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 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 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.

Dashboards: The system should provide a summary view of the sales opportunities underway across a company's customer base and the employees working on them. With this, promising opportunities are less likely to fall through the cracks, says Harding.

Delegation: Employees should be able to use the system to electronically delegate tasks to their colleagues.
Information entry and access: Employees also should be able to enter and access information from anywhere within the system, says Donaghy of SmartOnline. For example, if they've talked with a client on the phone, they should be able to enter details of the call under the person's name. Once in the system, that information should be accessible through both the individual's and the company's name.

Customer Experience Management (CEM) Versus CRM

The terms sound interchangeable: customer relationship management (CRM) and customer experience management (CEM). But they really help businesses with two entirely different business processes and small and mid-sized businesses would do well with a technology plan that marries the two. Though the term has evolved since it first made the scene 25 years ago, CRM now mostly refers to software used to manage and maintain customer records while CEM tools help a business enhance its customer interactions, says Ed Thompson, an analyst at Gartner, the IT research firm based in Stamford, Conn.

Essentially the two types of software solutions are pieces of the same puzzle and should be used together, says Patricia Seybold, who owns the Patricia Seybold Group of Boston, which advises businesses on customer relationship issues.

The differences between CRM and CEM software include the following:

  • CRM tracks and manages customer contacts.
  • CRM is specific to customer or to a company project.
  • CRM software is most often a database-based.
  • CEM is generally a sweeping term that refers to gathering customer input the better to change business operations.
  • CEM gauges many customers' reaction to the business.
  • CEM mainly uses survey software to gather customer input.

CEM is about four things: improving customer satisfaction, improving loyalty, improving advocacy, and living up to brand promise. Business owners generally determine the way their customers perceive the company by surveying those customers. Thus, surveys are the chief CEM tool. But a business needn't invest in specialized CRM and CEM software, Seybold says. Really all a business needs are set methods for tracking customer experience and customer contacts and measuring the customer experience. Online surveys, through such sites as SurveyMonkey, could easily allow a small business to create and distribute their own customer experience surveys.

Pitfalls of a CRM Strategy

There are potential downsides to investing in an expensive CRM system. The technology is ultimately only as good as the data it holds. Here are some potential pitfalls of CRM systems as David Taber, author of Secrets of Success (Prentice Hall 2009), wrote in an article in

  • "Even with all the most marvelous features, a CRM system without real users and real customer-facing data is just an empty shell," Taber writes
  • The more users, the more data that will be entered. So you need to encourage user adoption or else your data will be spotty.
  • Ensuring data quality will take time and, maybe, money, to police.
  • Integration into your other systems is essential and "it won't be as easy or inexpensive as the initial CRM project," he writes.


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Kroll, Karen M., CRM: Software as a Customer Service, 2007.

Leary, Brent, Small Business Should Embrace CRM in 2008, 2008

Taber, David, The 9 Dirty Little Secrets of CRM, Computerworld, 2009

Thilmany, Jean, Software to Manage Customers: CRM vs. CEM, 2009