You (Might) Need a Customer Relationship Management System


What is a CRM?

A customer relationship management (CRM) system manages customer (including potential customer) data.  Historically it has been used to track a customer through all cycles of the sales process.  If you have long sales cycles, sell to other businesses, or have recurring revenue streams, then you need a way to manage your interactions with your customer.  Increasingly, CRMs manage the information, interactions, processes, and workflows for existing customers as well.  Given the importance of repeat business, it makes sense that a CRM should manage existing customer interactions, just as it does for potential customer interactions.

Perhaps you need something to remind you to follow-up with the customer?  Or you want to keep track of a new contact from a recent meeting?  Or you need to see the quotes you sent acustomer?  Or you need to see what a customer has purchased from you?  As your company grows you may need more sophistication, to ensure your employees are following your sales process for instance.    The system also ‘tracks’ your employees through the sales cycle, holding them accountable for interacting with the customer (e.g. promptly following-up, closing enough deals, getting approvals to offer discounted quotes, etc). The ability to provide accountability is a major driver of CRM ROI (return on investment).

A sole proprietor with a small customer base might get away with using Outlook (or Excel!!!) initially.  But this will quickly become unwieldy.  The overhead of keeping the information at your fingertips grows as your business grows.  You will waste too much time just looking for customer data or trying to remember tasks.  An entry level CRM (such as Zoho CRM) is inexpensive and well worth the investment in time savings alone.  High-end CRMs (e.g. Salesforce and Oracle Cx) can be expensive to buy and implement, although they come with their own benefits (such as extreme customizability) as your business grows.

Customer relationship management systems are far more than just glorified inboxes or todo lists.  Features often include:

  • Automation and workflow (e.g. when one thing happens automatically do something else)
  • Forms to capture data from your Web site (although a marketing automation system is much more appropriate for this)
  • The ability to extend the system with custom fields
  • Integration with other systems (e.g. an ERP/accounting system and your operational systems)
  • Integration with customer tracking systems (such as Google Analytics)
  • Repository for all kinds of customer data (such as quotes)
  • Advanced reporting
  • Entitlement (e.g. enabling users to do access certain content on your Web site – maybe you sell training videos, for instance)
  • Possibly even a Web portal for customer to login and see their information (such as recent invoices)

For an idea of just how extensive a CRM can be, look at Zoho’s feature page.

Selling does not stop when a deal is closed.  Savvy businesses will also try and look for more deals with a given client or look to upsell the client.  Increasingly, sophisticated businesses try and sell services that generate recurring revenue.  For this reason, Microsoft wants people buying Office 365, not just a one-time download of Microsoft Office.  Consumers may like this model because they pay less up front, essentially spreading out their costs.  Microsoft likes it because it forces consumers to renew yearly, ultimately generating more revenue and providing more opportunities to upsell.  This means that once marketing brings a sale to the table, the sales process recurs over and over.

CRMs can help with certain one-time (‘transactional’) sales.  For instance they offer task reminders to help get a sale done.  CRMs excel, however, with recurring sales, where it is imperative to understand your customer in order to successfully close future deals.

All good systems come with robust reporting (business intelligence).  Ideally you can even pull in data from other enterprise applications to.  For instance, if you tie in your accounting/ERP data you can track the cost of acquiring a lead vs the profit it generates.  There are all kinds of metrics you should understand, such as which customer generates the most profit, which salesperson closes the most sales, what type of marketing campaign is most successful, how much revenue are you predicted to earn next quarter, and are there any prospective customers that have gone cold in your sales pipeline, etc.

Of course, CRMs are not a substitute for direct customer interaction, whether that is engaging customers by phone or in face-to-face conversations.  Salespeople should log such interactions in the CRM, so that nothing is forgotten.  This also records important information for other employees who may handle the account.  Software is just a tool; it is not a replacement for boots on the ground selling.

CRMs ≠ Marketing Automation

CRMs have some overlap with marketing automation systems but are not the same thing.  Roughly, marketing automation is for marketing and CRMs are for sales, customer support, and maybe operations teams.  In fact, even businesses that would not gain as much benefit from a CRM could still find great value in a marketing platform.

Say for instance that you own a movie theater and all of your sales are small, one-off, last minute purchases.  You sell tickets both in person and on the Internet.   Assume you do not have any corporate accounts (which would warrant a CRM!)  You have a loyalty program that allows you to capture email information, even when your customer buys the ticket in person.  As you plug ticket sales into your marketing system, you start to learn about your customer.  Perhaps they only come on Saturdays or only to watch romance movies.  You can now send targeted emails from your marketing system to all customers that watch romance movies on Saturdays.  Perhaps Wednesdays are slow for you and you send an email offering half-off admission on a special feature romance movie on a Wednesday.  (Note targeted emails are important; if you send emails that are not relevant the customer will unsubscribe and you will lose touch!)

CRMs Take Time and Money

Finally, implementing CRMs is not for the faint of heart. It is imperative to hire a professional services company with experience.  Be prepared for a large initial upfront investment plus ongoing costs as you adapt more and more features, integrate your applications, adjust to your business, and implement features suggested by your employees.  The TCO (total cost of ownership) is much more than just the price of the software license.  Companies that do not understand this are setting themselves up for failure.  ActiveCampaign offers some guidance on the hidden costs of a CRM.

Any good implementer will develop a plan for managing change.  Leave time to train and educate your employees on your new system.  Explain not just how the system works, but the benefits (to them) of using it.  They will have insight into their customers and (managers will have) oversight of their employees.  Certain mundane tasks may be automated.  Data will be readily available at their fingertips.  For larger teams, leads can be routed to the right sales person faster, increasing the chance of closing a deal.  Some CRMs can highlight relationships between contacts or ‘enrich’ data with third party sources (e.g. LinkedIn).  This gives salespeople more relevant information when reaching out to prospective customers.  One-time training is not enough.  As you enhance your system, explain those changes to your employees.  As new employees come on-board, they need training to be setup for success.  Moreover, employees may learn best practices and productivity tips from each other and submit requests for enhancements.  Your industry and business will evolve and you will require your system to keep pace with new capabilities.

Customer management systems have a vast and ever expanding feature set.  See Salesforce’s much more extensive description of CRM benefits.

Please contact me.  I would be happy to speak with you and suggest a CRM solution that is right for your business and work with you for a successful implementation.