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What is a CRM system? Everything you need to know

Here's what you need to know to get started on a CRM system

A Customer Relationship Management (CRM) system is a suite of tools that companies use to track customers and leads, and every interaction between them. It’s a busy market, with many suppliers and a whole host of products at different prices, aimed at companies of all sizes.

While a relatively simple CRM platform might only track contacts, revenue and notes about calls and meetings, a fully featured alternative will often roll in email tracking, marketing tools, live chat, and integration with third-party apps from Microsoft, Google and Slack. It may even have artificial intelligence to advise users on likely outcomes.

So, what do you need to consider when choosing a CRM for your business?

What is a CRM system? Everything you need to know

Why does my business need a CRM system?

The answer to that is, if data is to achieve its full potential, it needs to be shared.

Many of the tasks for which we’d now use a CRM might once have been done using paper, card indexes and spiral-bound address books. Sales and leads would have been tracked on a spreadsheet, meetings logged in a diary, and contacts in a notebook. It worked, but it was inefficient compared to the way companies operate today. It also meant the organisation’s data was scattered across multiple “silos” – discrete locations that were often only accessible to their creators, or, at best, a department.

You can still run a business in this way, but we wouldn’t recommend it, since it risks the same piece of work being done several times over. For example, if a manufacturer is selling a range of electrical products, responsibility for which is split between several departments, the team taking care of lightbulbs might not be aware that the team selling fuses from the room next door already has a relationship with a chain of hardware stores. As a result, they could waste several days cold-calling the stores’ head office in the hope of landing a meeting. This costs money, wastes time, and makes the supplier look unprofessional. It also wastes the retailer’s time, which isn’t likely to make a good impression.

Managing these interactions using a CRM makes the business more efficient, both externally and internally. The CRM would share the relevant information not only between these two teams, but across every department within the organisation. That way, everyone will know what’s going on and can work from the same data. This company-wide view of the state of play is what’s known as a “single version of truth”, and it’s difficult to replicate using spreadsheets, address books and wall charts.

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How can a CRM system help my business?

The heart of any CRM is its database, which is tailored to the specific task of tracking business activity, clients and leads. This database can be shared among everyone in an organisation so that departments can work in a more proactive manner.

By giving everyone access to “live” information, there’s no need for the sales department to pass contracts to an accounting office so that it can update its cashflow projections; accounting can see what’s happening in real-time, and keep its records in sync. Equally, reps can call up a contact’s record using a mobile app before stepping into a meeting with them. That way, they can check what their colleagues have discussed or agreed with a contact, and be in possession of the full facts before the meeting starts.

Depending on how it’s set up, a CRM can be used to track past purchases and project those trends to predict likely demand. This can help managers to better plan their spending, suppliers to manage stock, and service companies to allocate resources in a proactive manner, reducing their need to maintain warehouses full of seasonal goods that might sit around for months. In doing so, they can trim costs while simultaneously focusing their efforts on activities that a CRM suggests would more likely drive revenue.

A CRM can also reveal a customer’s “LTV”, or lifetime value. There are two metrics at play here: the historical LTV, which tracks how much revenue has been generated by a particular customer or group up to the current moment, and predictive LTV, which uses that data to calculate their potential spend or revenue return in the future. Of these, predictive LTV is perhaps the most important, since an existing customer might never spend again, making their historical LTV an interesting footnote, but not much more.

Calculating predictive LTV is a complex matter, and the precise method will vary between industries, markets and organisations. However, a CRM can help, and in doing so will indicate which relationships are worth cultivating and – among them – which are most likely to deliver the best return. This helps the business to more intelligently allocate time and resources.

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How much does a CRM system cost?

It’s possible to get started for free. Small teams may well find that Zoho CRM’s free plan for three users is sufficient. It includes essential tools for tracking customers and documents, plus mobile app support. Larger organisations will be better served by a commercial offering – although there’s no need to step away from Zoho if you’re upgrading as your team grows. Pricing is per-seat, starting at £12 per user, per month, for the “standard” tier when billed annually, or £16, if you’re paying by monthly instalments. It offers contact management, lead tracking and marketing tools. At the other end of the scale, £42 per user, per month (billed annually) for “ultimate” buys a range of additional features, including data-entry wizards, automation and customisation options, as well as analytics.

Perhaps the biggest name in CRM is Salesforce. Its eponymous product is so influential that Salesforce itself has become one of the largest companies in the world. The Essentials product for small businesses supports ten users and starts at £20 per user, per month, billed annually. This integrates with Outlook or Gmail, and handles account, lead, contact and opportunity management. There are various tiers above this, leading up to the £240 per user, per month Unlimited plan, which includes workflow automation and insights.

Working out which is the best plan for you – whichever provider you choose – will often be a case of gauging not only which tools you need, but how soon they’ll pay for themselves in terms of increased revenue, and savings through efficiencies and improved communication.

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What do I need to run a CRM system?

It depends on your chosen platform, but most CRM systems are hosted in the cloud, often by the very software houses that develop them. So, once you’ve paid for the number of licences you require, you’re unlikely to need much more than a web browser or smartphone app – plus a live network connection.

As a result, implementing a CRM doesn’t usually require a company-wide update of your desktop or laptop computers, nor that of any on-premise servers you’re running.

Are there any alternatives to a CRM system?

Aside from going back to the old ways of doing business with spreadsheets, which is likely to put you at a serious disadvantage to your competitors, you can pick and mix a range of online and locally hosted tools to replicate many of the core functions of a CRM.

You could start with a kanban board system such as Trello, which presents an easily understood overview of jobs and responsibilities, through which every team member can see how the various parts of a project are progressing. Usually delivered as an interactive web app, the kanban interface consists of columns for every stage in a job (which in this case may be defined as the stages of developing a customer relationship), and cards that can be picked up and moved between them as the job (or customer) on the card moves through the cycle.

Trello isn’t the only option: tools such as ProofHub, Zoho Projects and Asana each have kanban components within their project management tools.

You can use an online office platform such as Google Workspace to share client notes in discrete documents – or use shared spreadsheets, if that’s the best fit for your business.

Alternatively, you may find that a service such as SmartSheet offers a good compromise between the familiarity of a traditional spreadsheet and the project management aspects of CRM-based administration. Prices start at £5 per user, per month for up to ten users (billed annually), and the system offers Gantt, grid, card and calendar views, automation, and up to 20GB of storage for attachments.

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