Buying the right products to manage and analyze customer data can optimize business performance.
By Terri Coles
How do you manage the data you’ve collected about your customers? If you don’t know how to begin answering that question, it’s time to assess customer relationship management (CRM) systems: why they’re important, how they can help your business, and what to know to choose the best one for your needs.
Customer relationship management is a way of organizing—and thus using most effectively—the customer data your business has collected. “CRM is a tool that is used by businesses to organize their customer, sales, marketing, vendor, and service data in a structured way,” says Bruce Naylor, an IT consultant and CEO of software reseller FrugalBrothers. “This allows the business to use this data to build customer relationships, increase revenue, and improve marketing and customer communication.”
When you’re using the right CRM tools for your business, you have a way to both organize and store the data you have, and to gain insights from that data that can help you improve your business and deepen your relationship with your customers.
“Some of the advantages include the ability to build and manage sales forecasts, as well as having their customer data centralized,” Naylor says of CRM systems for small- and medium-sized businesses. “Having this data organized in a structured and meaningful way will reduce the likelihood of missed opportunities and lost sales.”
Imagine a scenario where you want to compile a database of the information you have on your customers: names, locations, contact information, purchase histories, marketing preferences. Just gathering that information from across the various departments and employees of your company can be time-consuming and confusing. But what if your company runs on PCs and one of your contractors uses a Mac? Or maybe different departments are saving information in different ways—one in a spreadsheet program, the other in a database, another still in a note-taking application. Maybe the department in charge of one type of product is collecting different customer data than that collected for a different product.
When you don’t have a standardized system for storing customer information, it can be problematic just to compile it all—let alone analyze it for useful information for your business. One of the key advantages of CRM systems is that they make it easy to store and access all of your customer information, in one place and a single format.
Many CRM tools are cloud-based as opposed to installed on a company server, which means they can be accessed from anywhere. This is a big advantage if you or your employees often work on the road, or if you regularly hire remote workers. Some of the tools also offer Android or iOS applications that make it possible to work on mobile devices.
“Cloud-based CRM makes it easy to enable remote workers to access the data,” Naylor says. “Things like upgrades, backups, and maintenance are normally handled by the cloud provider as well.”
Once you have all that information on your customers compiled in a way that makes sense and is easy to access, you can use it to reveal trends that can help your business down the road. This is another area where CRM systems are helpful; some of them analyze your data along with storing it, revealing trends based on the information in your customer database. This can be particularly helpful for small businesses without data analysts on staff or the funds to pay an outside consultant.
Finally, CRM systems can automate some of the procedures that benefit your business, saving you time and money. For example, you can set up automatic emails to customers who submit a contact form on your website, assuring them their email has been received and setting an expectation for a personalized response.
CRM tools increasingly consider the role of social media in your business, as well. This is another area where automation can be powerful. You can be alerted by the system when your company name is mentioned on social media, for example; this makes it easier for you to reply to social posts in a timely fashion. Read more about the ways automation can save SMBs time and money.
Finding the right tool
However, it’s important to make sure you’re using a CRM system that fits your business’ needs right now—both in terms of the information stored and the insights you can gain from that.
When is the right time to have a CRM system in place for your business? The sooner the better, according to Naylor—ideally before you’re managing data storage separately for each of your business’ front-office functions.
“Today there are CRM systems that allow you to start small and add more functionality as you grow,” he says. This means you can start now and expand your options (and manage the resulting cost increase) as your business expands.
Also, consider how easy it is for your employees to get on board with your chosen system. How robust is the support and training available? An open-source system might save money up front, but you could spend more later if you have to pay for outside support or training. Can your workers use the system easily on the tech hardware they have available, including smartphones and tablets?
Clearly, cost is a factor as well. Pricing formats can vary from system to system. Some offer the option to scale up as your business grows or your data needs evolve; if you choose one like this, it’s valuable to do projections of what your costs may be in the future in order to compare options and avoid unpleasant budgetary surprises down the line. Read about strategies for SMBs to save big on tech costs.
Though the benefits of CRM are strong, there are potential downsides—particularly those that come from choosing the wrong CRM tool for your business or implementing it poorly. If your employees don’t buy in to the use of a CRM system, then you’re not going to get all you can from it. You may even see reduced productivity if the system causes confusion, or if employees have to spend more time than planned for training or implementation. This makes it particularly important to use a system that is easy to learn and use. Read our guide on hiring IT help.
And no CRM system can fix a faulty sales process, Naylor points out. “The business should think through their unique requirements. They should flow-chart their sales processes as well,” he says of choosing the system that works for your business, and making sure your business is ready to implement it. “I recommend working with knowledgeable consultants that are familiar with several CRM applications.”
This article was underwritten by HP: Introducing HP BusinessNow, the right technology to help your business grow.