Manage your customers with CRM software

What does it do?
A CRM system helps you manage customer relationships, close sales, improve your customer support, and consolidate important information that employees need to do their jobs, all in one place. It does this by recording transactions for each customer and sending alerts to employees for different tasks, such as when to call back the customer or when a contract will expire. You can also use it to filter data according to customer preferences (such as customers who like to buy hats and gloves). This can help you develop sales promotions.

Use it to improve your service
You can filter data with a CRM system to show you patterns from service calls and figure out, say, that a certain product has been responsible for a lot of your company's time. You might also find data that help you streamline your operation. Let's say you're a small electronics store, and you discover that a large number of customers don't know where the On switch is in a popular device. You can include instructions to be included in the packaging and make that the first question your support people ask when called.

Look at your business needs, not your business size
CRM makes the most sense when you have a high volume of repeat customers, especially if they're handled by a relatively small staff. An artist who repeatedly sells reproductions of his works to a client list of 10,000, a 12-person travel agency with 500,000 customers, and a small to midsize insurance or manufacturing business are all examples of companies that could benefit from CRM.

On the other hand, if you mainly look for new clients and keep in touch with just a small number of current customers, you can get by with simple contact management software. One key question to ask is whether your company tracks customers for support issues as well as sales leads. If so, CRM software can probably help.

Go with an entry-level CRM application (or even a point-of-sale system) if your needs are modest
Full-scale CRM is not a solution for every business. There is no sense in spending money on extra software and maintenance if you don't track customer support issues and don't need to integrate the system with an elaborate, preexisting computer network.

A hobby store, for example, could use a point-of-sale system to streamline sales transactions, track inventory, and find out what's selling best. In this case, both point-of-sale systems and entry-level CRM products such as Act ($229.99) or GoldMine ($179.99) could help a store owner build a mailing list and run customer promotions. For example, with either of these products, the owner could pull up a list of customers that purchased model railroad-related items in the past and send them an e-mail message (straight from the CRM software) that talks about a new line he carries.

Consider hosted CRM if you don't have the IT resources available
Implementing full-scale CRM requires additional computers, software, and (most likely) at least a few IT employees to maintain the system. If that's too much firepower for your business, try a hosted CRM system instead. A hosted (or on-demand) CRM solution such as Salesforce.com (prices start at $65/user/month) or SageCRM.com ($69/user/month) lets the CRM vendor (instead of your company) store all of the data on its servers. Your employees can then use the different modules, such as managing contracts, marketing automation, and document management, from a Web-based interface without IT having to maintain the system. If you go this route, look for a smooth migration policy to an in-house product as your needs grow.

Ditch the file cabinets and speed up your customer response times
Big River Telephone Company, a local telephone provider with 47 employees, integrated Sage CRM SalesLogix ($995 per user, $5,995 per server) with its existing operational support system and accounting system. "We used to have 64 drawers of file cabinets full of customer information," recalls Kevin Cantwell, the company president. "When a customer called in with a problem, a rep would have to hang up, go find a file, read it, call back, and say, 'OK, I've got your file; what's the issue?' Then they'd fill out a piece of paper and send it to the area they thought it was, such as operations or billing."

A customer service rep made that decision, whether or not he or she knew the answer. At the time, Big River even had a full-time file clerk whose only job was to put back files. "Now all of that information is in the CRM system. It took 8 months to scan and put it in, but our reps are much more efficient."

Leverage your existing staff
When Big River bought a smaller local company in 2001, that company had about 3,000 local lines and six customer service reps. "We're now at 15,000 local lines and five customer service reps [in the same area]," said Cantwell. "We made those five people productive. Before, each rep had to make extra calls, get up, and go to different departments. With SalesLogix, that rep can address all of your needs right on the phone."