At a networking event for small business owners I was reminded that we often talk in abbreviations that are relevant to our industry and assume that people know what they are.

I was discussing business sales tools and a small business owner asked me what do you mean by “CRM?”

CRM, or customer relationship management, is different from contact management software, which you already may use in your business. Contact management software lets salespeople access and manage their accounts and contact information. Think of these as a computerized business card holder. While contact management software can be helpful for managing data, it generally can’t be used to generate informational reports and typically can’t be shared across users.

CRM software is much more comprehensive and provides the same contact management tools, but also can include detailed customer information that allows you to see the life cycle of the entire customer relationship, buying history, past correspondence and interactions. CRM software allows you to create sales reports and forecasts easily, and to share data among the entire team.

Depending on what information you gather about customers, CRM software can help you spot trends based on your customers’ demographics, ages, interests, locations or industries. This helps you target them better and add new services or products to meet their needs.

Many small businesses use some sort of CRM software every day to manage their sales pipeline, marketing and customer service activities.  A good CRM system will help them find new customers, close sales faster, keep their sales team accountable and build lasting, profitable relationships.

CRM software also helps with time management by allowing users to track, automate and schedule things such as client contact, follow-up and report generation. Last, but not least, it creates a consistent sales process for your sales team to follow. When choosing CRM software, keep it simple and scalable — simple enough that your sales team will actually use it, and scalable so it can grow with your company.