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When Is It Time to Invest in CRM Software?

A Small Business Guide to Making the CRM Software Plunge

Perhaps the business you began a few years ago is humming along, and after lots of hard work, you are starting to see some real growth. Revenues are steadily climbing and your customer list is growing as well. And that's the challenge – as your business continues its growth, it's starting to become noticeably more difficult to deliver consistent service to your customers.

So is it time to start evaluating a Customer Relationship Management (CRM) software system to help keep your customer interactions, communications, transactions and relationships organized and flowing so your business can continue to grow without the growing pains? When you begin asking yourself this question, there are quite a few related matters to start thinking about. Here are some top considerations that should be on your checklist.

So when exactly is the point in your business you should begin thinking that CRM software should be implemented? When you reach a certain number of customers? Or is the deciding factor a certain amount of revenue or sales, or even when your own staff reaches a certain number?

This is not a straight forward question, and there is no single answer for everyone.

In all likelihood, you'll know that you need a CRM system when manual business processes become overwhelming. When you reach a certain volume of customer accounts where managing them, making the follow-up calls, responding to inquiries and keeping your sales churning becomes more laborious and onerous than in the past, then it's likely that something's got to change. And that's a good clue it's time to grow your business process automation and look closely at CRM systems.

Rob Enderle, an independent IT consultant and analyst in San Jose, California, said you'll know it's time for CRM software automation when you hit a critical mass in your business workload. "You bring in CRM software when the customer number gets beyond what the executive staff can personally monitor," he said. "The point to CRM software is to maintain consistent customer satisfaction and once a company reaches a size where sales and support, without oversight, are the primary aspects of maintaining customers you bring in a CRM system as a way to put executive oversight back on maintaining customer loyalty. It's a tool which allows a few executives to keep track of more customers than they can touch manually."

Another key factor to consider, he said, is to adopt customer relationship management software "as soon as you realize that customers are being disenfranchised by executive management and hopefully before you notice a customer churn problem that will likely soon follow."

So is there a certain number of customers to consider the move? "After about a 100 customers you should be thinking of CRM," Enderle says. "It's more of a numbers game for breadth. In terms of revenue you need enough margin to be able to afford the software." But it's still not for everybody, he said. "CRM software works best where personal relationships need to be maintained so certain industries don't lend themselves to the tool."

So where do you begin? First talk to everyone your business touches. Talk to your customers to find out what they need from you in maintaining great customer relationships with your company. Ask them if they have other suppliers who use CRM software that your customers find is working well. Maybe some of your customers are already using CRM as well, and you can learn from their experiences.

Talk to your employees. What tools would help them do their jobs better? What problems in their business work flow would they like to see resolved? Ask them for their help, listen and take copious notes. Take their concerns with you when you speak to CRM vendors.

Visit business trade shows in your area and ask other executives what's working for them and even how and when they decided to pull the trigger on implementing a CRM software system. You're not the first to do this, so be smart and learn from the experiences of others, and as importantly, learn from their mistakes and save yourself and your business the headaches.

So how do you choose a CRM vendor? Talk to CRM software vendor representatives and value added resellers (VARs). Go to CRM software trade shows, read all you can online and turn yourself into an educated and informed buyer. You wouldn't buy a new car without doing some research on customer reviews, fuel mileage, crash safety ratings, reliability and resale values, so don't look at CRM systems blindly.

Ask the software vendors plenty of questions. Ask about scaling and capacity issues with the CRM systems as your business grows. Ask about how it will work with the other legacy applications you are running. Will the CRM software integrate easily with your accounting software or ERP system? Think about the future. What will you want it to do in two years as your company continues to grow? Will you be able to easily add new features or software modules?

Then pick 3 to 6 CRM software products that you are impressed with and dig even more deeply. Whittle them down to your top 2 or 3. Ask those companies to give you detailed and scripted software demonstrations. Ask them to use some of your customer data and see how it is displayed and organized and how it will work in each system.

Include some of your key employees in the evaluations. Are there products that they think are easy to use? What do they think are the most important features - and why?

These key steps, including talking to customers, other CRM users and your staff are very important, Enderle advises. "Before making the move and selecting a CRM software vendor find out what other companies in the same industry are using and why, also find out if your own people have experience with any particular tool and factor both into your decision making process," he said. "Switching CRM systems can be very painful and spending quality time up front in the software evaluation process can pay off huge dividends over time."

Don't be timid. Challenge the software vendors. Challenge their claims. Make them show you what they mean when they say the product does something. Now is the time to walk out of the room without any doubts or remaining questions. You're about to make a big investment to advance your business for the future.

So what about CRM in the cloud? Should you consider this over an in-house installed application?

This may be a viable option, especially if you have a small IT team, or no full-time IT staff. There are good vendors out there offering cloud-based or Software-as-a-Service (SaaS) CRM systems which can help you adopt CRM with less hassle than going it alone. If the cloud CRM advantages of reduced cost, faster time to market or outsourced technical management intrigue you as you consider the move to CRM in the first place, then ask your potential vendors about advantages, disadvantages and cost differences with this software delivery model. Cloud CRM systems can help you get started with a hand to hold and less stress as you dive into this new world of customer relationship management software for your business.

Enderle said he likes the SaaS CRM option for first timers. "Hosted first because the entry cost is low and it will scale with the business," he said. "Depending on the numbers you can stay hosted or, when the marginal benefit exceeds the marginal cost, switch over to an internal software application if you like."

Yes this can be time consuming and nerve-wracking as you enter this new area of business IT, but the positives will likely far outweigh the negatives as you adopt CRM automation and watch your business become more efficient, more assertive and more focused on its goals of growing your business and better serving your customers. | CRM Software