As any entrepreneur knows, there is more to finalising a sale than following up on a lead or negotiating a contract. To turn leads into happy customers, customer interaction needs to be on point, from start to finish. Managing this process requires skill and organisation, and this is where a CRM (customer relationship management) system can be valuable.
But it can also be a big investment, both in terms of capital outlay, and time to set it up.
So, how can an entrepreneur begin to weigh up the costs and benefits of a CRM and determine whether it’s right for your business?
The Benefits Of A CRM
For businesses willing to invest the time and capital into a CRM, there are many benefits to be had. These include:
- Improved employee efficiency. A CRM takes the grunt work, automates it, and lets employees focus on what matters more.
- Better conversion rates. With a CRM, it’s easier for a sales or marketing team to stay in touch with leads, and answer their needs.
- Insights into your customers. A CRM makes it very easy to collect data about your users, and what you need to do to serve them better.
- Scalability. As a customer base grows – especially if it grows rapidly – admin increases and problems can ensue. CRMs can easily scale with your business however, reducing barriers to growth.
The Numbers Behind CRMs
CRM software is a fantastic technology that helps businesses manage the interaction they have with existing, or future customers.
Anything that businesses usually need to close a deal, from visualized funnels to bulk communication tools, have their place in a CRM. This comprehensive toolset provides a lot of value for companies.
The first thing we want to underline is how big of a phenomenon CRMs are. In 2020 alone adoption of the technology rose from about 50% to over 74%. The growth was accelerated by the Covid pandemic, which has forced many businesses to adapt to an online-first economy. But the pandemic merely sped up an already existing trend which has seen more and more businesses integrate CRMs over recent years.
And there’s a clear reason for that. CRM spending provides fantastic returns. The latest study on the matter shows that every dollar spent on CRM software and processes brings back $8.71.
But using a CRM to improve customer relations is not as easy as flipping on a switch. To get the most out of a CRM, companies need to set it up correctly.
Moreover, an investment in a CRM might not be the best choice for all companies.
Who Is A CRM Good For?
To understand who are the agents that can make the most out of a CRM, it’s important to keep in mind what a CRM can do. In most cases, CRMs will:
- Help manage leads, and visualize them.
- Set reminders for sales actions.
- Send messages in bulk.
- Analyze customer relations and find insights to improve them.
The key thing to note is that CRMs are even more effective the more leads they have to process. So for example, if a company has 10-20 high-value leads coming in each month, they might not make the most out of a CRM.
By contrast, if a business gets hundreds of leads each month, a CRM is more or less essential for proper lead management.
The customer interaction required is also important to note. B2C (business to consumer) eCommerce sites, for example, don’t rely as much on individual communication to sell more. A CRM could still be valuable, but not as valuable as it would be for a factory equipment distributor.
So how can entrepreneurs asses whether or not a CRM is right for them?
Our answer is to not over complicate matters. A simple analysis of the lead management process, and whether or not it’s cluttered, is enough to tell whether or not a CRM can be useful.
This analysis should answer questions like:
- Do sales agents struggle to get back to all leads in time?
- Are there any repetitive tasks where employees are spending too much time?
- Is outreach difficult for the business?
With questions like these answered, a better understanding can be developed of whether or not a CRM would be a wise investment.
A CRM is a great investment when it comes to improving lead management in companies of all sizes. However, it’s not a necessity for all enterprises.
As long as a business doesn’t struggle with sales funnel management, or lead communication, a CRM might not be necessary, at least until further growth is achieved and these processes become more complicated. For those businesses which are ready however, a CRM really can take your sales and marketing to the next level.