best types of CRMs, analytical systems will give you insights so rich it’ll feel like you do own Fort Knox. At a practical level, this means you can:

• Improve customer satisfaction
• Know the best times and customers to cross-sell or upsell
• Boost those customer retention rates
• Target prospects, leads and customers with relevant content
• Grow revenue by analyzing what sells and what doesn’t
• Identify your weak spots and work to improve them
• Create detailed customer journeys and buyer personas
• Optimize marketing campaigns
• Discover trends and new opportunities

Users: Who It’s Best For

An analytical CRM is best for medium to large businesses working as service providers and account-based sales organizations that deal with huge data sets.

It’s helpful for those looking to make informed decisions when building business strategies, find out why certain approaches aren’t working or gain a deeper understanding of customers. Furthermore, the more data you have, the more important it becomes to consider using an analytical CRM.

Limitation: If you’re just getting started with a CRM and don’t have much historical data to sift through, a CRM with strong analytics capabilities might not be the best choice.

These types of CRMs can get difficult and technical to understand without dedicated staff, something not many small businesses can afford. It’s also important to be careful when entering information as inconsistent data entries can lead to skewed results.

Example: HubSpot Sales
With built-in reporting and analytical tools, HubSpot Sales helps you measure performance at every stage of the sales funnel. It transforms raw data into actionable intelligence for better performance tracking. You can corroborate deals closed with contacts created through attribution reporting. Marketing Hub, Sales Hub and Service Hub come with their modules for advanced analytics.

Dashboards display vital information in an easy-to-access hub

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3. Collaborative

Once again, the name is a dead giveaway. This CRM type (also referred to as strategic CRMs) is all about making communication and collaboration more efficient across your teams.

According to a report by Freshworks, 91% of employees are frustrated with the tools they have for collaboration at work, and 57% feel restrained by legacy tech.

As you can see, a collaborative CRM is about optimizing internal communication in order to better serve your customers. The means to that end is by giving your teams access to critical information and the right tools.

That also means it covers similar grounds to operational CRM.

Key Features

The three main features in these types of CRM solutions are interaction management, channel management and document management. Let’s look at what they do.

Interaction Management

Here, the focus is on interactions between your company and customers. This feature allows you to log all the touchpoints a customer or prospect has with your brand to create a 360-degree view.

Once you have this visibility, you can map each individual’s customer journey and understand how, why and where they’re interacting with your company. From there, you can make improvements and base decisions off facts instead of guesses. For example, if you find out customers keep coming to you with the same problem, you can highlight that in your marketing content.

Within interaction management, there are tools that let you group contacts based on various criteria, map behaviors to improve interactions, filter results for more precise views and more.

Channel Management

Customers have a plethora of channels they can choose to connect on — social media, email and phone to name a few.

Your goal is to meet them on whichever channels they prefer. Channel management makes that possible at every stage, whether it’s a prospect reaching out for more info or a customer calling the help desk with an issue.

Document Management
Most collaborative CRMs allow you to centralize customer records like proposals, contracts and SLAs. In some cases, they also store technical documentation for customer self-service. This feature helps agents and sales reps access crucial customer information for speedy and contextual redressal.

Additional Features 

For large organizations, the concept of channel management can extend to managing an ecosystem of partners, vendors and other parties via a partner relationship management (PRM) solution. You’re more likely to find this functionality in larger products such as Oracle Siebel and Salesforce.

An activity stream in a collaborative CRM.

A collaborative CRM also has capabilities that revolve around enhancing internal communications:

• Activity streams for individuals, teams, contact records and deals
• Video conferencing tools
• Integrations with collaboration platforms like Hangouts and Slack, as well as document management tools like Dropbox and Google Drive
• Workgroups for project management

Primary Benefits

Collaborative CRM leads to benefits such as:

• Improved cross-team communication
• Integrated data for a more complete view of your customers
• Consistent support for customers across their channels of choice
• Data-driven interactions with customers
• A holistic approach to managing the entire customer journey
• Messaging based on real pain points

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Users: Who It’s Best For

Businesses that heavily depend on cross-department communication can gain a lot from a collaborative CRM, as can those that need to track customers across multiple channels, especially on the digital side.

It’s also helpful for companies that have multiple locations or want to increase customer retention and gain a better understanding of their customers so they can offer more effective content.

Limitation: While a collaborative CRM is great for communication, it’s not ideal for companies that aren’t comfortable with sharing customer information liberally throughout the organization.

Example: Dynamic 365 for Sales

Collaboration in Microsoft Dynamics 365.

Dynamics 365 for Sales comes with co-working capabilities to enable teams to share files and simultaneously work on documents. Microsoft Teams lets teams collaborate on sales deals across departments and locations. You can easily share quotes, RFPs and emails via Microsoft Office integrations and libraries on SharePoint.

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Selecting the Right CRM Type

As we’ve seen, the various types of CRMs each have unique features and strengths. But that may leave you wondering, “How does that affect my company?”

What if you want an analytical CRM to make sense of your data, but you also need an operational CRM to help streamline and automate tasks?

If you’re worried you’ll need to implement multiple systems just to get the level of functionality you need, you can put that fear to rest.

Here’s the thing to understand. While it’s helpful to talk about the types of CRM solutions based on what they do, that’s only one piece of the story.

In reality, many CRM systems, especially the big names like Salesforce or SugarCRM, cover all those bases (and more). CRMs are robust platforms, often with a handful or even dozens of individual modules that cover a huge range of features. The major difference is that some specialize more heavily in one area — analytical CRM, for example.

So it’s not about choosing to gain analytical features at the cost of missing out on collaboration tools. What you need to do is determine which specialization (if any) is the most essential given your needs so you know which area requires deeper capabilities.

With that in mind, how do you choose the right one from the different types of CRMs available in the market?

It’s not an easy choice, nor one you should make lightly. Here’s a quick list of what you can do to ensure you make a solid decision, along with some resources we’ve put together to make the process easier for you.

• Assess your needs by laying out a requirements checklist, which can help determine if you need a particular type of CRM and what kind.
• Be aware of different types of CRM needs based on your industry, especially if it’s a small niche like a nonprofit.
• Conduct comparisons of different products.
• Ask lots of questions — of your company, of vendors and about the solutions you’re interested in.
• Send RFPs to aid your search (not always necessary, but often helpful).

The right CRM can do a world of good for your business. You owe it to yourself and your customers to get a system that’s a good fit. Never rush your decision, perform your due diligence and keep your overarching goals in mind so you don’t get distracted by all the bells and whistles. It’ll pay off in the end.

Other Key Considerations

In your search for the ideal types of CRM solutions, it’s crucial to jot down hurdles you encounter in your day-to-day business operations and the objectives you wish to achieve post-implementation.

The right CRM should boost your sales, reduce ticket volumes and optimize CSAT, CES and other customer metrics. Here are some of the elements to consider before selecting a specific type of CRM:

• Integrations: Is your data scattered across multiple systems? Then it’s beneficial to get a CRM solution that integrates with your existing tech ecosystem.
• Scalability: It’s advisable to buy a solution that will likely match your company’s growth two or three years down the road. Otherwise, repeatedly purchasing a new tool as you expand can incur high costs and set you back.
• Adaptability: Even if you opt for the “best” CRM in the market, it could be redundant if your staff cannot get on board. Implement a solution with a lower learning curve, friendly user interface and onboarding support.
• Inter-departmental Functionality: Coordination between sales, marketing and customer service departments is imperative to foster customer relationships. Select a CRM that unifies activities across departments and teams.
• Deployment Mode: While cloud-based solutions are the most prevalent, some businesses could benefit from an on-premise CRM. Assess which mode fits your requirements and budget.
• Mobile Platform: Some cloud CRMs offer mobile apps that are especially beneficial for remote and hybrid teams. A few systems even allow you to update information offline, something useful in times of bad internet connectivity.
• Budget: You need to take into account various costs you may incur. Go beyond obvious ones and assess potential hidden costs, onboarding, training or maintenance fees. If you choose an on-site platform or analytical CRM, you’ll need a budget for dedicated staff.
• Reporting and Analytics: Determine whether you need a CRM with built-in reporting and analytical modules to extrapolate insights from data.
• User Experience: A platform with an intuitive and visual interface is always a plus. It can save valuable resources that would otherwise go into expensive and time-consuming software training.
• Customizability: Look for solutions that let you tailor the platform to each team’s unique needs. The systems that offer pre-built templates for communication and other business processes are the best types of CRMs in the market.
• Vendor Support: Assess how quickly and effectively your vendor handles support requests. Do they provide self-service options like AI chatbots or knowledge databases? It’s also vital to look into their onboarding process and data security measures.

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Final Thoughts

Whether a CRM is operational, analytical or collaborative, it contributes key features and benefits to the process of managing the customer lifecycle. Some systems will specialize in one of these CRM types, but many include capability across all three. And the system that’s best for you depends on your company’s specific situation.

That can make it difficult to pick out which platforms fall under which type when surveying the market. But you don’t have to go it alone. Our free CRM comparison report can help you get a feel for what’s on the market and serve as a launching point on your search for the perfect CRM.

No matter which types of CRM tools are most critical for your company, you can be sure of one thing. Implementing the right system will help you better attract, convert, retain and serve your customers.

Which type of CRM do you think is most valuable for your company? Are you having difficulty knowing which one would be best for you? Let us know in the comments!