CRM (Customer Relationship Management) software for small businesses goes far beyond a simple contact list with notes. Today's software options offer small business owners multiple ways to monitor and track your sales pipeline with incredible detail and also offers an easy way to view the history of customer purchases and payments. Especially useful in a tough economy, small busines CRM software can help you sell more of your product or service by targeting your most profitable customers. In this article, you'll learn what small business owners should look for in a CRM software package and how to use it effectively once purchased. Adapted from a small business podcast on the subject of CRM software for small businesses, we ask a small business CRM expert questions about the various CRM software packages available today and the choices business owners have for each type.
The goal of CRM software is to give entrepreneurs and small business owners a way to increase efficiency in their businesses and ultimately have an easier time making a profit in these difficult economic environment that we're in right now. Small business owners can keep track of customers and really use the software to try and make more sales and make sure you have pipeline full of sales. A lot of small business owners don't get into this part of it. They might keep customer lists in Outlook or just in Excel spreadsheets, but there's a whole world of things you can do beyond that to try and keep track of things and make your life a whole lot easier and hopefully, increase sales at the same time. We're going to talk to him about why small business owners should really look into this and maybe get a more robust system for their CRM software.
SmallBusinessPodcast.com: Please tell us why do small business owners need online or server-based CRM software? CRM Software Expert: Well, take a little step back here to kind of look what's happening in the market place. CRM is the fastest growing software segment. In fact, right now, it's probably the only growing software segment so that's an indication that there is something good that's coming out of that for business owners. Most small businesses don't actually have a common system that they can share information amongst their staff, and Customer Relationship Management is an effective system to organize the front office activities. By definition, it's using technology to find, captivate and keep good customers and streamline your work process. So, if you're still working in Excel and Outlook, there's a big benefit to look into buying or subscribing to one of the variety of online CRM software programs available.
SmallBusinessPodcast.com: So, let's talk about some of the basic features that people should be looking for in a CRM software package. Obviously, there are some that are offered as a service online or there are systems that you can load on your own servers. Maybe, we should start there. CRM Software Expert: Actually, that's a great way to begin because there are essentially two different types of software that you can purchase. The first is traditional on-site where you buy the software, you install it on your server, configure it, integrate it, and support it. And what's emerged over the last five to ten years is an area we refer to as "software as a service" or SaaS. It's often referred to as On-Demand, and one of the big differences between the two, ignoring things that anyone can figure out in terms of price and support and that sort of thing, is CRM is inherently about coworking and collaborating and centralizing information and integrating that information into other applications in work processes and that's, almost by definition, very difficult to do with an on-site installation of software. That's one of the motivating factors behind software as a service. Bringing together all of the small business resources available to you will make your job much easier and the path to profitability much shorter.
SmallBusinessPodcast.com: There is also the impportant point of allowing your employees to be working on the same file all at once. CRM Software Expert: Yes. And working from different locations, one of the characteristics of small business is they often don't have the team of IT staff that do nothing but keep systems running. And when you're installing software locally, that's typically what's required. There are benefits to having your software installed locally. Typically, the applications are more feature-rich and and can be customized faster, but it's a serious trade off in terms of keeping those systems running and controlling the costs related to it. Small business owners typically don't have dedicated IT departments. In the online world, you basically point your browser at a website and you have access to that application and all its features, data sharing with other members of your team and, typically, the team behind the scene that's doing all the IT work, doing the backups and that sort of thing with you. So, when you're out there shopping, there's really no commitment to supporting your own software. You just point your browser at different websites and you could be trying a number of different applications and find out which one is best for you instead of going through the cycle of installing a package finding out it didn't work for you and then continuing on. There's also another dimension here that we should probably touch on is, not only are there two ways to purchase a software, but there are also fundamentally two different types of CRM system, and this is actually quite an exciting area to talk about. You see, the CRM is not a new concept. It's been around for over a decade, and in the first decade there, what companies focus on was the transactional side of their business, basically, dealing with orders, shipments, ticket management, performance report, that sort of thing.
SmallBusinessPodcast.com: Constantly growing the number of prospective sales and following along the sales process and knowing where every customer is in that process is an important feature, correct? CRM Software Expert: Exactly, and automating that, and we got really excited about that, but we're also interested in how those systems help in managing your staff. They weren't necessarily about things customers really cared about. So, as you mentioned, when the economy gets tough and your competitors are concentrating there, what has to be in front of the mind is what's important to your customers. How do you engage them, how do you keep those conversations going with them and how do you close them, how do you understand what their needs are, how do you get them invested in you. And so, what's happening here is there's a new wave or a new type of small business CRM that's emerging in the market place. It's being coined CRM 2.0. Hopefully, that term is not being overuse too much but in this context, it actually means something because CRM 1.0 was about the transactional side of things, the pipeline, just automating some processes and centralizing your data, but the trap there is typically its inward-looking process. In CRM 2.0, it's about your customers, basically evolving the process, accepting that you can achieve internal efficiency. But, a simple way to look at this is CRM 1.0 didn't help lets people sell that much more. It was a better spreadsheet for them and it helped them get a report to their manager so that their manager knew what to expect next week. CRM 2.0 is about tools that help that salesperson sell more to have more engaging and more timely conversations with their customers.
SmallBusinessPodcast.com: Let's talk about how the customer participates in the process as well. CRM Software Expert: We call these conversations and, essentially, it's about kind of recognizing a best practice about sales and, essentially, what we're trying to do here is match the behavior of your company with the prospect's buying pattern, and I'll give you an example of that, actually, a couple of examples. We all know that it takes many interactions to convert a prospect to a customer. A generation that goes probably three, now it's 12, sometimes even more.
SmallBusinessPodcast.com: CRM Software essentially keeps things organized through what may be a long sales process? CRM Software Expert: Absolutely. So, how ironic is this? Ninety percent of all salespeople stop after four interactions with a customer, but 80% of the sales happen after the fourth interaction. So, if they would just stick with it a little bit longer, they'd probably sell a whole lot more. CRM Software helps you do just that. If 50% of all the leads result in a sale for somebody somewhere, and when they're ignored they go to a competitor. So, essentially, what we're talking about here is how can you scale up in the number of conversations that you can maintain. This is difficult because we're just human, right? But, it is also a balancing act, too. I know if I got 12 calls from a salesperson for something that is truly I'm not interested in and I'd become annoyed. What we are not talking about here is advertising. It's not a one way harassment or you're sending out information or just sending out emails on some sort of your program. These are personal conversations, and what's required to support those is a journal of activity, basically, recording what's happening, what your customer was asking for and having an audit, semi-automated process for following up and delegating that within your business. So, CRM 2.0 is about maintaining a journal and a plan with every prospect and getting it out there in a simple list so that you don't have to keep in your head or on, you know, on a pad of paper beside your screen. So,basically, you can engage in multiple conversations without having to remember all of the details of it. It's an effective way of managing the leads as they come in to your system, qualifying them, establishing some type of pattern and classifications, you know, which ones to focus on; and when you're focusing on those to track the conversations that are occurring, the questions that were asked, the areas of interest to keep qualify them, adding information about them and keep segmenting them into list so that you know what at frequency, what their needs are. Customers want a personal conversation with you. They don't want just an email message full of sales-talk and marketing.
SmallBusinessPodcast.com: Isn't one of the most important features of CRM software for small businesses is allowing my staff to help a customer if I'm not in the office? No one wants to be told that they have to wait to get a call back because no one else can help them. CRM Software Expert: Yes, CRM software can change that dynamic. That's an area that is pretty fundamental to small business because CRM 1.0 was typically targeted at larger organizations where just having a singular customer profile was quite a significant improvement in stepping their processes. So, we can basically bank that one, right? The CRM system allows that. But, what's different in the small business is they typically do a lot of role sharing. That same person is responsible for generating and capturing leads but also sales, provisioning, support, the whole thing. Yet you want your entire staff to know what's going on with each customer. So, what you're saying in the CRM 2.0 area is that the scope of functionality and the level of integration with other systems is much higher than in the CRM 1.0 days where it was about recording information and reports. This is truly about let's get our work done no matter who you are. Let's have a consistent view of the customer not only from the sales side of things but also from the provisioning and support side of things.
SmallBusinessPodcast.com: One of the common things I hear about CRM software is that getting employees even if you have one or two of them that are sales reps to use it and use it correctly is can sometimes be a battle. They don't want to update it. They'd rather be on the phone call. They don't see the value of it. How do I sell the value and, you know, better convince them of the value of this to the business and to them as one way to generate more income for them? CRM Software Expert: What I see is the system has to actually be easier than writing on paper. CRM and systems, in general, have their reputation for creating more work for people. If you find yourself at the end of the day updating your CRM system, it's probably not a good sign that users are going to continue to use it. It has to be seen as providing more value to them. It has to be seen as something that they can work with in real time on the telephone as they're talking to somebody. It has to seem like paper. You know what I mean is applications have this kind of system feel to it, rows and columns, takes a long time to update data, update page, wait, and this sort of thing. A lot of the new systems that are available now are benefiting from the innovation that Web 2.0 provided on the web where things are much easier to use. They're actually very friendly. Some might argue, enjoyable. This is the era of Facebook defining what application should look like and how they should behave. So, the traditional barrier and concern that existed is being mitigated by a lot of new vendors that are providing these services now. So, getting back to one of your comments about how do you shop for this. You probably want keep an eye open for that. Is the product that you're using recognizing these trends and opportunities? Or is it from the old school?
SmallBusinessPodcast.com: CRM is used mostly in traditional service business sales where there is, for example,a financial planner who uses it to track their customers and clients, or an insurance salesman who uses it to track customers and prospects. But what about businesses that typically don't track their customer's such as a retail store or even a restaurant? Do you see any trend of those kinds of companies, those kinds of small businesses using CRM as well? CRM Software Expert: Yes, I do, and I think the trend here is that CRM 1.0 was helping service industries work more effectively. That's pretty much as a predominant pattern, and CRM 2.0 is addressing the service side of those industries, right? Dealing more with people and less with automation. And so, even in businesses that typically don't track the customer sales process, there are service components to that. We actually have customers that are in the hospitality industry and I enjoy listening to their conversations about how they operate their businesses, and it's quite interesting. For example, in one case, they manage a side of their business which is around weddings and that sort of thing. So, they have a need to collect and manage a lot of dynamic information that really has nothing to do with collecting information about the invoice that will be produced. They already have systems in place to do that. It may work well. But, where they fall down, where they need help was collecting the information and managing the relationship with their clients to understand the requirements. So, that gets back to capturing the lead, nurturing by providing information and proposals and then actually providing the service. It could be as simple as managing a wedding at a hotel. You can imagine the different steps that goes through as they try to understand what the solution is going to look like for them.
SmallBusinessPodcast.com: In a typical small business, if you have a sales person who leaves or the owner wants to take some time off (which is tough for small businesses to do because a lot of client information is in their head), a central CRM systems is a way to get that information out of their brain and into a central place that anybody can use. The owner then doesn't have to feel like they have to be there 12 hours, 14 hours a day and 7 days a week! CRM Software Expert: Well, it's really the only hope they have to scale, and I don't mean become a 100- or 200-person organization. I mean, if you're three people now, to be able to scale to six or eight, you can get away with sharing notes and yelling across the desks when you're two or three people. When you get to be five, six, seven, eight, now you have some management issues that you have to deal with some serious efficiency and control issues and you need a system to allow you to kind of grow into that. So, you're absolutely right. In less than a check, you're business is in a Microsoft Outlook file in a notebook. You have absolutely no control over. We all know what happens in those situations, you know, a staff could go and work for a competitor. Notebooks get stolen. You have some obligations to your customers to protect the information about them. Centralizing it in a hosted crm system like this, makes it absolutely easy. Something happens to your computer, you just switch to another computer. You go to a library. There's nothing on your computer that really is confidential or useful. Overall, an online CRM software system may be the best for a small business or even large company with employee working from home or around the globe.
The goal of CRM software is to give entrepreneurs and small business owners a way to increase efficiency in their businesses and ultimately have an easier time making a profit in these difficult economic environment that we're in right now. Small business owners can keep track of customers and really use the software to try and make more sales and make sure you have pipeline full of sales. A lot of small business owners don't get into this part of it. They might keep customer lists in Outlook or just in Excel spreadsheets, but there's a whole world of things you can do beyond that to try and keep track of things and make your life a whole lot easier and hopefully, increase sales at the same time. We're going to talk to him about why small business owners should really look into this and maybe get a more robust system for their CRM software.
SmallBusinessPodcast.com: Please tell us why do small business owners need online or server-based CRM software? CRM Software Expert: Well, take a little step back here to kind of look what's happening in the market place. CRM is the fastest growing software segment. In fact, right now, it's probably the only growing software segment so that's an indication that there is something good that's coming out of that for business owners. Most small businesses don't actually have a common system that they can share information amongst their staff, and Customer Relationship Management is an effective system to organize the front office activities. By definition, it's using technology to find, captivate and keep good customers and streamline your work process. So, if you're still working in Excel and Outlook, there's a big benefit to look into buying or subscribing to one of the variety of online CRM software programs available.
SmallBusinessPodcast.com: So, let's talk about some of the basic features that people should be looking for in a CRM software package. Obviously, there are some that are offered as a service online or there are systems that you can load on your own servers. Maybe, we should start there. CRM Software Expert: Actually, that's a great way to begin because there are essentially two different types of software that you can purchase. The first is traditional on-site where you buy the software, you install it on your server, configure it, integrate it, and support it. And what's emerged over the last five to ten years is an area we refer to as "software as a service" or SaaS. It's often referred to as On-Demand, and one of the big differences between the two, ignoring things that anyone can figure out in terms of price and support and that sort of thing, is CRM is inherently about coworking and collaborating and centralizing information and integrating that information into other applications in work processes and that's, almost by definition, very difficult to do with an on-site installation of software. That's one of the motivating factors behind software as a service. Bringing together all of the small business resources available to you will make your job much easier and the path to profitability much shorter.
SmallBusinessPodcast.com: There is also the impportant point of allowing your employees to be working on the same file all at once. CRM Software Expert: Yes. And working from different locations, one of the characteristics of small business is they often don't have the team of IT staff that do nothing but keep systems running. And when you're installing software locally, that's typically what's required. There are benefits to having your software installed locally. Typically, the applications are more feature-rich and and can be customized faster, but it's a serious trade off in terms of keeping those systems running and controlling the costs related to it. Small business owners typically don't have dedicated IT departments. In the online world, you basically point your browser at a website and you have access to that application and all its features, data sharing with other members of your team and, typically, the team behind the scene that's doing all the IT work, doing the backups and that sort of thing with you. So, when you're out there shopping, there's really no commitment to supporting your own software. You just point your browser at different websites and you could be trying a number of different applications and find out which one is best for you instead of going through the cycle of installing a package finding out it didn't work for you and then continuing on. There's also another dimension here that we should probably touch on is, not only are there two ways to purchase a software, but there are also fundamentally two different types of CRM system, and this is actually quite an exciting area to talk about. You see, the CRM is not a new concept. It's been around for over a decade, and in the first decade there, what companies focus on was the transactional side of their business, basically, dealing with orders, shipments, ticket management, performance report, that sort of thing.
SmallBusinessPodcast.com: Constantly growing the number of prospective sales and following along the sales process and knowing where every customer is in that process is an important feature, correct? CRM Software Expert: Exactly, and automating that, and we got really excited about that, but we're also interested in how those systems help in managing your staff. They weren't necessarily about things customers really cared about. So, as you mentioned, when the economy gets tough and your competitors are concentrating there, what has to be in front of the mind is what's important to your customers. How do you engage them, how do you keep those conversations going with them and how do you close them, how do you understand what their needs are, how do you get them invested in you. And so, what's happening here is there's a new wave or a new type of small business CRM that's emerging in the market place. It's being coined CRM 2.0. Hopefully, that term is not being overuse too much but in this context, it actually means something because CRM 1.0 was about the transactional side of things, the pipeline, just automating some processes and centralizing your data, but the trap there is typically its inward-looking process. In CRM 2.0, it's about your customers, basically evolving the process, accepting that you can achieve internal efficiency. But, a simple way to look at this is CRM 1.0 didn't help lets people sell that much more. It was a better spreadsheet for them and it helped them get a report to their manager so that their manager knew what to expect next week. CRM 2.0 is about tools that help that salesperson sell more to have more engaging and more timely conversations with their customers.
SmallBusinessPodcast.com: Let's talk about how the customer participates in the process as well. CRM Software Expert: We call these conversations and, essentially, it's about kind of recognizing a best practice about sales and, essentially, what we're trying to do here is match the behavior of your company with the prospect's buying pattern, and I'll give you an example of that, actually, a couple of examples. We all know that it takes many interactions to convert a prospect to a customer. A generation that goes probably three, now it's 12, sometimes even more.
SmallBusinessPodcast.com: CRM Software essentially keeps things organized through what may be a long sales process? CRM Software Expert: Absolutely. So, how ironic is this? Ninety percent of all salespeople stop after four interactions with a customer, but 80% of the sales happen after the fourth interaction. So, if they would just stick with it a little bit longer, they'd probably sell a whole lot more. CRM Software helps you do just that. If 50% of all the leads result in a sale for somebody somewhere, and when they're ignored they go to a competitor. So, essentially, what we're talking about here is how can you scale up in the number of conversations that you can maintain. This is difficult because we're just human, right? But, it is also a balancing act, too. I know if I got 12 calls from a salesperson for something that is truly I'm not interested in and I'd become annoyed. What we are not talking about here is advertising. It's not a one way harassment or you're sending out information or just sending out emails on some sort of your program. These are personal conversations, and what's required to support those is a journal of activity, basically, recording what's happening, what your customer was asking for and having an audit, semi-automated process for following up and delegating that within your business. So, CRM 2.0 is about maintaining a journal and a plan with every prospect and getting it out there in a simple list so that you don't have to keep in your head or on, you know, on a pad of paper beside your screen. So,basically, you can engage in multiple conversations without having to remember all of the details of it. It's an effective way of managing the leads as they come in to your system, qualifying them, establishing some type of pattern and classifications, you know, which ones to focus on; and when you're focusing on those to track the conversations that are occurring, the questions that were asked, the areas of interest to keep qualify them, adding information about them and keep segmenting them into list so that you know what at frequency, what their needs are. Customers want a personal conversation with you. They don't want just an email message full of sales-talk and marketing.
SmallBusinessPodcast.com: Isn't one of the most important features of CRM software for small businesses is allowing my staff to help a customer if I'm not in the office? No one wants to be told that they have to wait to get a call back because no one else can help them. CRM Software Expert: Yes, CRM software can change that dynamic. That's an area that is pretty fundamental to small business because CRM 1.0 was typically targeted at larger organizations where just having a singular customer profile was quite a significant improvement in stepping their processes. So, we can basically bank that one, right? The CRM system allows that. But, what's different in the small business is they typically do a lot of role sharing. That same person is responsible for generating and capturing leads but also sales, provisioning, support, the whole thing. Yet you want your entire staff to know what's going on with each customer. So, what you're saying in the CRM 2.0 area is that the scope of functionality and the level of integration with other systems is much higher than in the CRM 1.0 days where it was about recording information and reports. This is truly about let's get our work done no matter who you are. Let's have a consistent view of the customer not only from the sales side of things but also from the provisioning and support side of things.
SmallBusinessPodcast.com: One of the common things I hear about CRM software is that getting employees even if you have one or two of them that are sales reps to use it and use it correctly is can sometimes be a battle. They don't want to update it. They'd rather be on the phone call. They don't see the value of it. How do I sell the value and, you know, better convince them of the value of this to the business and to them as one way to generate more income for them? CRM Software Expert: What I see is the system has to actually be easier than writing on paper. CRM and systems, in general, have their reputation for creating more work for people. If you find yourself at the end of the day updating your CRM system, it's probably not a good sign that users are going to continue to use it. It has to be seen as providing more value to them. It has to be seen as something that they can work with in real time on the telephone as they're talking to somebody. It has to seem like paper. You know what I mean is applications have this kind of system feel to it, rows and columns, takes a long time to update data, update page, wait, and this sort of thing. A lot of the new systems that are available now are benefiting from the innovation that Web 2.0 provided on the web where things are much easier to use. They're actually very friendly. Some might argue, enjoyable. This is the era of Facebook defining what application should look like and how they should behave. So, the traditional barrier and concern that existed is being mitigated by a lot of new vendors that are providing these services now. So, getting back to one of your comments about how do you shop for this. You probably want keep an eye open for that. Is the product that you're using recognizing these trends and opportunities? Or is it from the old school?
SmallBusinessPodcast.com: CRM is used mostly in traditional service business sales where there is, for example,a financial planner who uses it to track their customers and clients, or an insurance salesman who uses it to track customers and prospects. But what about businesses that typically don't track their customer's such as a retail store or even a restaurant? Do you see any trend of those kinds of companies, those kinds of small businesses using CRM as well? CRM Software Expert: Yes, I do, and I think the trend here is that CRM 1.0 was helping service industries work more effectively. That's pretty much as a predominant pattern, and CRM 2.0 is addressing the service side of those industries, right? Dealing more with people and less with automation. And so, even in businesses that typically don't track the customer sales process, there are service components to that. We actually have customers that are in the hospitality industry and I enjoy listening to their conversations about how they operate their businesses, and it's quite interesting. For example, in one case, they manage a side of their business which is around weddings and that sort of thing. So, they have a need to collect and manage a lot of dynamic information that really has nothing to do with collecting information about the invoice that will be produced. They already have systems in place to do that. It may work well. But, where they fall down, where they need help was collecting the information and managing the relationship with their clients to understand the requirements. So, that gets back to capturing the lead, nurturing by providing information and proposals and then actually providing the service. It could be as simple as managing a wedding at a hotel. You can imagine the different steps that goes through as they try to understand what the solution is going to look like for them.
SmallBusinessPodcast.com: In a typical small business, if you have a sales person who leaves or the owner wants to take some time off (which is tough for small businesses to do because a lot of client information is in their head), a central CRM systems is a way to get that information out of their brain and into a central place that anybody can use. The owner then doesn't have to feel like they have to be there 12 hours, 14 hours a day and 7 days a week! CRM Software Expert: Well, it's really the only hope they have to scale, and I don't mean become a 100- or 200-person organization. I mean, if you're three people now, to be able to scale to six or eight, you can get away with sharing notes and yelling across the desks when you're two or three people. When you get to be five, six, seven, eight, now you have some management issues that you have to deal with some serious efficiency and control issues and you need a system to allow you to kind of grow into that. So, you're absolutely right. In less than a check, you're business is in a Microsoft Outlook file in a notebook. You have absolutely no control over. We all know what happens in those situations, you know, a staff could go and work for a competitor. Notebooks get stolen. You have some obligations to your customers to protect the information about them. Centralizing it in a hosted crm system like this, makes it absolutely easy. Something happens to your computer, you just switch to another computer. You go to a library. There's nothing on your computer that really is confidential or useful. Overall, an online CRM software system may be the best for a small business or even large company with employee working from home or around the globe.
About the Author:
Tim Bourquin is the co-Founder of SmallBusinessExpo.com which is a directory of small business resources for entrepreneurs.
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