The Best Way To Manage Customer Relationships

by Jim Berkowitz on March 20, 2009

Here’s a thought provoking article by Kern Lewis about why he thinks that small businesses don’t need expensive CRM software when a phone will do, The Best Way To Manage Customer Relationships. Be sure to check out the end of this post for my equally insightful commentary on this article:

Just as your seventh-grade English teacher told you to “keep it simple, stupid,” so should you apply the same K.I.S.S. principle to managing customer relationships.

Not that you’d know it by all the customer relationship management, or CRM, software being peddled in this tough economy. To wit: In its most recent quarter, salesforce.com reported record revenue of $276 Million, up 43% over the same period a year earlier.Even small firms, desperate to keep as many paying customers as possible, are ponying up $25,000 a year for systems from the likes of Salesforce and SugarCRM.

What a waste for small companies. I can’t help but think of my uncle Tim, owner of Central Sales and Leasing, a mid-sized vehicle leasing company in California, with whom I had a recent chat about how to win customer loyalty. Tim’s simple answer: “We just call everyone regularly,” he said. “They seem to prefer that to our newsletter.”

Simple enough. But how did he figure that out? “We asked them about the newsletter while we were on the phone with them,” added Tim.

Expensive CRM packages are good for something: They make big companies look like small ones that stay close to their customers and solve their problems quickly. There’s a reason “Don’t worry, I know the owner” is a common boast in American society; it means the customer is connected and valued, and can get a favor done or a problem fixed without fuss.

Small companies that forget this do so at their peril. Service is their single most potent competitive advantage over larger companies.

Before you shell out for a new CRM system, try these inexpensive customer management tools first:

  • A database of your customers, in ACT!, Excel or wherever, that can be sorted and updated and includes a comments section.
  • Follow-up steps, including “Thanks for your time” letters or e-mails.
  • An inexpensive e-mail vendor such as ConstantContact, SwiftPages or any other similar online service that can cost as little as $15 per month to manage up to 500 contacts.
  • A solid communication schedule, with a customer feedback loop that captures and logs in the customer contact history.
  • Buy-in from every employee in your company to execute the strategy.

All of this might amount to an initial investment of $1,000–less if you already have a database up and running. As you grow and have more money to invest, consider an automated Contact Management System (a stripped-down CRM for small-business software) that can be had for a lot less than full-boat CRM packages. The cheapest I have seen, from AppShore in California, would organize your contacts and communications for about $2,300 per year for a staff of 10. Other reputable vendors sell solutions with price tags from $3,600 to $15,000 per year.

Remember, once you start down the road to offering great service, there’s no going back. Your customers will continue to demand it. And that’s not a bad thing.

So what do you think about this article?  My thoughts are that the author doesn’t appear to have all that much experience with the totality of what the CRM technology marketplace has to offer.  I think that with all of the powerful, yet inexpensive web-based Sales 2.0 software-as-a-service solutions that are being released, a lot of the CRM technologies available today can offer small businesses tremendous value beyond just keeping in touch with customers.  In fact, they can make small companies look like big ones!

Don’t get me wrong, keeping in touch with customers and clients is important but there are many other customer management areas that small and mid-sized businesses must deal with on a daily basis that can be holding back their ability to get, keep and grow customers.  Just a few that come to mind are not enough quality leads being generated, poor lead qualification, inaccurate sales forecasting, ineffective and inefficient selling processes, inefficiencies in responding to customer needs and requests, and on and on.

In these tough economic times, I think it’s more important then ever for small businesses to remain competitive and to be able to build customer loyalty.  In order to accomplish this, businesses must constantly monitor their performance and be able to identify internal process problems or issues with customer satisfaction and loyalty that they would like to improve upon.  Once these problem areas have been identified I believe that there has never been a greater opportunity for small businesses to find affordable technologies that can be of help in addressing their customer management issues.

{ 4 comments }

Deb Kolaras March 20, 2009 at 1:54 pm

Thank you for putting this out there, I so agree! So often when I’m working with clients they believe all the hype surrounding massively expensive CRM and contact management programs, as if some how those pieces of software will magically convert unknowns into paying clients. It just doesn’t happen that way. The key is simplicity and manageability. The pricey options are often too complex and geared more toward large sales forces and their management, and bean counters, not the small business entrepreneur.

Having a simple program or even a spreadsheet and a plan of attack is by far the best way to keep contact and marketing control with your customers and potential customers. As you grow, your system can too, but it all boils down to working it.

BTW, the simplest contact management program I ever used, and still use to this day? Harvey Mackay’s “Sharkware”. Now, if only a sharp cookie would swoop in and support it, it’s not longer supported. @bizcoachdeb

Rick Chamberlain March 21, 2009 at 7:18 am

Jim – I see both sides of the coin. Too many companies have wasted money on non-functional CRM systems that even mentioning \"CRM\" turns many stomachs.

In the case of Uncle Tim, perhaps his client base is small and manually managing relationships works well. Or, perhaps he doesn\’t want to grow his business because he likes it the way it is.

On the other hand, some sort of system is required for most businesses to maintain relationships, if not grow them. So many distractions out there… so much info. It\’s easy to be forgotten with all the noise out there. A properly implemented CRM system is becoming a necessity rather than a luxury.

For those people who mastered the paper DayTimer, CRM is possibly a 4-letter word (I can\’t tell you the last time I saw a DT in a meeting though…). But there is so much more to CRM than just personal phone call follow-ups that Uncle Tim is so good at. I believe a company is negligent if they do not have a defined customer management strategy along with tactics and processes to support that strategy.

And to me that means a functional CRM system.

ERPRooney March 21, 2009 at 8:24 am

The Best Way to manage customers is by implementing a CRM

Customer Relationship Management or CRM is a combination of enterprise strategies, business processes and information technologies used to learn more about customers’ needs and behaviors in order to develop stronger relationships with them. CRM software systems automate many customer-related business tasks.

CRM helps in:

Customer acquisition
Customer relationship enhancements
Customer retention

To know more about CRM,CRM Softwares ,Reviews etc visit
http://erp.com

Thomas Trevino April 3, 2009 at 10:56 am

there are some less expensive crm systems out there too that are web-based. do some research…it’ll be worth it

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