If you think a customer relationship management (CRM) strategy is just for big companies, then think again. CRM is essential for any small business that wants to prosper, as Rachel Miller explains
No business - whatever its size - can afford to ignore customer relationship management. At its simplest, it is a method of record keeping that ensures nothing slips through the net. It could be a spreadsheet of contacts, a simple database or a tailor-made system. Whatever the size of your business or the sector you are in, there is a CRM system for you.
Why do you need a CRM system?
Be honest, have customer contact details ever gone missing? Or has a golden opportunity to get in touch with a customer come and gone unnoticed? Have some of your best customers gone elsewhere and you don’t know why?
A good knowledge of your customers enables you to develop marketing strategies that target their specific needs - and increase your sales. But how do you safely get, store and sort customer data? We look at how a customer relationship management (CRM) system can boost your revenue.
A customer relationship management system can be a powerful tool in your marketing armoury. By recording your customer's product likes and dislikes, their spending patterns and their location, age and gender, CRM software enables you to build up a detailed picture of their tastes, needs and buying habits.
This in turn enables you to segment your customer base into groups of buyers with different tastes or budgets. You can identify your most profitable customers, for example, or promising prospects, and target them with marketing messages and offers devised just for them.
If the message - and its timing - is right, you could improve your sales conversion rates considerably.
Ten ways CRM can help your small business
-
Know your customers - Know who is buying from you, how often and have up-to-date contact details. Have access to their sales history so you can spot buying trends. See their preferences at a glance and contact them at the right time with the right message. Also notice when customers have lapsed - and try to win them back.
-
Put a value on your customers - Analyse your customers and their buying patterns to quantify exactly what each customer is worth to your business. Use the information to identify your most profitable customers and other important segments.
-
Have all your information in one place - Dedicated CRM systems allow you to join up your sales and marketing data with other records, such as accounts, stock-keeping and delivery. That way you can know everything about a customer’s dealings with your firm - from whether their goods arrived on time to whether they are a late payer.
-
Test and refine your marketing - With a simple CRM system, you can easily analyse the success of marketing initiatives and refine them accordingly.
-
Improve your sales figures - Research has shown time and again that CRM boosts sales. With all the customer information at your fingertips, you can target your sales effort more precisely, time your approaches more strategically, improve your conversion rate and up the number of sales per customer.
-
Boost customer retention - Keeping good customer records allows you to offer a more targeted and personal service that will improve customer satisfaction levels allowing you to retain good customers for longer.
-
Up-sell and cross-sell - Customer buying patterns help to identify opportunities to up-sell and cross-sell enabling you to maximise the value of every customer.
-
Increase your efficiency and reduce costs - CRM is about efficiency. Sales and marketing costs can be reduced if you improve your targeting and reduce wastage. And, by eliminating duplicate processes, you can save more time and money.
-
Spot trends and monitor changes - Many small firms are often operating on the back foot, reacting to changes in the market after the event. CRM can help you spot changing customer needs as they happen so you can respond quickly.
-
Find new customers using your data - The information on your existing customers can help you find and successfully sell to new customers that match the profile of your best clients. Keep details of enquirers and new prospects so that you can keep in touch.
What information can a CRM record?
Having the right information about your customers at the right time can help you seal a deal. There are four key types of information that a CRM can record that can help you make a sale:
-
Previous customer interactions - Selling is all about relationships. With a CRM system, you can capture information every time you have contact with a customer, logging everything from phone calls and emails to sales. Your salespeople can access this information at the touch of a button allowing them to provide a more targeted and personal service and significantly boost the chances of making a sale.
-
Previous buying behaviour - Analysis of buying trends can be very revealing. Looking back over past sales can reveal trends and buying cycles. By spotting patterns, you can target the right sales message to the right person at the right time. It can also help you identify key characteristics about your customers allowing you to identify more potential customers matching that profile.
-
Customer information - If you sell to other businessses, you need to do your homework about prospective clients before you start pitching to them. Information about companies can be gleaned from websites, external directories and reports. These can give you valuable data and information on company revenues, new developments and future plans. They will also tell you who the top executives are and give useful background on them.
-
Previous sales methods - Looking at past sales can be very instructive. It can tell you which sales methods and marketing campaigns are working. This helps you improve your sales rates and raise your game. A CRM system enables you to search your records for similar deals (by sector, client type or product, for example) and offer insight into how those deals were successfully concluded. With these recommendations, sales people are likely to increase their conversion rates dramatically.
Jason Nash, Microsoft's CRM product marketing manager explains:
"CRM is a customer-focused business strategy designed to optimise revenue, profit and customer satisfaction. The more you understand your customers, the easier it is to target new prospects and boost sales.
"If you have your marketing database, your sales pipeline and delivery going through your CRM system, you can monitor the relationship and accurately measure your return on investment. By using data effectively, you can also drive sales from an existing customer base, rather than spend a lot of money on trying to attract new clients."
Traditional or cloud-based CRM?
CRM systems are not just for corporates, he says. "Smaller businesses don't necessarily need a highly sophisticated CRM package," says Nash. "But if it's implemented properly, most systems should pay for themselves within 12 months."
Many businesses now opt to set up a cloud-based CRM system. This can have a number of benefits:
- cloud-based software can be accessed easily by salespeople working out of the office;
- cloud-based applications are often cheaper as they don't require a large upfront investment (businesses can subscribe on a monthly basis);
- it may be easier to scale up an online CRM system.
A micro-business can expect to pay as little as £3 per user per month for an entry-level, cloud-based CRM system. However, businesses with around 10 employees should expect to pay around £50 per user per month for a suitable cloud-based system.
Alternatively, businesses can buy and set up a CRM system on their computer network. Initially this is likely to cost considerably more, as it will include IT support and one-off fees such as software licences. It is worth checking out your existing IT support contract to see what it covers.
Choosing a CRM system
With many CRM systems on the market, you will need to be clear about what you want yours to do. Do you need something that will work seamlessly with your existing software, for example? Do you want it to schedule sales calls, or send automatic emails to customers confirming orders?
"You should try to find one that is easy to use," advises Nash. "Some are compatible with common email platforms - staff are more likely to use these, because they are familiar."
Whatever package you choose, making it accessible to everyone is crucial. John Nash concludes: "Too often, CRM systems are just rolled out to sales staff and you miss other opportunities across the organisation where you can gather data to build customer loyalty. For CRM to be effective, all staff should have input."