CUSTOMER RELATIONSHIP MANAGEMENT FOR SMALL BUSINESSES

Article published in The Growing Business Handbook 9th Edition, published by Kogan Page, recommended by The Institute of Directors.

Let’s start with a definition of Customer Relationship Management (CRM), for which I am indebted to Wikipedia, the free encyclopaedia. “CRM ,in its broadest sense, means managing all interactions and business with customers. A good CRM program will allow a business to acquire customers, service the customer, increase the value of the customer to the company and retain good customers.” The concept therefore is not exactly rocket science, although if you read the marketing press you might think it was because the whole subject seems to have become obscured by the use of pseudo-scientific jargon. It is not rocket science because CRM is what any business will be instinctively doing whatever their size and whatever their business sector. It predates computers. If you think back to the days of the small greengrocer on your local high street, you would have received personal, friendly, attentive service from the owner who might even have arranged for your purchases to be delivered to your home. It has taken supermarkets forty years to re-invent this particular level of service. What has changed is the amount of information that can be collected on each individual customer. So in the computer age, what does CRM mean for small businesses?

Definition Of A Small Business

So we are clear about the size of businesses we are talking about, let us have a brief foray into the world of government statistics. According to the DTI there were a total of 4.3 million business enterprises at the start of 2004 – 99.3% were small businesses employing between 0-49 employees. However the vast majority of these businesses – 3.1 million – had no employees. So the small businesses we are talking about comprise two different segments:
 - sole traders/partnerships comprising only the self-employed owner-managers and companies comprising only an employee director
 - companies employing fewer than 50 employees

 It is worth pointing out that these businesses account for 46.8% of employment and 37% of business turnover in the UK.

CRM For The Sole Trader

So what does CRM mean for the sole trader? Although it does depend on the type of business, most sole traders will know each of their customers personally, they will have a clear idea of their needs, likes and dislikes and will have managed the relationship with a paper-based system ( or a good memory ). With the advent of off-the shelf CRM software solutions, paper-based systems are a criminal waste of the proprietor’s time. By automatically recording and filing electronic correspondence and outgoing letters, delivery notes and invoices in one computer file, a huge amount of routine administrative work can be streamlined. This will allow the sole trader more time to develop his business.

CRM For The Small Business With Employees

It is once a business starts taking on employees that CRM software becomes essential. The proprietor/managing director will no longer have personal knowledge of each customer. Some aspects of the inter-action/relationship will now be handled by other members of the team. There may be a separate and distinct sales team. Customer complaints may be handled by a different department. It is vital therefore that all the inter-actions with customers can be gathered and filed on the computer for easy access so that all members of the team can track the relationship with each customer. However this is only one aspect of the capability of these CRM packages.

CRM And Marketing

This is potentially where CRM should be of most positive benefit to the bottom line. Because the software is capturing all the information it can from the company’s relationship with each customer, this information can be analysed and utilised to maximise the value from each relationship. However, CRM software does not and cannot tell you what to do. It is up to you to decide how and when to contact your customers and what to offer. So does your customer prefer a personal sales visit, a letter, electronic mail, postcard, newsletter etc? Your CRM programme can tell you when your customer last bought something from you, what it was, how much they paid. So, is it time to try and cross-sell, make them a special offer or give them some free information? The relationship still depends on you and your marketing strategy – CRM software facilitates the process and makes targeted mailings of whatever kind easier to implement and manage.

Acquisition Of New Customers

Everyone knows that that their best potential customer is an existing customer, but inevitably some customers will desert you over time. So, part of your marketing strategy will be dedicated to the acquisition of new customers. CRM packages will help by giving you the information to profile your existing customers, so you can narrow down your target audience to potential customers with the same or similar characteristics.

Choosing A CRM Package For Your Business

You may have been put off buying a CRM package because of the envisaged cost; this is no longer a concern as there are a number of off-the shelf packages that are targeted at the small business market and priced accordingly. Products that would be worth looking at include Act!! , Goldmine and Perfect PA. These do not cost the earth per seat and have similar features. I have not include Microsoft’s offering as this requires training and implementation by an outside consultancy which may put it beyond the budget limits of most small businesses.

 When comparing the software packages mentioned it is worth considering whether they have the in-built flexibility to cope with your business requirements because customisation will probably cost more than the original software itself. Some companies, particularly those in the creative sector, may well have a mixed platform network and therefore require a system that can transfer data across MACs and PCs. Something to bear in mind when comparing systems. In addition the basic software package may not include all the essential features that you need and you may then find it necessary to buy add-ons that make the original purchase price misleading. Read the small print and download a trial!!

CRM And Your Company

However, we are probably getting ahead of ourselves. Because CRM has been a buzz word for so long you may feel that you need a system without really thinking it through properly. You must be certain that your company will actually benefit from the customer information that such a system can provide and that you have the necessary expertise to utilise it to get a return on your investment. The decision should not be taken in isolation as it requires all potential users to buy into the concept because it is how well the system is used that will determine how much benefit the company derives from it. And it is not just about buying in because levels of computer literacy will vary between individuals and it is no use buying a system that some of your team cannot get to grips with. Ease of use is an overused word in this marketplace but if it is a reality, then you might actually have a system that 100% of the team can use.

It is possible for CRM software to help you run an entire business but you must have the vision and desire to make it happen.

Green Button Software specialises in the design of off-the shelf solutions for small businesses and is a member of the FileMaker Business Alliance.