All small business owners and entrepreneurs interact with their customers in some form or fashion regardless of the product or service they provide. This interaction, in the not too distant past, was recorded on paper in some form and retained as “data” by the owner to sustain sales or grow the business. I distinctly remember my parents and their business owning friends using a Rolodex and file of Index Cards for such purposes.

However, this practice has become antiquated and no longer serves businesses well. Today, businesses are embracing Customer Relationship Management (CRM) Systems to replace the Rolodex of yesterday. The Rolodex of today comes in a variety of CRM Systems that range widely in cost, complexity, capability, and relevance. In order to help the small business owner and entrepreneur sift through the options out there and cut through the tech talk, we’ll provide some information and general tips on evaluating CRM Systems.

We aren’t going to talk about specific systems and their advantages or disadvantages as there are just too many of them out there to address in one blog post. Instead, we will focus on how to select the right technology for your business. We see this as an objective exercise and should be conducted based on what fits for your business not what you can fit your business in to. For more on that, check out our earlier post on this subject, Technology Doesn’t Solve Business Problems; People and Processes Do.

The first question most small business owners and entrepreneurs ask is “Do I need a CRM system?” That one is the easiest of all to answer. If you sell anything be it product or service, the answer is “YES”. The more important question you should ask is “How do I incorporate Customer Relationship Management (as a process) into my business?” This answer will involve things like;

  • Who will input data and manage it for you?
  • How easy do I need it to be to use?
  • How much do I need to be able to do with the system? Are you going to make calls, send emails, distribute newsletters, use it for upselling and cross selling other services?

Once you have some general answers to those questions you are ready for the next step of evaluating what is out there. Before we do though it is important to understand that all CRM systems do three basic things:

  • Gather Data – The system will capture and keep data that’s produced from a variety of activities related to a business operation e.g. sales, marketing, customer support. The important aspect here is the data is kept specific to an individual customer.
  • Data Analysis – The system assists the business owner to analyze data many ways to ultimately support business decisions necessary for improving the business.
  • Interact – In the context of a CRM system, we’re talking about communications or collaborations external to the business. Besides the customer, this includes important stakeholders to the business e.g. suppliers, vendors, partners, value added reseller’s, and/or distributors.

Okay so that all sounds great but you are probably thinking now what. How do I even begin to evaluate those three things as it relates to my business? Here are some tips that can help you in that process.

Evaluating Data Gathering Function

As an evaluation criteria, the importance centers around how much data you already have, the frequency with which you get new data, and the volume of new data you expect/want to receive. The answers to these questions drive how much (expensive) automation you need in your CRM system. Smaller, services based, business tend to receive data (e.g. business card) in smaller increments less frequently, thus less automation is required. While a manufacturing business, even a small one, might have data coming in from a variety of places sometimes multiple times per day, thus requiring a high level of automation. Additionally, I’ll add a little saying I’ve heard and used: “Data Rich, Analysis Poor” and vice versa. This means that there is such a thing as having too much data if you can’t analyze the data in a useful way.

Evaluating Data Analysis Function

As an evaluation criteria, this is probably one place a small business owner can potentially make an expensive mistake. There are some very well-known CRM systems available where the pricing is tied to capability. That capability often revolves around analytics, which is the discovery and communication of meaningful patterns in data. Data analytics, beyond basic charts and graphs, depend on larger amounts of data to produce relevant results. In other words, the analytics packages will work, but the result may not be accurate enough, based on the amount of data you have, where you could confidently make a business decision. It might be worth considering a “scaled” approach and adding the “expensive stuff” later when you have the amount of data necessary to produce meaningful results.

Evaluating the Interact Function

Many CRM systems allow you to interact directly with customers and external stakeholders as well as remote employees. In addition, many also allow collaboration through the major social media platforms and other third-party systems for running email campaigns. Keep in mind, these interactions produce data that most systems will capture. Therefore, the level of interactivity will drive the frequency and volume of data and thus the level of analytics you may need to conduct CRM as a process. However, while it may seem obvious to start here when evaluating CRM’s, please keep in mind, we are talking about interactions DIRECTLY from the CRM System. Not all businesses need to do it this way. Your business may be well suited for those interactions to happen outside of the CRM system.

By taking the time to evaluate these three basic attributes of CRM systems most business owners can differentiate between the available CRM systems out there. Armed with this knowledge, you can objectively look at the systems and determine the best one that works for you and your company today. And which ones can grow with you as you grow.

By: Sam Kwon, CEO, Cosmital Inc