Is CRM even needed for a small business, you might wonder. Before we get to that, let’s understand what it is all about.
CRM stands for Customer Relationship Management, a term first coined in the 1990’s. The literal and original meaning of the expression “Customer Relationship Management” was, simply, managing the relationship with your customer.
Today, Customer relationship management (CRM) is a term that refers to practices, strategies and technologies that companies use to manage and analyze customer interactions and data throughout the customer lifecycle, with the goal of improving business relationships with customers, assisting in customer retention and driving sales growth.
Like many buzzwords, the term CRM has been adopted by IT system vendors to fit their product. CRM might be used to describe a cloud CRM systems for sales people (Sales Force Automation, Opportunity Management), for marketing people (Marketing Automation, Campaign Management), for Helpdesks (Customer Service and Support), email and voice logging, and so on. CRM systems are designed to compile information on customers across different channels — or points of contact between the customer and the company — which could include the company’s website, telephone, live chat, direct mail, marketing materials and social media. CRM systems can also give customer-facing staff detailed information on customers’ personal information, purchase history, buying preferences and concerns.
According to Wikipedia, “the generally accepted purpose of Customer Relationship Management (CRM) is to enable organizations to better serve their customers through the introduction of reliable processes and procedures for interacting with those customers”.
Given the above definition and purpose of CRM, it is obvious then that CRM as a concept, policy or strategy is essential for any and every business irrespective of size.
In fact, some believe that small businesses need CRM more than larger competitors. This is because small companies rely more desperately on the value they get from each individual customer. Local marketplaces typically have a limited population of customers. Plus, you must compete with other large and small businesses for those customers. With CRM, you can get firmer control of which customers offer the most value so that you can dedicate your marketing efforts at getting them in the door and retaining them.
The three key reasons that CRM is important for a small business are as follows:
1.Increase profitability – According to Forbes, it is “six to seven times more expensive to acquire a new customer than to keep an existing one.” Therefore retaining an existing customer for life should be a company’s primary objective.
A CRM solution can help organizations increase profitability by building and maintaining strong relationships with their customers and prospects. By retaining customers there will be less need to spend money on marketing, to find and acquire new customers. CRM solutions allow a company to maintain relationships with customers by knowing what they want and when they want it. The data collected from website traffic and enquiries allows a company to be able to strategically target certain products and services to the correct prospect or customer. By knowing what a customer or prospect has been viewing on the website, the company will be able to provide content or a follow up call offering them the services or products they are interested in – thus leading to higher possibility of making a sale. It is also vital to recognize the importance of building new relationships with prospects to bring in additional revenue. A CRM can help with both, nurturing existing relationships and acquiring and building new ones.
2.Increase productivity – Automation is key to increasing productivity. Where a team manually inputs data and searches through different files to find the information needed, a CRM solution automates this for the entire organization, with the click of a button. CRM solutions allow teams to create reports across many different databases with the requisite information, in a few simple steps. Consequently this means that time can be better utilized – for following up leads and converting prospects into customers leading to more sales.
3.Improve customer service – It is estimated that only 7% of organizations follow-up with their web leads within an hour. The sooner a lead is followed up the higher the possibility of converting them into a customer. It’s all about first impressions and getting to your prospects in good time, because chances are they have contacted your competitors too. In fact, according to Forbes, 71% of organizations waste their web leads by taking up to 47 hours to follow up with them.
A CRM system will assist a sales team in following up with leads in real time, as and when they come in. It will give reminders to prompt when a lead or customer needs following up with, allowing the sales team to nurture a relationship with their prospects and customers. Having these reminders will allow an organization to contact their prospects and customers at the right time, meaning time won’t be spent bombarding them with unwanted phone calls and emails, or they won’t go unattended for an extended period of time. Real time customer engagement is about giving the customer an experience as personal as possible.
Businesses essentially want to establish connections with new customers, retain them and develop long-running, loyal relationships. CRM thus becomes extremely important as it greatly aids in that.