In a real-world scenario of a customer relationship management (CRM) system, discuss how normalization principles can be applied to handle customer data effectively while minimizing redundancy.

Normalization in a CRM system involves breaking down customer data into multiple tables such as contacts, orders, and products, linked by foreign keys. This reduces redundancy, ensures data consistency, and allows for efficient data retrieval and updates. Storing all customer data in one table would lead to redundancy and inefficiency, while separate databases or non-relational databases would not adhere to normalization principles.