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What is CRM? Customer Relationship Management Defined

If you speak with 10 people in sales who use CRM software to help them track prospects they will probably give you 10 different answers to the question: what is customer relationship management, or CRM software?  This is because CRM software is used in many different ways; from tracking pre-sales activities, to managing post-sales maintenance services.  It also can be used to socialize information within sales teams, and it is used for price quote generation, quote management, and proposal generation.

So let’s cut through the complexity of defining CRM and keep it simple… CRM software is just one thing: it helps you sell more products and services by better managing your customers throughout the customer lifecycle.

What makes this simple definition sophisticated is that there are really three key phases over the customer lifecycle in which sales can be done.  You can make new customer sales, you can sell to existing customers additional products or services, and you can sell maintenance to existing customers to support the use of products.  In each of these three ways you are selling something that you are offering, and that means you need to go through a sales process no matter if you are selling to a new customer or an existing customer.

Managing the sales process is what CRM software does best.  It is the place to store all your prospect and customer information.   It can provide your customer information to you easily and quickly, it can walk you through the sales process, it also reminds you when to make contact, and it keeps all your notes about your conversations, plus much more.

The top 3 things that you can do with CRM software are to manage your sales contacts, opportunities, and services.  Contacting your prospects and customers is what you do most when using CRM software.  Many CRM software solutions are pre-configured when you first use it allowing you to immediately get started by entering or importing your customer data.  Today, some CRM software can also give you access to your contacts via your company’s socials sites.  Either way, once your initial data is in the system, you can put up a list of the prospects you want to contact based on various criteria, such as by location or whether they are not yet a customer.  As you start to contact these prospects you can make notes, such as the date when you made the contact, what happened in the conversation if anything, and if you had to handle any sales objections.  At the end of the conversation you can make an entry as to when you would like to try and contact them again.  Each day you can pull up your daily contact reminders and make those calls first.  

The next thing you will do often is track your opportunities.  As you continue contacting your prospects some of them will eventually be interested in your products or services.  Once they express this interest you can create an opportunity record associated with that customer, which outlines the customer’s product interest, and any other considerations that they may have.  You can also enter pricing information you may have given the customer.  Some CRM’s have a quote generator to help produce a line by line quote that you can send to the customer.  Together with sales management and opportunity closure, these processes are called sales force automation because you are automating the entire sales workflow process.

The third popular thing done with a CRM is to track service requests.  Once you have customers who have bought your product or services, they may make contact with a problem or a request.  You can then use the CRM to create a case for that contact.  Once the problem is clarified usually there is a process that needs to be followed to solve the problem which could involve multiple people in the company.  This case resolution process is attached to the case and the CRM will automatically circulate the case to the appropriate people according to the process as each step gets done.  This process is called customer services automation because you are automating the services workflow process.

Using CRM software in a small or medium size business can be well worth your investment.  With CRM software options today, such as pay-as-you-go, can be affordable and available for immediate use.  In the past before cloud-based software, CRM software was notorious for taking months to setup and configure, and then it had a bad reputation for being too restrictive for salespeople to do what they needed to do.  Often in these days, salespeople would only use the CRM as mandated by their management, and rely on hand notes or laptops for tracking sales prospects.  Of course the downside with this is that a lot of company information is lost when that salesperson leaves the company.  But today, with pre-configured cloud-based solutions, sales people have access to the system on your mobile device and laptop.  And on the business side there is no up-front cost, and you can pay through a monthly subscription.

Another misconception with CRM software is that it may not work the way your company sales works.  The truth is all cloud-based CRM software can be configured to add room for new types of information you need, as well as to change terminology for the way you speak.  Though there still may be a few limitations in CRM software configuration options it can usually handle most of what you need.  Some larger businesses will hire consultants to custom configure certain parts of the CRM to meet special needs, but in general the standard configuration options are more than adequate for most businesses.

One thing to keep in mind as you use CRM software is a famous rule-of-thumb when it comes to managing data: what goes in is what comes out (Also known as, ”garbage in – garbage out.”).  What this means is that if you and your employees are sloppy when entering data then sloppy is what you get out of it.  On the other hand, if you and your employees are careful to put in validated contact information, use casing management correctly (avoid all UPPER CASE,) and have other quality checks as the data is entered, then you will find that the CRM will work better than expected.  It can be helpful to have a back office administrator to check data quality occasionally and find problems early rather than miss a deal later on.

So why do you need CRM software?  Because by using the software you will sell more.  According to some researchers it can cost you five times more to get a new customer than to keep an existing one.  This statistic has played itself out in many ways.  Some marketing managers know that the response rates from an outbound campaign will net many times better responses when sent to their installed base as opposed to sending to non-existing customers.  Using CRM software can help you sell to new customers, of course, but more importantly is that it can help you automate the processes of selling additional products to your existing customers, and to sell them maintenance services too.  The net return on your investment often results in higher sales that more than pays for the cost of CRM software.

So how much does CRM software cost?  There are many vendors offering cloud-based CRM software solutions for small and medium businesses today.  The most common pricing scheme is a monthly fee per user, though they often offer discounts for nonprofits and government users, or volume discounts for larger number of users.  What is good about subscription pricing like this is that it usually includes your maintenance and support costs; these services are not extra.

Who are the vendors?  Popular cloud –based CRM vendors come in three types.  The first type of CRM vendor is your system that brings in your customer data from other systems through an import process.  These vendors include Salesforce, Microsoft Dynamics, SugarCRM, and Oracle OnDemand.  Another type is other smaller CRM vendors that have integrated with social channels to grab and acquire followers on your business social sites, including InsideView, Nimble, Demandbase, and also again Salesforce.  The last type is CRM vendors are focused in specific industries, such as Binary Semantics for restaurants.

As you review various CRM vendors for your business there are a few basic questions you should be asking before you make your decision:

  • Is it a company that has good reviews?
  • Is the price reasonable and affordable?
  • Do they offer a trial version to get some experience with the product before making a decision?
  • Did you have multiple staff review the product?
  • Is there anything missing that you may need?
  • How much change will you need to make in your business processes to adapt to the product?

You may have other questions too, so ask them!  Let your CRM vendor help you get to where you need to get, so that you can get on with selling!