"Know thy customer" may be an important business principle, but putting that ideal into practice gets exponentially harder as a company grows. That's why nearly every large corporation has embraced customer relationship management technology. CRM tracks buyers, purchase patterns, product preferences, and a zillion other bits of information, then connects those dots to form statistical portraits of each customer. CRM can't replicate one-on-one human relationships, but it comes awfully close.

Unfortunately, most small-to-midsize growing companies have had to watch from the sidelines, unable to afford the price of admission. Full-scale CRM implementations by PeopleSoft (www.peoplesoft.com), SAP (www.sap.com), SAS (www.sas.com), and other vendors can carry seven digit price tags and may require a small army of technicians to run. It takes a lot of revenue to justify that kind of investment.

But lately, as often happens in technology, prices have come closer to earth -- so close, in fact that CRM is becoming a realistic option for even the smallest enterprise. A slew of software vendors, including Microsoft, SAP and several smaller companies, have come out with CRM solutions designed expressly for businesses with fewer than 500 or so employees. The Microsoft Business Solutions Customer Relationship Management program (www.microsoft.com/businesssolutions/), for example, sells for $395 to $1,295 per user, depending on the options desired. Market analysts expect users to flock to these programs in the months and years ahead. "SMB is the sweet spot for CRM vendors," says Sheryl Kingstone, a specialist at Boston's Yankee Group.

Growing companies that want to avoid upfront licensing fees can choose from a number of hosted CRM applications for as little as $30 per month per user. Employees access these applications using Internet browsers, perhaps unaware that they're not interacting with a monster mainframe down the hall. Salesforce.com (www.salesforce.com) and Upshot.com (www.upshot.com) were among the early CRM hosts. Siebel (www.siebel.com), NetLedger (www.netledger.com) and SalesLogix (www.saleslogix.com) also host their proprietary software. This spring, Surebridge (www.surebridge.com) became the first to offer a hosted version of Microsoft's CRM.

Although welcomed, the emergence of entry-level CRM applications confronts many owner-managers with a new set of technology questions: Does CRM make sense for their businesses? If so, what kind should they get? And how will it impact their ongoing operations? There are no simple answers. But the decisions are made easier by knowing a little about how these programs work.

The first thing to understand is that CRM isn't a single type of software application, like a spreadsheet or word processor. It is a catch-all name for a variety of programs that may have little in common other than to collect bits of data about existing and potential customers and make connections among them. Every vendor has its own approach. However most programs have at least one of these characteristics:

Sales force automation. The simplest CRMs are contact managers that catalogue prospects and note your company's interactions with them. Management can see at a glance the status of each potential customer and get a sense of whether a sale is imminent or a long shot. Some software continues to track these contacts long after they become paying customers, keeping a running record of, among other things, what they buy and how often -- in essence which ones are most profitable for the company. Overall, the data generated by these programs can improve forecasts and identify the most productive salespeople.

Customer support automation. These programs track customer inquiries and problems, providing a real-time record of the status of each. This helps assure proper follow-up, and when a customer calls back the representative sees a complete record of previous contacts. When a problem is researched, the solution can be entered into a master knowledge base. That makes it easier for other customer service agents to help customers with similar issues. And by looking for patterns, the software provide an early warning about quality problems that might fester unnoticed.

Marketing automation. Such applications can help companies assess the impact of marketing programs by linking advertising, direct mail, and other activities to inquiries and sales. The goal is to help management improve efficiency through more precise targeting. Advanced tools can apply algorithms and other analytical tools to predict future customer behavior.

Most programs emphasize one of these areas more than the others, though buyers or subscribers can often upgrade to more powerful versions or add capabilities, such as integration with accounting software.

When choosing a CRM program, company owners or managers need to assess how the application will mesh with its own operations. Many vendors have online demos that show how the software works, and several let prospective buyers offer working trial versions. Selecting a CRM program can take a lot of time and effort, but the payoff can be big.