CRM Software Small Business Buyer Report – 2014

Every year, Software Advice speaks with thousands of organizations looking for the right customer relationship management (CRM) software, which provides us direct insight into the unique needs of these buyers.

In 2013, we analyzed a random sample of these interactions (with U.S. buyers only) to create our first CRM BuyerView Report. This year, we evaluated interactions with small-business buyers (from companies with annual revenues of $100 million or less), and expanded our sample to include buyers in the U.K. and in Australia (AU).

We analyzed these interactions to understand the CRM software buyer trends of 2014, including buyers’ most desired applications, features and integrations, as well as their most common reasons for seeking new software. This report highlights the results.

Key Findings

  1. Over half of CRM buyers (53 percent) currently use manual methods, such as paper and spreadsheets—up from 44 percent in 2013.
  2. Many small-business buyers (37 percent) seek an integrated suite of multiple CRM applications, up from just 7 percent in 2013.
  3. Nearly all CRM buyers (88 percent) want a sales force automation application; only 10 percent want a customer service application.
  4. Most small-business buyers (71 percent) prefer a cloud-based over on-premise CRM system—up from just 48 percent in 2013.
  5. CRM buyers in the U.S. are over three times more likely than U.K. or AU buyers to request social media functionality or integrations.

Most Buyers Are Upgrading From Manual Methods

Over half of the buyers in our sample (53 percent) currently use manual methods, such as spreadsheets or paper, to manage customer relationships. Less than one-quarter currently use an off-the-shelf, commercial CRM product.

A smaller percentage of buyers report using email clients (such as Microsoft Outlook), stand-alone email marketing software, industry-specific software, such as a multiple listing service (MLS), or point-of-sale (POS) system.

Prospective Buyers’ Current Methods

Prospective Buyers’ Current Methods

With the breadth of affordable, cloud-based CRM solutions tailored to the small business market, we expected to see a year-over-year increase in buyers switching from one CRM product to another. However, when we compared our findings to last year’s report, the results were nearly identical.

In fact, slightly more U.S. buyers are upgrading from manual methods this year, at 47 percent, than were last year (44 percent in 2013). And just one-quarter of buyers are current CRM software users in 2014—down from 26 percent in 2013. This suggests there are still significant opportunities in the small business market for businesses to better leverage technology to improve customer experiences, and for vendors to improve messaging and increase market penetration.

  • Year-Over-Year Comparison: Prospective U.S. Buyers’ Current Methods

    Year-Over-Year Comparison: Prospective U.S. Buyers’ Current Methods

  • International Comparison: Prospective Buyers’ Current Methods

    International Comparison: Prospective Buyers’ Current Methods

Compared to the U.S., where 47 percent of buyers are using manual methods, even more are using them in the U.K. (56 percent) and Australia (55 percent). This may reflect slightly higher CRM market penetration among American small businesses. However, it also suggests that there’s an additional opportunity for U.K.- and AU-based vendors to educate buyers who are still using manual methods about the benefits of CRM software.

Nearly All Buyers Request Sales Force Automation

Breaking down the specific applications buyers seek in new software, the vast majority of buyers across all geographies (88 percent) seek sales force automation (SFA), making it the top-requested CRM application by small businesses. This makes sense to Brent Leary, co-founder of CRM Essentials, who says that the foundation of SFA is contact management—which is the traditional first step for small businesses looking to improve efficiency, organize customer data and track interactions.

Marketing automation is the second-most requested application among our buyers (36 percent). Leary explains that many small businesses struggle to keep opportunities from growing cold in cases where they aren’t immediately ready to buy. He says marketing automation software allows small businesses to nurture prospects over time, allowing them to drive significantly more revenue from the leads they generate.

According to Leary, “[marketing automation] penetration rates are still low in the small business market, particularly when you compare them to sales force automation.” However, he expects adoption rates for marketing automation to rise faster than any other CRM application—particularly as systems become more accessible and easier to use.

  • Top-Requested Applications

    Top-Requested Applications

  • International Comparison: Top-Requested Applications

    International Comparison: Top-Requested Applications

As illustrated in the chart above, very few CRM buyers are requesting a customer service and support (CSS) application.

“These numbers are alarming to a certain extent, because the focus is on selling and marketing, which of course is important—but the service aspect is just as critical,” Leary says. “If you provide great service, you turn one-time customers into multiple-time customers, and the most effective way to grow and scale your organization is to create brand advocates.”

Notably, however, significantly more U.S. and U.K. buyers are seeking CSS functionality compared to buyers in Australia: 14 percent and 12 percent, respectively, compared to just 5 percent of AU buyers. This suggests that small-business buyers in the U.S. and U.K. may be more on track to pursue a balanced technology strategy than their Australian counterparts.

Interaction Tracking and Alerts Are Top-Requested CRM Functions

We next asked buyers what specific functionality they wanted in a CRM system, and broke those responses down by application type (sales, marketing or customer service).

Among those buyers seeking an application for SFA (in the “Top-Requested Applications” chart above), interaction tracking is the most requested module, with 82 percent seeking to log email conversations, call notes, social media conversations and other interactions to contact profiles. Sixty-seven percent also seek alerts and notifications—typically used to improve follow-ups and prevent deals from slipping through the cracks.

  • Top-Requested CRM Functionality (Sales)

    Top-Requested CRM Functionality (Sales)

  • Top-Requested CRM Functionality (Marketing)

    Top-Requested CRM Functionality (Marketing)

  • Top-Requested CRM Functionality (Customer Support)

    Top-Requested CRM Functionality (Customer Support)

In addition, all of the buyers who seek an application for marketing automation specifically request a module for email marketing. In particular, many ask for custom email templates and functionality for drag-and-drop email design.

“Email has been the traditional way of interacting with customers and prospects,” explains Leary. “And particularly at the small business level, I don’t see that going away.”

Software Advice’s 2014 B2B Demand Generation Benchmark Report suggests that the emphasis on email marketing is well placed. We found that it’s a particularly efficient channel for small businesses because it yields a very low cost-per-lead compared to other marketing channels, while still delivering a relatively high volume of quality leads.

Among those buyers requesting a CSS application, most seek features directly related to addressing customer inquiries via email, phone or live chat. Every single buyer is seeking some form of ticket management to organize incoming customer requests, with 41 percent requesting more specific CSS automation features, such as ticket routing, to automate the assignment of incoming tickets to the proper agent.

Buyers Increasingly Seek Suites for Sales and Marketing Automation

Most small businesses in our sample (62 percent) are looking to purchase a single, best-of-breed CRM application, with another 1 percent looking to purchase multiple stand-alone products.

Breaking down the data further, we found that the vast majority of best-of-breed buyers (particularly in the U.K. and AU) are looking for a stand-alone SFA product. This is in line with Leary’s claim that SFA—and contact management, in particular—is where most small businesses start when they first develop a CRM technology strategy.

However, a significant number (37 percent) instead are requesting an integrated suite of multiple CRM applications. Most commonly, this means a combination of SFA and marketing automation functionality—particularly in the U.S., where 37 percent of buyers request this particular pairing of applications.

  • Integration Preferences

    Integration Preferences

  • International Comparison: Top-Requested Application Pairings

    International Comparison: Top-Requested Application Pairings

In addition, a small but significant number of small-business buyers request stand-alone marketing automation, help desk and CSS applications. Leary says many of these are likely leveraging affordable integration services for cloud-based products—such as Zapier and Kevy—to pursue a best-of-breed CRM strategy in the traditional sense.

All in all, our analysis reflects a dramatic rise in the number of buyers requesting integrated CRM suites over the past year. Among U.S. buyers, 42 percent are requesting a suite in 2014, up from just 7 percent in 2013.

Year-Over-Year Comparison: Integration Preferences

Year-Over-Year Comparison: Integration Preferences

According to Leary, this data suggests that more small businesses are starting to understand how combining marketing automation with SFA can help to better align their sales and marketing efforts. For instance, he explains, exporting marketing automation data to your CRM’s contact database allows sales reps to see if a potential customer downloaded a certain white paper or visited a certain page on your website. This allows for more timely, personalized interaction opportunities.

Small-Business Buyers Increasingly Want Web-Based CRM Software

Nearly three-fourths of all small-business CRM buyers specifically request solutions hosted in the cloud, while 29 percent aren’t sure whether they prefer Web-based software or on-premise software. And of the 385 buyers in our international sample, only a single buyer specifically requested on-premise CRM software.

The overwhelming preference for online systems makes particular sense for small-business buyers, as Web-based deployment significantly reduces upfront investment and installation costs. It also saves smaller companies—which often have limited resources—from having to dedicate the IT resources required to maintain a system on their own servers.

In addition, Web-based products typically offer monthly subscription pricing, which means that costs typically scale at a more reasonable rate as companies grow.

  • Deployment Preferences

    Deployment Preferences

  • Year-Over-Year Comparison: Deployment Preferences

    Year-Over-Year Comparison: Deployment Preferences

Interestingly, far more buyers in 2014 are certain they want Web-based products. The decrease in the number of unsure buyers, along with the corresponding increase in the number of buyers requesting online CRM systems, suggests a growing awareness among small businesses about the benefits of Web-based software deployment, and about how hosted software differs from on-premise software.

Very Few Small-Business Buyers Seek Social CRM Features or Integrations

We also sought to understand which applications and tools small-business buyers need their CRM system to integrate with. We found that only 10 percent of small-business CRM buyers seek integration with social media channels to import contacts and track social interactions.

According to Leary, this supports his belief that small businesses have been slow to take advantage of the opportunities offered by social media, such as leveraging social signals to help sales reps create real-time interaction opportunities. He says many small businesses are overwhelmed by the prospect of leveraging the flood of online information, particularly on social channels.

But, he says, “It’s not like social is ever going away, and I do think there are tools that help them,” again referencing cloud integration tools that allow businesses to sync popular CRM products with social media sites, as well as with social monitoring, management and analytics tools.

Despite the overall lack of enthusiasm for social, U.S. buyers were over three times more likely to request social media integrations, at 19 percent, than U.K. and AU buyers, at just 6 and 5 percent, respectively. According to Leary, this puts U.S. small businesses ahead of the curve, because earlier adopters of social CRM will be at a distinct advantage when it comes to nurturing leads and resolving customer issues on social channels.

  • Top-Requested CRM Integrations

    Top-Requested CRM Integrations

  • International Comparison: Top-Requested CRM Integrations

    International Comparison: Top-Requested CRM Integrations

Rather than social functionality, we found that most buyers request basic CRM integrations with popular email clients, such as Microsoft Outlook or Gmail (58 percent), or calendar apps, such as Google Calendar or Apple’s iCloud Calendar (36 percent).

The ability to keep all professional calendars synchronized helps employees stay on top of follow-up reminders, tasks and meetings, regardless of whether they’re working within their CRM system or not. Surprisingly, however, significantly fewer U.S. buyers seek email and calendar integrations compared to U.K. buyers.

Buyers also request CRM systems that integrate with their website (16 percent)—most commonly to facilitate lead capture and nurturing by allowing companies to track how prospects interact with certain Web pages or pieces of content. Another 12 percent request industry-specific integrations; most often, these are real estate companies seeking MLS integration, or retail companies seeking ecommerce or POS integrations.

First-Time Buyers Want to Centralize Data, Automate Tasks

When asked why they are evaluating CRM software, many buyers currently using manual methods say they want to learn more about how CRM can help their business (34 percent). Similarly, 21 percent of buyers using specialized software (including CRM, email marketing, proprietary or industry-specific software) say they are researching how alternative CRM products might improve upon their current solution.

These results are in line with Gartner’s finding that over 60 percent of all business-to-business (B2B) software buyers cite “self-driven information search” as their most preferred method at every phase of the buying cycle.

  • Top Reasons for Evaluating New Software

    Top Reasons for Evaluating New Software

  • International Comparison: Top Reasons for Evaluating New Software

    International Comparison: Top Reasons for Evaluating New Software

Among small-business buyers graduating from manual methods, other top reasons for evaluating new software include the need to centralize information (26 percent) and automate more tasks (25 percent). For example, one buyer notes that he “is sick of manual processes and juggling spreadsheets.”

By comparison, few buyers using specialized software cite the need to centralize data or automate tasks (10 and 4 percent, respectively). Instead, many of these buyers say they seek specific, additional features in a new system (37 percent). This suggests that many small businesses begin with a basic CRM solution, and learn more about what functionality they truly need as they become familiar with the technology. And this, in turn, may lead them to evaluate alternative products.

Breaking down buyers’ reasons for evaluating software by geography, we find that far more buyers in the U.K. cite researching the benefits and options of CRM as their primary reason for evaluating software (38 percent) than U.S. buyers (28 percent) or AU buyers (20 percent).

Meanwhile, fewer buyers in the U.S. want CRM software to help automate tasks, compared to those in the U.K. and AU. This difference is consistent with the larger number of U.S. buyers who are currently using CRM software, and the larger number of U.K. and AU buyers using manual methods.

In addition, more Australian buyers are seeking CRM technology to improve the quality of customer data and records than U.S. and U.K. buyers. This corresponds with the higher number of AU buyers using proprietary software. Compared to off-the-shelf products, businesses that build their own CRM systems aren’t typically able to emphasize the development of an intuitive user experience. This can lead to data entry problems and lower user adoption, which, in turn, lead to a less accurate, less complete customer database.

Most Buyers Only Seek CRM Software for Up to Five Users

One of the most interesting CRM software buyer trends in our report is that, in total, two-thirds of the small-business buyers in our sample plan to have only a single named user (19 percent) or between two and five named users (47 percent) on the system. Just 15 percent plan to have over 11 users. This is significant for CRM vendors, since, aside from stand-alone marketing automation vendors, most price their solutions by the number of users.

Similarly, over half of the respondents in our sample (56 percent) represent extremely small businesses with just 10 employees or fewer. Only 10 percent represent businesses with more than 100 employees.

  • Prospective Buyer Size by Number of Users

    Prospective Buyer Size by Number of Users

  • Prospective Buyer Size by Number of Employees

    Prospective Buyer Size by Number of Employees

In addition, most of the buyers in our sample represent businesses in the following industries: consulting, real estate, manufacturing, software and information technology (IT) and retail.

  • Prospective Buyers by Industry

    Prospective Buyers by Industry

  • International Comparison: Prospective Buyers by Industry

    International Comparison: Prospective Buyers by Industry

However, it’s important to note that the top-represented verticals vary widely across different geographies for small-business CRM buyers. For instance, real estate companies comprise just 1 percent of U.K. buyers in our sample, compared to 23 percent of U.S. buyers and 13 percent of Australian buyers. Meanwhile, a proportionally higher percentage of U.K. buyers represent small businesses in the manufacturing, software and retail industries.


Small businesses still using manual methods to manage customer relationships need to make sure they understand the potential benefits of new technology. With so many accessible options on the market, it’s easier than ever to make the jump to CRM software.

However, Leary cautions that it’s critical for small businesses to “do their due diligence” before making a purchase, noting that they “really have to understand what challenges, processes and people will be involved.”

Small businesses also need to rise to the challenge of engaging customers on social media channels. The low number of buyers requesting social integrations or social monitoring highlights the need for more small businesses to incorporate social signals and interactions into their overall CRM technology strategy, in addition to mainstays such as contact management and email marketing.

There is even more room for improvement in these areas for small businesses in the U.K. and AU, where even greater numbers of buyers are still using spreadsheets and paper, and even fewer request social CRM integrations and functionality as compared to buyers in the U.S. Also, while businesses in all three countries should consider placing more emphasis on customer support technologies, it’s particularly important for businesses in Australia, where only 6 percent of CRM buyers seek an application for CSS.

On the other hand, vendors targeting the small business market still have a lot of room to better educate businesses about how CRM can help—especially vendors that offer social monitoring functionality or social integrations. And because so many small businesses cite “research” as a primary reason for evaluating software, vendors also need to ensure that they’re in a position to be found when buyers research potential options, whether through search engine optimization, content marketing, driving B2B software reviews or other inbound marketing efforts.

Small-business buyers are growing increasingly cognizant of the benefits of cloud-based software deployment, so it’s critical that vendors in this market offer strong hosted products. Most buyers are still requesting stand-alone products, but the number of buyers requesting suites of multiple applications is increasing—particularly those seeking a combination of SFA and marketing automation.

This indicates growing opportunities for vendors that offer a broader CRM suite. For vendors selling a best-of-breed solution, it means that integrations with other popular solutions are becoming increasingly critical, as more small businesses look to implement a full, end-to-end CRM system to track customers throughout the life cycle.


Software Advice regularly speaks with organizations that contact us seeking new CRM software. To create this report, we isolated a sample of 385 interactions with small-business buyers (those from companies with annual revenues of $100 million or less) from Q4 2014. The sample was comprised of 128 random interactions with U.S. buyers, 128 with U.K. buyers and 128 with Australian buyers.

Our findings exclusively represent those buyers who contacted Software Advice for guidance on software selection; they may not be indicative of the market as a whole.

Expert commentary solely represents the views of the individual. Values and charts are rounded to the nearest whole number unless noted otherwise.

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