Customer relationship management (CRM) is a computer software programme for managing a company’s interactions with its customers and clients. It uses technology to organise and automate the process of creating profiles of customers, interacting with them and collating information about the sales transactions you do with them. The aim of customer relationship management is to find and win new clients as well as retain those the company already has.
How does a CRM work?
A key element of CRM is the importance of measuring and valuing relationships with customers. CRM software involves putting all details of your customers, the orders they place with you and the interaction you have with them, on to a computer system which can be accessed and added to by everyone in your organisation who deals either directly or indirectly with customers and prospective customers. The software not only records details of every customer and the business that you do with them, it also collates and analyses the data it has recorded for each customer, across your entire customer base so you can see how often individual customers place orders, what size orders they place, how well they respond to pricing initiatives and new products and so on.
Why do I need CRM software it?
Firstly because it can help you establish and maintain a good relationship with your customers. The focus on maintaining relationships with existing customers can be particularly fruitful as it has been proven to be eight times cheaper to hold onto an existing customer than it is to find a new one.
And secondly, because an effective customer relationship management strategy can reduce your costs – less paperwork, less admin, less repetition of simple tasks – and therefore can increase the profitability of your business.
The practicalities
It can be useful to incorporate some kind of CRM software system into your business right at the start because it will be easier to start out with it than trying to bolt it on at a later date. The good news is that start-up businesses can build up to a fully blown CRM system gradually, by beginning with an off-the-shelf product which provides a straightforward, integrated contact manager system enables you to track and record interactions with customers such as emails, documents, jobs, faxes and scheduling. These tools usually focus on accounts rather than on individual contacts, so there is less complexity required. As the business grows, you can then add on more detailed applications as required or switch to a bespoke system.
Things to consider
A customer relationship management strategy is only as good as the employees trying to implement it. If it is too unwieldy or difficult to use or understand, or if employees cannot see the point of it, then it will not be effective.
Top tip
CRM software can be run either on a desktop, online or via the cloud so you need to think about what type of arrangement you would prefer.
How much does it cost?
From around £200 plus VAT for a simple contact management system to several hundred pounds a month on a license basis for a full CRM system. You can also find a range of Opensource (Free) CRM options.
Where can I find out more?
Computer software firms which supply CRM software for small and start-up businesses include Sage, Workbooks, Intuit Quickbase, Sugar CRM, Salesforce, Tacile, Zoho, Salestrakr, Maximiser, Infusionsoft and Microdynamics.
Related: How to build a sales pipeline