How to Use Customer Relationship Management Software

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CRM as a Customer Service Tool

Customer relationship management (CRM) providers have tailored their offerings for the small business market, providing software-as-a-service options, integration with other technologies, and an understanding of what small businesses want from their customer relationships. It used to be that CRM was only for large enterprises and, then, there were horror stories about the technology being too costly, too time consuming, too complex and too disruptive to be successful. Over the last few years, however, thanks to software-as-a-service (SaaS) CRM providers like Salesforce.com and NetSuite, CRM has rehabilitated its tarnished image.  Because of this, large enterprises along with mid-sized companies have opened up their arms and embraced CRM in its more affordable, easier, and accessible reincarnation and even small businesses may find these tools worthwhile.

Small and mid-sized businesses were forecast to spend about $884 million on CRM, contact center, and e-service technology last year, according to a survey by Services & Support Professionals Association (SSPA), reported by SearchCRM.com. The availability of customer relationship management packages for the small and mid-size business market is growing, particularly in the on-demand or SaaS models.

Every business needs some form of customer relationship management (CRM) system, argues Brian Donaghy, vice president of product strategy with Smart Online Inc., a provider of software-as-a-service (SaaS) applications for businesses in Durham, N.C. That's true even if the system is an amalgamation of Post-It notes, spreadsheets, and the like. Of course, this is not always effective.

What Is CRM?

That's where CRM software comes in. "A CRM application is a better way to manage so that you can be more organized and do more with less," Donaghy says. An effective CRM application provides an organized, comprehensive view of a company's customers and prospects, and employees' interactions with them. Once a large-business luxury, CRM software packages have come down in price and scale as they have migrated to hosted applications or SaaS solutions, making CRM available to a growing number of small and mid-size businesses.

Spending on SaaS will climb by 25 percent annually through 2010, according to a May 2007 report by Saugatuck Technology Inc., of Westport, Conn., "Three Waves of Change: SaaS Beyond the Tipping Point." SaaS solutions for CRM usually require a lower upfront investment, as no software needs to be purchased and installed. Upgrades can be done over the Internet, rather than by loading disks onto each computer. And, employees can access the program with just an Internet connection.

Licensed solutions typically start at several hundred dollars per user license, and go up from there. Some also charge a maintenance fee of about 20 percent of the initial cost. But among the benefits of licensed CRM include that the application runs on your computers, and data is stored in your file server, instead of off-site.

Benefits of CRM

Regardless of which type of CRM product your business chooses, they offer some of the same benefits, allowing you to do the following:

• Realize which customers produce the most profit. By analyzing buying behaviors and other customer data, your business can gain a better understanding of who are your best customers. You can differentiate between the customer who provide the highest profit margins and those that simply bring you the most revenue. You could use that information to provide them a better type or tier of customer service for better customers.
• Analyze buying patterns. More understanding of customer buying patterns can, again help you spot potential high-value customers so that you can make the most of your sales opportunities with those customers.
• Maximize per-customer profits. Data gleaned from CRM can help you lower the cost of selling to certain customers and help you increase profits from those customer interactions.

Features to look for in CRM

Whether hosted or licensed, these are some common features you'll want to look for in a CRM solution for your business:

Application Programming Interface (API): This allows the CRM solution to link with other systems, eliminating the need to enter information multiple times, says Clate Mask, president and chief executive officer with Infusion Software.

Multiple contact information: Users should be able to organize and access information by a person's name, as well as his or her company, says Harding. That makes it possible to view all the interactions that have occurred with a particular person, as well as with multiple individuals within a single company.

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