As a business owner, you probably understand that one of the most important things your company needs to focus on is the relationship you have with your customers. After all, it’s thanks to them that you’re able to continue developing your enterprise and do what you enjoy most.
However, keeping your customer relationships on an excellent level can be harder than it might seem to some, especially if you have quite a lot of clients. No matter how much effort you put into it, you’re only human which means that you can make an error, which can negatively impact said relationships.
What if we told you that there’s a way to ensure that your customer relationships will be taken care of so that you can put your focus on more important matters? Because there is, and it’s called CRM, or as some prefer Customer Relationship Management.
In this article, we will talk about what is CRM software, why you need one for your company, what are the different types of CRM systems, as well as answer some of the most frequently asked questions regarding this topic.
What Is CRM?
First things first, let’s talk about the CRM definition.
CRM stands for Customer Relationship Management and it’s a type of software that allows you to effectively manage the relationship between your business and your clients. Thanks to it, there’s no need to use a multitude of spreadsheets or databases to track individual customer’s data – instead, you have everything related to a specific client (including all customer interaction that has already taken place, documents, contact data, purchase history and more) within one platform. All that information can be accessed by any of your employees at any time.
Why Do You Need a CRM System?
There are several reasons why companies should consider adding CRM solutions to the tools they use. Below, you will find some of the most important ones.
This one is probably a no-brainer, but the main idea behind using a CRM system is to improve the relationship between your business and your customer, and that’s exactly what it does. As we already mentioned, thanks to this software you have all your customer data within reach. Any of your employees can take a look at the information gathered, so when a particular customer contacts your business it allows them to provide them with better service, which, in turn, can affect the relationship between your company and the said customer.
CRM software automates a lot of tasks that your employees would’ve had to do by hand, thanks to which they have more time for other, more important matters. It also ensures that everything has its own, rightful place, as with the number of emails some people receive daily, it is very easy to forget about one or two – this way, all of them stay organized. Additionally, a CRM system can improve collaboration between your team members, which is especially important if you have quite a few remote workers. If your CRM system is cloud-based, you can be sure that all the data within it will be up to date, so if someone is having a hard time making a decision regarding a specific client, they can always access this information to make it easier for them. What’s more, depending on the CRM system you’re using, you might have access to collaboration tools that allow several people to work on the same file or to follow a document’s progress. Thanks to all this, customer service teams, sales, and marketing can all work together to provide the best experience possible for your client.
A lot of modern CRM solutions will go further than just collecting data – they will also contextualize it and break it down into metrics such as demographic information. This allows you to have a clearer view of your customers, and it can also help you judge whether a specific marketing campaign was a success or not really.
Not all marketing campaigns will be suitable for all of your customers, so sometimes you might want to send an email about it to only a few of them. A CRM solution can make it easier for you, allowing you to sort your customer base depending on factors such as where they live, their age, buying stage they’re in, and so on. Thanks to this aspect of a CRM system, you can send more personalized emails, taking into account their preferences or customer interests, which, in turn, can result in a better customer experience.
It’s no secret that the cost of obtaining new clients is much higher than the cost of maintaining the ones you already have. This is why, if you want to succeed, you need to put as much effort into keeping existing customers as you would into scouting new customers, if not more. One of the reasons customers leave a company is because they’ve been experiencing some issues that most likely weren’t addressed. A CRM system can prevent that from happening – since all the employees have access to the same CRM data, problems can be resolved quickly instead of getting lost in someone’s inbox. Another common reason for leaving is neglect. If a customer feels like the company doesn’t care about them, they might decide to go to your competition. Again, a CRM system can help by, for example, automatically sending an email to your customers every once in a while.
Types of CRM Systems Based on Their Capabilities
There are a few different types of CRM systems that you should know about if you’re considering investing in one for your business. Keep in mind, however, that it’s not all black and white and sometimes a CRM software will have combined features of a few types of CRM solutions. Still, let’s take a look at the most commonly used ones.
As you might deduct from the name, collaborative CRM allows different departments, such as customer service representatives, as well as sales and marketing teams, to work together and ensures that they all have access to the same customer information. Collaborative CRM systems are a need for businesses that use a multi-faceted approach when it comes to keeping existing customers and acquiring new ones. It allows them to provide your customers with the best customer service and ensures customer satisfaction every step of the way.
The ones that will benefit the most from operational CRM systems are companies with customer-facing teams whose main motivation behind getting a CRM system is to streamline and automate workflow. The main advantage of operational CRM systems are the tools that focus on creating, monitoring, and optimizing business processes.
Analytical CRM systems are most suitable for businesses that care a lot about customer data and are looking for a way to visualize it, as they feature a number of different types of analytics, including, but not limited to interactive dashboards, text and speech analytics, work-flow embedded analytics and more.
All-in-one CRM solutions combine the best of both worlds – not only are they perfect for businesses with customer-facing teams, but they also allow your company to automate back-office business processes and workflows. They are most suitable for workflow-intensive businesses in industries such as manufacturing, telecom, or others where there’s a need to keep to a certain standard.
It’s no secret that the cost of obtaining new clients is much higher than the cost of maintaining the ones you already have. This is why, if you want to succeed, you need to put as much effort into keeping existing customers as you would into scouting new customers, if not more. One of the reasons customers leave a company is because they’ve been experiencing some issues that most likely weren’t addressed. A CRM system can prevent that from happening – since all the employees have access to the same CRM data, problems can be resolved quickly instead of getting lost in someone’s inbox. Another common reason for leaving is neglect. If a customer feels like the company doesn’t care about them, they might decide to go to your competition. Again, a CRM system can help by, for example, automatically sending an email to your customers every once in a while.
Types of CRM Systems Based on Their Location
Another very common division of CRM systems involves the place where the said system is located. Based on that, we can divide them into two categories – on-premises CRM systems and cloud-based CRM systems.
Cloud-based CRM is also often called SaaS (software as a service) or on-demand CRM, and it uses cloud computing to store your customers’ data. The information is located on an external remote network that you and your employees can access at any time, from anywhere – all you need is a device such as your phone or your computer and an internet connection. This is a great solution for any company that doesn’t have enough resources to store the data on its own servers. The way it usually works is that you would pay a fee for storing your data – how much that will be and how often you’ll have to pay it depends on several factors, including what CRM software you decide to go with, how much customer data you have to store, how many of your employees will be using it, etc. (we go a little bit more in depth about it later on). One benefit of a cloud-based CRM system that needs to be mentioned here is its scalability – if your business suddenly takes off, and the number of customers you cater to significantly increases, you can easily expand it to suit your current needs. The same goes for when your business is slow – you can downsize it accordingly.
If a company has an on-premises CRM system, that means that everything connected to it, including security and maintenance, falls on its shoulders. Contrary to companies using cloud-based CRM systems, in this case, the data is stored on the company’s own servers, and they also need to cover any upgrade costs, if those arise. You might want to consider this type of CRM system if you have an in-house IT team that will be able to take care of it on a regular basis. Also, instead of a subscription, companies using on-premises CRM systems pay for a license upfront. The installation process for this type of system is often longer than that of a cloud-based CRM software due to the fact that it requires full integration with the company’s data. If you have a cloud-based CRM system and want to switch to an on-premises one, contact your CRM provider – chances are that they also have it in their offer and vice-versa.
How Much Does a CRM System Cost?
That depends on the system you will choose if you decide to implement a Customer Relationship Management (CRM) platform into your business. However, here are some things that can help you get a general idea of the costs associated with a CRM system:
- Some CRM systems have a per-user fee, which means that the more employees use the system, the more you will pay. So, for example, if the per-user fee is $35, and you have 17 employees using the CRM system, you will be paying $595 per month for it.
- If you have a lot of customers, you might be paying more for the CRM platform as some CRMs have a per-record charge. For example, there are CRMs with which you will be paying for every additional 1,000 (or 10,000 depending on the CRM) customers added to your database. You can also encounter CRM systems in which you pay for storage. So, for instance, you could be able to store your first 10 gigabytes for free, but you’d have to pay for every gigabyte over that.
If you’re not 100% sure that your company needs a CRM system, a good idea would be to take advantage of a free trial – there are many CRM platforms that allow you to use their services for a specific period free of charge so that you can see if their CRM solution is what you need.
Moreover, many companies offer you a 30-day money-back guarantee, which means that if, within 30 days from the purchase day, you decide that the CRM system is not the right one for your company, you can terminate the contract and what you paid will be refunded to you.
Of course, not all CRM systems provide you with this option, so make sure that the one you want to go with to test out CRM in your company does.
The Bottom Line
As you can see, CRM, or Customer Relationship Management, is an essential tool for any business dealing with customers, no matter how big or small that enterprise is. If before reading this article you were unsure whether that’s something you should invest in, we hope that we dispel any of the doubts you might have had.
Before we go, let’s just summarize the most important points. CRM is a system that helps you with managing customer relationships. Some of the biggest advantages of having one include higher productivity of your teams and better customer segmentation. CRM systems can be divided into four categories based on their capabilities (collaborative, operational, analytical, and all-in-one systems) and into two categories based on where the data is stored (on-premises and cloud-based systems). Finally, when it comes to the cost of a CRM system, there’s not much we can tell you, as the prices can vary quite a bit, and there are a lot of factors that go into the pricing.
With that being said, we have reached the end of our short CRM guide. However, if you’re interested in reading some more about Customer Relationship Management (CRM) software, don’t hesitate to take a look at some of our other articles, such as Best CRM Software for 2023, or, if you’re a small business owner, Best CRM Software for Small Businesses for 2023.
FAQs
Find answers to the most common questions people ask.
As we already mentioned, CRM stands for Customer Relationship Management.
There are a few situations that might indicate that investing in CRM software is something that you should consider. These are:
– when you have different teams working closely with each other.
– when your employees are unable to easily find the needed customer data.
– when you’re managing things using spreadsheets or notebooks, which negatively impacts your business and the deals you’re making.
– when your business is growing very quickly and your customer base is becoming larger and larger.
– when you’re losing customers because of the customer service you provide.
– when you spend too much time creating reports and not enough time analyzing them.
– when there’s no transparency or visibility when it comes to your sales team’s activity.
With so many different CRM solutions available on the market, you might be asking yourself – how do I choose the one that is most suitable for my business? Some of the factors that most businesses take into account when making such a decision are cost and functionality. Think carefully about which features you need the most, as there’s no point in paying a lot of money for things that your team won’t even be using.
Consider which type of CRM software you think will work better with the resource you have – on-premises CRM or cloud-based CRM?
It’s also a good idea to establish a budget and stick to it – although, of course, if you find a system that you really like that is a bit out of your budget the world will not end. It’s more of a guide than a strict requirement that you need to follow.
Once you know more or less what you’re looking for, compare the offers of a few different providers so that you can be sure that you’re getting what you need at the best price possible.
The short answer is yes. All businesses, no matter the size, will definitely benefit from having CRM software in place. After all, even if you don’t have that many clients, it’s still almost impossible to keep track of all the interactions your employees have with them. Having a CRM system allows you to keep them organized, and your team members will be able to access this information whenever they need it. And besides, there are plenty of CRM systems dedicated to small businesses.
The CRM circle involves five phases. The first one is reach, where your marketing team delivers various marketing campaigns and increases your brand awareness.
The second step is customer acquisition, which happens when your potential customers take the first step toward a relationship with you, such as filling out a form or downloading an ebook from your website.
The next phase of the CRM circle is conversion, which is what happens when your leads make a purchase, becoming your new customers.
The fourth step is retention, which is basically making sure that once you gain a customer, they stick around. One of the ways to do it is by providing them with excellent customer service whenever they need something from your company.
Finally, we have customer loyalty, which doesn’t necessarily mean repeated purchases. For example, loyal customers might upgrade their services to more expensive ones because they know what they can expect from you.
