Customer relationship management (CRM) software is software that automates and manages the customer life cycle of an organization. It is usually used by the sales team, sales reps, and call center reps to maintain contact with customers and quickly respond to their needs.
Note: Specific sales CRM platforms have features that are optimized for sales teams.
Basically, if you work with a lot of customers, a CRM is your team’s best friend. Not only will it help you manage your data, a good CRM makes your customers’ experience fluid and effortless.
Here’s what we’ll cover:
CRM software provides your business with several tangible benefits, including:
Whatever business you’re in, chances are you frequently have to deal with customers, prospects, or other important contacts. When it comes to these interactions, CRM software gives you an advantage over your competitors by helping you with the following:
CRM systems are used by many businesses, across a variety of industries, so there’s no “typical” buyer. In general, though, you’ll fall into one of the following categories:
CRM can be divided into several related subcategories of software, all of which focus on improving your relationship with your customers:
When comparing CRM software, it’s important to understand the functionality included in each. The most common functions of these systems are listed in the table below:
automation: Provides you with the tools to streamline and manage your sales team’s performance. Also gives your salespeople the ability to more efficiently track their prospects and customers with functions such as contact management, lead management, opportunity management, pipeline management, forecasting and territory management.
Marketing integration: This feature allows you to automate your marketing campaigns through the CRM system. It enables you to attract new visitors and customers, score customers as leads that can be nurtured along the sales pipeline, deliver marketing and promotional materials through various channels (e.g., via email marketing, social media etc.), obtain analytics about customers to improve marketing efforts and automate repetitive, time-consuming manual tasks.
Customer service and support: This functionality consists of a set of tools that allows you to cater to customers’ needs by tracking their interactions with your company to focus on creating the best possible customer experience for each individual. Specifically, it allows customer service representatives to document, route, track, resolve and report on customer issues via a trouble ticketing system, using tools such as live chat, customer self service and multichannel management.
Help desk automation: This is similar to customer service and support in that it also focuses on creating the best possible individual customer experience. However, it is more focused on resolving IT issues, and the “customer” may be either external or internal (i.e., employees who need help with IT issues). Help desk automation involves the creation of an electronic ticket that customer service representatives track and associate with customer profiles that include contact information and, potentially, purchase history or assets.
The buyers we’ve helped at Software Advice tend to be looking for some of the more basic aspects of customer relationship management systems. Their top-requested features, by far, are contact management, interaction tracking and scheduling/reminders-all defining features of CRM software. The more specialized features are, the less buyers tend to request them.
The CRM software features you really need
Certain CRM features are more critical than others depending upon your business’ stage of growth. Here are some of the most crucial features for different business sizes (see the “Business Sizes Using CRM Software” section of this guide for business size definitions):
|Single user||Contact database: Your CRM database helps you manage and track each customer interaction, saving time by eliminating the need for complex spreadsheets or tracking your contacts through pen and pencil.|
|Small business buyer||Sales automation: Helps you manage sales activities down to individual sales reps. It can also generate sales forecasting and provide insight into your sales pipeline.|
|Midsize business buyer||Marketing automation: Helps automate your lead generation and nurturing funnels, provides insights and assists with targeted marketing campaigns.|
|Large enterprise business buyer||Customer service functionality: Allows your customer service representatives to fully track and manage the customer journey and make sure they’re receiving the proper amount of care and individuality along the way.|
CRM software is typically hosted online and licensed out to companies on a per user, per month basis, alongside one-time implementation costs—otherwise known as a Software-as-a-Service (Saas) or online CRM model. Some vendors may have a flat monthly fee regardless of the number of users, though it varies between different market segments. For example, sales force automation is almost universally sold per user/month, while marketing automation often is sold via a flat monthly fee. However, this flat fee is increasingly uncommon.
The per user/month costs across the SaaS market average from around $50-$90 per user/month, depending upon required functionality, though it can also be much cheaper (e.g., $10-$15 per user/month) and much more expensive (e.g., $200-$300 per user/month) depending on the vendor. Additionally, there are a variety of free CRMs, but these will offer limited functionality.
The flat monthly fees for more specialized systems tend to be more more expensive, starting at around $200/month, but can scale up to around $3,000-$4,000/month for more robust systems.
Based on an analysis of the CRM software buyers we speak to, business budgets for a CRM solution vary widely. The highest percentage of buyers (about 32 percent) budget for $76-$100 per user, per month, while only 3 percent are willing to budget more than $301/user/month.
Please note that these prices do not include any potential up-front fees, such as installation and training.
Because it is such a staple of so many industries and businesses, CRM software vendors make their money more through volume than through nickel-and-diming customers. As such, there are few hidden costs, with one notable exception: implementation.
The majority of SaaS CRM systems can run without dedicated IT support, either internally or from the vendor, so extra costs come out of paying the vendor to install the software and provide training sessions for key users. Depending on the vendor and the system, this cost can range from a few hundred to a few thousand dollars.
An on-premise CRM solution will require a dedicated IT team in order to maintain the servers and administration duties.
As discussed in the “Benefits of CRM software” section above, CRM software provides several key functions for your marketing teams, including:
When researching CRM vendors, don’t just rely on the information they provide. Request a demo, where a representative walks you through the software and its various features.
However, don’t let this demo just be a sales pitch. Be sure to ask important questions, such as:
What parts of the software do users most frequently report problems with?
Don’t just focus on functions vendors rave about, but ask what tends to be challenging for users. This will also enable you to gauge just how frank the representative is willing to be with you about their product. If a key feature for your business needs and sales pipeline is a pain point for other customers, it likely will be for you, too.
What are the set-up costs for the software?
Most vendors will price CRM software based on a “per user, per month” model, but there are frequently up-front costs that come with implementation.
How likely are we to require tech support in order to set up, implement, and/or use the software?
If you have a small or no IT department, it will be important to know whether or not you’ll require (potentially costly) tech support in order to implement and maintain the software.
How easy will it be to add features at a later date?
As you become more familiar with a given system, you may want to add more complex functions, such as marketing integration or reporting and analytics. Check to see whether there are any hidden costs or challenges associated with adding features later on. An integration to your social media management system is a possible example here.
Is there a mobile app?
Your team likely works from smartphones or tablets, therefore the type and cost of the CRM mobile app could be important for your business. Your team can follow up with customers quickly and sometimes in real time, make phone calls while on the go, check their email and social media interactions, and overall improve the employee experience with an intuitive mobile app.
Be sure to ask if the mobile app is optimized for Android or iOS devices—whichever your team uses.
CRM vendors offer a lot of applications with their products, and jargon is commonly used to describe them. We’ve demystified much of this in our article, “The ABCs of CRM: A CRM Terminology Primer.”
Many companies these days have call centers and marketing teams that communicate with such frequency that they often function as one unit, an alignment called “smarketing.” You can find out how this influences software choice in our article, “How ‘Smarketing’ Paired With Software Can Help Align Sales and Marketing.”
One of the biggest challenges of purchasing CRM software is getting your team to use it—especially sales teams that are often attached to practices they don’t want to interrupt with new technology.
A CRM solution isn’t a magic cure-all for companies that have problems due to their own dysfunctional business processes or poor corporate hygiene. Some businesses think that buying software will fix a disorganized sales team, an inexperienced marketing team, or poor data entry, but in reality the CRM tools may just scale up and worsen existing problems.
For CRM software to work successfully for your company, you need to make sure that the teams and individuals who will use the CRM platform are equipped to deal with the increased customer base that the software may bring on board.
Purchasing CRM software will generate a solid return-on-investment (ROI) for your business. You can use this ROI as a selling point when trying to justify the purchase price, as we explain in detail in our article, “How to Build a Business Case for CRM Software.”