What is customer relationship management (CRM)?

Customer relationship management (CRM) is fundamentally a strategy designed for managing a company's interactions with both current and potential customers. It encompasses various practices, technologies, and strategies that organizations utilize to analyze and manage customer interactions throughout the customer lifecycle. The primary objective of CRM is to improve customer service, enhance customer satisfaction, and ultimately drive sales growth by fostering better relationships with customers.

Using CRM, businesses can collect and analyze customer data, which aids in understanding customer preferences, behaviors, and needs. This knowledge allows companies to tailor their marketing efforts, respond more effectively to inquiries, and build long-term relationships that can lead to increased customer loyalty and retention.

The incorrect choices focus on other aspects of business operations. Tracking employee performance pertains to human resources and performance management rather than customer interactions. Enhancing product development is related to innovation and design processes, while managing financial transactions falls under financial management. None of these options address the core purpose of CRM, which is centered entirely around customer relationships.