CRM Quick Summary
Customer relationship management (CRM) software helps automate and manage the customer life cycle of an organization. It is usually used by the customer-focused side of businesses to maintain contact with those customers and quickly respond to their needs.
Benefits of CRM Software
CRM software provides your business with several tangible benefits, including:
Customer data management. Most products provide a searchable database to store customer information (such as contact information) and relevant documents (such as sales proposals and contracts). While most CRMs offer this functionality, it can also be incorporated into other industry-specific systems. For example, customer management is a core component of salon management software.
Interaction tracking. These systems document conversations held by phone, in person, through live chat, email or other channels. These interactions can be logged manually, or automated with phone and email system integrations. Depending on the product, some systems can also track interactions on Facebook, Twitter and other social platforms.
Workflow automation. This standardizes business processes, usually through a combination of task lists, calendars, alerts and templates. Once a task is checked off as complete, for example, the system might automatically set a task for the next step in the process.
Reporting software. Management can use CRM tools to track performance and productivity based on activities logged in the CRM system—for instance, how many new contacts were added to the database that day, or how much revenue was generated. These tools can also be used for forecasting, such as for the next-quarter sales pipeline.
Competitive Advantages of Using CRM Software
Whatever business you’re in, chances are you frequently have to deal with customers, prospects or other important contacts. When dealings with those contacts, CRM software gives you advantages over your competitors by helping you:
Scale your business. If you only have 100 contacts to deal with, then you might be able to keep all of their information straight using a simple Excel spreadsheet, or even pen and paper. Larger companies, however, deal with thousands or potentially millions of contacts and customers, which requires CRM software in order to keep that information well-organized and accessible.
Operate more efficiently. When everyone in your company has access to your customer and contact data, you can deal with those customers more efficiently and avoid the dangers of reaching out to contacts either too much or too little. You can also track those interactions and analyze that data for more efficient resource planning.
Compete with superior customer service. Staying in touch with your customers in just the right amount, and using the communication method they prefer, lets you stay on top of their needs and concerns in a way that stands out. Superior customer service, focused on providing the best possible customer experience, will allow you to seriously compete against other businesses.
Size of Businesses Using CRM Software
CRM systems are used by many businesses, across a variety of industries, so there’s no “typical” buyer, as it varies by industry. In general, though, you’ll fall into one of the following categories:
Single User. The smallest businesses consist of only one owner/employer, such as real estate agents, freelancers or independent contractors.
Small Business Buyer. These are companies with 2-100 employees that make under $50 million a year and have no IT department.
Mid-sized Business Buyer. These are also companies that have 2-100 employees and make under $50 million a year, but they do have an IT department.
Enterprise Business Buyer. These are large companies that have more than 100 employees, make more than $50 million a year, and have a dedicated IT department.
Software Related to CRM
CRM can be divided into several related subcategories of software, all of which focus on improving your relationship with your customers:
Sales Force Automation Software: helps companies manage their sales team’s activities, and helps the sales team to close more deals by keeping thorough, accurate records of their interactions with all sales prospects.
Marketing Automation Software: provides tools that helps marketers reach out to potential customers through a variety of channels, especially email, and tailor messages to them.
Customer Experience Software: combines frontline customer service applications, such as live chat and tools for self-service knowledge bases, with tools that connect departments in order to oversee individual customer experiences.
Help Desk Software: stores customer information in a searchable database, tracks interactions and automates the issue resolution process using an issue tracking system, for either external customers (consumers or businesses that have purchased goods or services from your company) or internal customers (employees).
Live Chat Software: allows companies to have real-time conversations with website visitors in order to improve customer service, help increase online sales and encourage repeat business by providing customers with precisely what they want.
What a Common CRM Software Feature List Looks Like
When comparing CRM software solutions, it’s important to understand the functionality included in each. The most common functions of this type of software are listed in the table below:
Feature Details and Examples
Sales force automation: Sales force automation (SFA) provides you with the tools to streamline and manage your sales team’s performance, and gives your salespeople the ability to more efficiently track their prospects and customers with functions including contact management, lead management, opportunity management, pipeline management, forecasting and territory management.
Opportunity tracking in Salesforce.
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.
InfusionSoft’s campaign builder page.
Customer service & support: Customer service & support functionality consists of a set of tools that enables you to cater to your customers’ needs by tracking their various interactions with your company in order 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.
TeamSupport’s customer management page.
Help desk automation: Help desk automation is similar to customer service & support, in that it focuses on creating the best possible individual customer experience. However, it is more focused on resolving information technology (IT) issues, and the “customer” may be either external or internal (i.e. employees needing 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.
Freshdesk’s ticket summary page.
Buyers’ Top-Requested CRM Features
The buyers we’ve helped at Software Advice tend to be looking for some of the more basic aspects of CRM systems. Their top-requested features, by far, are contact management, interaction tracking, and scheduling/reminders, all defining features of CRM software.
The more specialized a feature gets, the less buyers tend to request them.
Most Desired CRM Software Features
What CRM Software Features You Really Need
Certain CRM features are more critical depending upon your business’ stage of growth. Here are some of the most crucial features for different business sizes (see “Types of Businesses Using CRM Software” for definition of business sizes):
How CRM Software is Priced and Hosted
CRM software is typically hosted online and licensed out to companies on a “per user, per month” basis, alongside one-time implementation costs. 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) and is increasingly uncommon.
The per user/month costs across the market average from around $50-$90 per user/month, depending upon required functionality, though it can also be much cheaper ($25 per user/month) and much more expensive ($200-$300 per user/month) amongst varying vendors.
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 $3000-$4000/month for more robust systems.
What Businesses Typically Budget for CRM
Based on an analysis of the CRM software buyers we speak to here at Software Advice, business budgets for CRM systems vary widely. The highest percentage of buyers, about a quarter, budget for $100-195 per user, per month, while only 3%, are willing to budget more than $300/user/month.
Please note that these prices do not include any potential up-front fees, such as installation and training.
Budget for CRM Software
Hidden Costs of CRM Software
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 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.
What are the key functions of CRM software?
As discussed in “Benefits of CRM Software” above, CRM software provides several key functions for your business, including:
Contact management. Manage and store customer, client and prospect data so you can contact them at the right time using their preferred method of outreach.
Interaction tracking. Keep detailed notes on each employee’s interaction with customers, clients and prospects for the future use of all people at your company.
Workflow automation. Create task lists, reminders, calendars, alerts and templates that will help streamline your dealings with customers.
Reporting and Analytics. Generate reports that track and analyze the performance and productivity of your company and employees based on the data in the CRM system.
What should I ask vendors when evaluating CRM products?
When evaluating 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.
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, like marketing integration or reporting and analytics. Check to see whether there are any hidden costs or challenges in adding features later on.
What’s the difference between Marketing Automation and Salesforce Automation?
CRM vendors offer a lot of applications with their products, and jargon is common to describe them. We’ve demystified much of this in our article, The ABCs of CRM: A CRM Terminology Primer.
What if my company doesn’t differentiate between sales and marketing?
Many companies these days have sales 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.
How do I get my team to Adopt CRM Software?
One of the biggest challenges of purchasing CRM software is getting your team to use it, especially sales teams who are often attached to practices they don’t want to interrupt with new technology.
To help with this, we created a series of articles all about CRM implementation. You can link to individual articles here:
What Are Some Drawbacks I Should Watch Out For?
CRM software isn’t a magic cure-all for companies that have problems due to their own dysfunctional work processes or poor corporate hygiene. Some businesses think that buying software will fix a disorganized sales team or inexperienced marketing department, but in reality the software may just scale up and exacerbate those already-existent problems.
For CRM software to work for your company, you need to make sure that the teams and individuals who will use that software are equipped to deal with the increased customer base that the software has the potential to bring on board.
Tips & Tools
Build a Business Case for CRM Software
Purchasing CRM software will have 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 outline in detail in our article How to Build a Business Case for CRM Software.
Here are some recent articles you should check out about CRM software:
Popular CRM System Comparisons
Recent Events in the CRM Market
Here are some important recent events concerning CRM vendors and the world of CRM software:
Gartner notes CRM software market grew 12.3 percent. In May 2016, Julian Pouter, research director at Gartner, noted that the greater than 30 notable CRM acquisitions from 2015 had led to a 12.3 percent growth in the market.
Everstone acquires C3. In October 2016, Indian equity fund Everstone Capital, along with co-investor Sunrise BPO, acquired US-based CRM solutions provider C3 (Customer Contact Channels) in a deal worth USD 150 million.
Freshdesk acquires Pipemonk. In August 2017, major CRM vendor Freshdesk bought Bangalore-based startup Pipemonk (which helps companies move data between cloud platforms) for an undisclosed amount.
Top Products - August 2017 FrontRunners
Our FrontRunners™ Quadrant
To create this quadrant, we evaluated over 1,000 CRM products. Only the top 25 to 30 products made the quadrant because they scored highest in capability (x axis) and value (y axis). Those scores are based largely on reviews from real software users, along with other product performance details (e.g., what features they offer, how many customers they have). You can download the full FrontRunners for Customer Relationship Management report here.
Small businesses should use FrontRunners to make more informed decisions about which software is right for them. See our About FrontRunners page for more information.