What Is Relationship Management? And Why Do Businesses Use It?

What is relationship management? 

Relationship management, also called customer relationship management (CRM), refers to a business’s process of managing and optimizing interactions with its customers: past, present, and future. You can manage relationships with customers in your direct interactions with them and through CRM software like Salesforce or Hubspot. 

Relationship management encompasses several aspects of business operations, including: 

• Activities around selling products and services, such as guiding customers through the sales process

• Service-related activities, such as helping customers use products and answering their questions 

• Data analysis to study large amounts of customer data from different channels 

• Forecasts of future sales growth

A solid approach to relationship management creates the ability to:

• Observe customers as they mature through the buyer’s journey. 

• Segment customers according to their behaviors and spending habits.

• Create a customer-centric culture in your organization. 

• Value customers for the relationships you can build with them.

• Meet customers’ needs more effectively. 

• Increase customer satisfaction. 

• Retain customers.

• Drive sales.

• Automate sales (when using CRM software).

Did you know?

CRM as a concept originated in the 1970s with the storage of customer satisfaction data in mainframe systems and spreadsheets. In the 1990s, different software systems emerged to scale and automate sales. It is thought that President Franklin D. Roosevelt’s campaign manager, James Farley, created a precursor to modern-day CRM by developing what’s called the “Farley File,” detailing personal and political facts about people that FDR was scheduled to meet. FDR reviewed the file before every meeting to recall details and create rapport. 

Examples of effective CRM

As you learn more about relationship management and consider CRM tools, you might find it helpful to look at some examples of companies with effective CRM practices:

Wells Fargo

• Responsible for managing over $1.9 trillion in assets.

• Uses a CRM platform to manage services, banking, mortgages, investing, credit cards, etc.

• Automates workflows and optimized platforms, thus saving over 5,600,000 hours of extra work.

Bespoke Collection 

• Four wine brands known for unique and elegant customer experiences.

• Uses a CRM platform to personalize email messages after customers make a purchase.

• Spends time understanding the customers’ behaviors and buying habits. 

• Increases customer retention, referrals, and order value.

Activision 

• Video game brand behind popular games

• Offers engaging post-purchase customer experiences.

• Monitors social media conversations about their products and follows up with potential customers. 

• Has decreased annual customer service operating expenses by 25 percent. 

According to Statista, revenue in the CRM software segment is projected to reach over $199 billion by 2027 [1]. 

What does a relationship manager do? 

A relationship manager manages the process of building relationships with customers and clients. 

Their duties might include: 

• Meeting with prospective clients to present new products 

• Identifying ways to enhance the company’s communication strategy

• Communicating with other teams within the company to improve customer experience

• Offering existing clients advice and assistance with products

• Keeping customers and clients engaged 

• Resolving customer complaints and issues

• Keeping the sales team informed of new opportunities 

• Analyzing competitors’ CRM strategies to identify ways to outperform them

• Helping the company maintain a positive reputation 

• Overseeing the use of CRM software to manage customer information, track communications, and segment customers 

To pursue employment as a relationship manager, you may need a bachelor’s degree in business, management, marketing, or a related field. Experience in customer service or sales is a plus, as you may be working directly with customers and clients as a relationship manager. 

As of June 2022, Glassdoor has 323,000 relationship manager job listings, spanning industries such as finance, health care, education, recreation, and more [2].   

How to manage relationships with customers 

A key element of customer relationship management is to step out of a sales-first, transactional way of doing business and into a relational approach. Whether you are seeking employment as a relationship manager or want to take a more customer-centric approach to your own business, there are several strategies you can use to cultivate meaningful relationships with customers.

1. Identify CRM goals. 

Starting with understanding your goals (or that of an employer) can make it easier to design an effective CRM strategy, including the tactics, tasks, and technologies needed to meet those goals. CRM goal examples include retaining more customers, shortening the sales cycle, increasing sales, and decreasing the cost of acquiring customers.  

2. Examine current CRM practices. 

This step can offer insights into which strategies are working well and which ones need improvement. Find out how the company: 

• Stores, organizes, and analyzes customer data

• Communicates with customers, from before to after a purchase

• Schedules and assigns tasks among team members 

• Automates tasks 

3. Identify opportunities to improve CRM. 

Once you get an idea of how the company currently operates its CRM, the next step is to look for areas within the CRM system that you can improve. For example, you may find communication breakdowns after customers make a purchase, leaving them to feel unsupported or disengaged with the brand. Or, you may find that customer data isn’t being leveraged. 

Improvement measures might include: 

• Gathering more detailed feedback from customers to discover better ways to serve them

• Segmenting customers with more precision

• Monitoring social media mentions of the brand 

• Automating more tasks 

4. Create a CRM strategy. 

Based on the goals and opportunities for improvement, create a CRM strategy that includes all the tactics, tasks, and technologies you’ll need to implement. Use the following as a starter list:

• A breakdown of the sales pipeline 

• How you’ll personalize customers’ experience at every stage of their journey

• The metrics you’ll be tracking, such as conversion rates and the number of email opens 

• New customer data that you’ll be collecting and how you’ll be labeling it

• The CRM tools you’ll be using 

• The specific tasks that team members will be assigned

Improve your relationship management with Coursera

Online courses can be a great way to learn more about relationship management and CRM software and explore career opportunities. Explore the options below: 

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Article sources

1. Statista. “Customer Relationship Management Software, https://www.statista.com/outlook/tmo/software/enterprise-software/customer-relationship-management-software/worldwide.” Accessed May 28, 2022. 

2. Glassdoor. “Relationship Manager Jobs, https://www.glassdoor.com/Job/relationship-manager-jobs-SRCH_KO0,20.htm.” Accessed June 16, 2022.