Customer relationship management (CRM) refers to the various ways in which businesses interact with their customers, throughout the entirety of the customer life cycle. As such, it encompasses a variety of different activities—sales automation, tracking customer interactions, email marketing, monitoring/reporting on the sales pipeline etc.
As with most contemporary business needs, CRM largely relies upon software to help simplify the process for organizations large and small.
At Software Advice, we talk to hundreds of small to midsize businesses (SMBs) every day, and have helped thousands of businesses choose the right software for their CRM needs. Different businesses have varying needs when it comes to CRM, and our expert advisors take the time to cover all the details with each and every CRM buyer.
As a result, we have a unique insight into just what SMBs that contact us hope to get out of a CRM system, and we are able to examine and analyze recent CRM trends.
This CRM buyer report will examine our recent analysis of 200 in-depth conversations with SMBs over the last year in order to identify the top trends among CRM buyers.
- Sales force automation remains the backbone of CRM, with the vast majority of buyers requesting it as the main feature of a new CRM software system.
- As CRM systems become more diverse and offer more features, businesses with specific needs (such as real estate and manufacturing) are turning to software, often from manual methods, as a solution to their CRM needs.
- Many SMBs are expecting to pay around $70 to $75 per user per month for a robust CRM system, but they may be overestimating both their own needs and the price they should pay for CRM.
Sales Force Automation Continues to Drive CRM
Sales force automation (SFA) is at the heart of what many businesses require from CRM software. Although only 8 percent of our buyers directly state that “sales automation” is something they require, the top three features they request—contact management (88 percent), tracking interactions (80 percent), and scheduling/setting reminders (75 percent)—are all major components of SFA functionality.
According to Paterson, once businesses have a solid SFA process, with a firm database in place, “they get going with email marketing…reporting and analytics then kick in when the CRM system is running well and management can get some useful information from it. Integration to other systems such as accounting systems then speeds productivity and reduces errors.”
For many SMBs, this basic functionality is actually all that they will need out of their CRM, especially at first. According to Alex Haimann, head of business development for Less Annoying CRM:
“Some [SMBs] just need something that can help them be a little bit more efficient, and for the most part, that is managing contact details/information and tracking interactions. That probably is what 50 percent of the people that are coming to look for CRM need, and that’s it.”
Alex Haimann, head of business development, Less Annoying CRM
The need for basic SFA functionality coincides with the top pain points mentioned by our buyers. Over a third of these buyers (39 percent) mention that their biggest problem is organization/efficiency, while a fifth (20 percent) complain about tracking and 15 percent simply have no CRM or SFA system in place at all.
Spreadsheets, email systems and/or pen-and-paper are simply not feasible methods for a growing business to maintain quality CRM. As SMBs realize this, they turn to specialized software for their needs, which frequently begin with basic SFA.
One of the reasons so many first-time users are now looking for CRM software is because the software itself is becoming much more simple and intuitive to use.
According to Jon Lee, cofounder and CEO of ProsperWorks, “The best CRMs today are those that are able to blend outstanding functionality with user-friendly design,” he says. “By making CRM simple and familiar to any user, the new wave of CRMs are able to drive unprecedented levels of user adoption.”
Specialized Business Segments Are Turning to CRM
There are a wide variety of industry segments represented by our prospective CRM buyers, but a few rank higher than others—particularly real estate (18 percent), manufacturing (12 percent) and consulting (9 percent).
“These industries have unique and specific processes that are hard to automate with generic CRM systems. For example, real estate deals with properties, listings, showings and MLS integration. Consulting companies, in addition to core CRM attributes, may need capabilities to track projects, billing, labor efficiencies, etc.”
Katherine Kostereva, CEO of bpm’online
These industries may only be turning to CRM now because they have not been as well-served by basic, SFA-focused CRM systems.
However, the CRM software market is diversifying, with more industry-specific solutions offered either as part of a larger system or as a stand-alone system. This means there are more opportunities for businesses to find the perfect fit.
Kostereva explains that CRM is increasingly adapting to a vertical market, where individual business segments have specialized needs: “Over the years, CRM vendors have developed industry-tailored solutions that make it possible to automate the specific processes each of these industries requires, allowing for better efficiency and scale.”
SMBs May Be Overestimating Their Required Features and Costs
The majority of our buyers are on the smaller size of the SMB designation.
Prospective Buyer Size by Number of Employees
Prospective Buyer Size by Annual Revenue
Half of our buyers represent businesses with ten or fewer employees, and almost as many (47 percent) represent businesses that make less than $1 million annually. Because these are such small businesses, it is not surprising that they are often unfamiliar with even the most basic of CRM software.
Many of our buyers are small businesses turning to a CRM software solution for the first time. As a result, they may overestimate what features they will actually use, and what is a reasonable price for the system.
For example, a SMB may be searching for full-function CRM software only to find that more basic dispatch software would better suit their needs.
Prospective Buyers’ Monthly Budget
Prospective Buyer Size by Number of Users
According to Paterson, “$70 is plenty! You can start with a simple but usable two-user system for free…The world has moved on from expensive CRM systems.”
Haimann says that people who expect to pay $50 per user per month will actually “end up with a CRM between $10 and $20 per user per month that hits all of the basic needs they’re looking for, especially if they’re coming from manual methods.”
One of the reasons that SMB buyers may be overestimating what they expect to pay for their CRM system is because they are similarly overestimating the functionality and features that they will require. Lee points out:
“A budget of $70 to $75 per user per month is certainly reasonable for a fully-functional CRM but it’s important to understand that great functionality doesn’t necessarily mean having a laundry list of features.”
Jon Lee, cofounder and CEO of ProsperWorks
Lee explains that “rather than struggling to implement complex, clunky CRM software that are popular among large enterprises, SMBs would benefit from an intuitive and automated CRM that puts usability, design and integration first…These CRMs can be had for a third of the cost or less and can generate a much higher ROI.”
First-time SMB buyers would do best to focus on simple, core CRM features—such as contact management, tracking and setting reminders—that should be relatively inexpensive to implement.
For those who follow the CRM software market, the main findings of our buyer report is not terribly surprising:
- SMBs primarily need the SFA features of a CRM system.
- A greater variety of CRM systems catering to specific business segments means that more businesses are turning to CRM software.
- First-time buyers are naturally confused about what features they might need and how much they might expect to pay.
However, these CRM trends also indicate some important points for the future of the field as regards the average SMB CRM buyer:
1. More SMBs will continue to adopt CRM software
With affordable pricing, industry-specialized systems and access to the basic SFA functions that are required for businesses to operate today, CRM is more attractive and available to SMBs than ever before.
As Kostereva explains, “SMBs have no doubt recognized the huge advancements in CRM technology with respect to features, functions, data management, integration, analytics and, of course, the cloud. There is pretty much no reason or excuse for someone to be using an outdated and home-grown solution these day.”
2. SMBs choosing CRM software for the first time should resist overestimating the level of functionality they need
Many of the pain points and problems faced by smaller businesses, particularly regarding disorganization and a lack of streamlining, can be addressed by the most basic CRM capabilities, rather than turning to an overly robust system.
According to Haimann, “A lot of bigger CRMs are trying to take their experience with much more sophisticated businesses that have much more sophisticated sales processes and make that fit for very small businesses. That’s overkill beyond imagining.”
Before committing to a system like this, SMBs need to consider whether they will actually use all of those features, or whether they will over complicate processes and deter people from actually using the system.
3. SMBs should put basic SFA functionality into place first, before implementing more complex CRM features
Once a reliable, accessible database is in place, then it is time to think about greater levels of functionality, such as analytics and email marketing. These features may appear daunting when coming from of manual methods, but they are relatively easy for a company that already has a workable CRM system in place. According to John Oechsle, CEO of Swiftpage:
As John Oeschle, CEO of Swiftpage, explains, “once you have this authoritative source and you have all this information in one place, now can you begin to mine this information to start pulling out predictive analytics.”
“This scares the small business because they don’t have an IT staff or data analysts/scientists,” he says, “but we’re beginning to see tools either inside CRM systems or bolted on to CRM systems for the small business that they can start looking at to find the next best interaction with their customer or prospect.”
Adopting CRM is a process with increasing levels of complexity. Moving straight from manual methods to enterprise-level functionality will result in a failed implementation of the system. Instead, buyers should look for software that allows them to add on functionality as they become increasingly comfortable. This will enable them to eventually leverage a robust feature set that is tailored to their individual business needs.
Note: You can find more information about our methodology here.
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