Every year, thousands of small-business buyers—those from companies with $50 million or less in annual revenue—contact Software Advice for help choosing a new system. These interactions provide us with valuable insight into trends in the online customer relationship management (CRM) software market.
We analyzed a random sample of these interactions to understand the top Web-based CRM buyer trends and factors that influence buyers’ purchase decisions and software preferences.
This report can help other online CRM buyers choose the best system for their business.
- Half of buyers (50 percent) are using manual methods, such as spreadsheets and pen and paper; 8 percent use only an email client, and 4 percent have nothing in place.
- Nearly one-third of buyers (30 percent) seek software because their current system lacks features, while a combined 26 percent want it for a new or growing business.
- Nearly all buyers (91 percent) want software with sales automation functionality; 30 percent want marketing automation capabilities.
- The majority of buyers seeking marketing automation want email marketing tools (68 percent); only 5 percent of these buyers seek social media functionality.
In today’s CRM software market, Web- or cloud deployment tools are becoming very popular. In fact, research by Gartner estimates that nearly half (47 percent) of CRM implementations were cloud-based in 2014. And according to our latest CRM software buyer report, nearly three-fourths of buyers from small businesses request solutions hosted in the cloud.
Given the more limited resources small businesses have, their interest in these solutions makes sense. The monthly subscription pricing model used by most cloud CRM vendors offers more reasonable, ongoing costs for smaller companies, as compared with the substantial upfront investment and installation costs of on-premise systems.
To learn more about why small businesses seek Web-based CRM systems and what functionality is most important to them, Software Advice analyzed a random sample of buyer interactions. This report highlights our findings.
Majority of Buyers Are Upgrading From Other Methods
Exactly half of buyers still use manual methods, such as spreadsheets or pen and paper, to manage customer data. A small number of buyers report using only an email client (8 percent).
Nine percent are using multiple methods, juggling things like spreadsheets, emails and handwritten notes along with commercial CRM systems or non-CRM software. And 4 percent have no methods at all in place.
Prospective Buyers’ Current Methods
Many companies only purchase CRM software when the amount of customer information they’re tracking grows too large to manage manually. Indeed, many buyers in our sample mention feeling disorganized and inefficient. Given this, it’s not surprising that so many are upgrading from manual methods.
For a number of reasons, we’re likely to see even more small businesses switch from analog methods to online CRM solutions in the future. For one, the majority of U.S. small businesses are planning to expand over the next six to 12 months (72 percent, according to an American Express OPEN Small Business Growth Pulse survey).
What’s more, a growing number of affordable, online CRM solutions tailored to the small-business market are available. With more business being conducted online every day, more companies will need this online software to assist them.
“[Cloud] is really changing the game in terms of the scale and the ability for [businesses] to get up and running very quickly without the need for hardware and software.”
Sean Alpert, senior director of product marketing at Salesforce
Buyers Want More Software Features and to Support Growth
The largest percentage of buyers want online CRM software because their current system lacks functionality (30 percent). What’s more, a combined 26 percent say they want new software because they are either starting a new business (10 percent) or experiencing growth (16 percent). And 13 percent seek better integration—either between multiple software systems, or multiple people or teams.
Top Reasons for Evaluating New Software
Our findings suggest that small businesses are thinking about cloud CRM systems as strategic tools that help drive growth. By allowing users to track customer interactions more efficiently, CRM systems help them do more with fewer workers and improve their relationships with customers.
“CRM is now becoming the real center of gravity for business. … Companies that are investing in CRM are able to grow and develop relationships at a much faster pace and in a much deeper way.”
Sean Alpert, Salesforce
Many other studies support this idea, as well. For example:
- According to Capterra, more than half of users adopt a CRM within the company’s first five years.
- Wasp Barcode Technologies finds that nearly half (45 percent) of small-business leaders plan to increase revenue by investing in new customer-acquisition activities and methods.
- In a survey by Brother International Corporation, 72 percent of small-business owners say investing in new technologies will pay off more than investing in new hires.
Indeed, using CRM software to improve the customer experience will only become more essential over time. Walker, a customer intelligence consulting firm, even predicts customer experience will overtake price and product as the key brand differentiator in the future:
“The customer of 2020 will be more informed and in charge of the experience they receive. They will expect companies to know their individual needs and personalize the experience. … To be relevant in 2020, companies must focus on leveraging big data to create a single source of truth and [make] customer intelligence accessible throughout the [business].”
Walker’s “Customers 2020” report
Buyers Rarely Seek Marketing Automation Without Sales
Looking at the specific applications buyers want their software to have, sales automation is the top request (sought by 91 percent of our sample). And 30 percent of buyers request marketing automation. However, many buyers request both.
Top-Requested Online CRM Applications
Buyers who want both of these applications likely intend to integrate their sales and marketing processes. There are clear benefits to this approach: According to Salesforce’s Alpert, using one system with both sales and marketing automation applications not only makes for a much easier learning curve, but also provides a single source of customer data.
“If you’re able to do it all with one platform, it becomes much easier to develop deep customer relationships,” he explains.
Nicole Mertes of Weidert Group, a B2B inbound marketing agency, agrees that aligning sales and marketing is important.
“When alignment is fully enacted, sales isn’t just responding to marketing’s needs—it helps to instigate a better marketing process,” she says. “[And] lead management and nurturing is critical to sales’ success.”
When marketing and sales teams are aligned, they can tailor marketing material to address the questions customers most frequently ask sales reps. This allows marketing staff to pass along more sales-ready leads. Marketing and sales can also work together to identify, using nurturing techniques, which leads need the most attention.
Naturally, these processes are made easier when everyone is working from the same software platform.
“The lines between sales and marketing [and] even customer service are blurring. Customers want a seamless customer experience from the companies they do business with.”
Sean Alpert, Salesforce
Few Buyers Request Social Media Functionality
Digging even deeper, we looked at buyers seeking the top applications in the chart above, and examined the specific software capabilities they’re looking for. Among buyers seeking sales automation applications, interaction tracking (68 percent), alerts and reminders (65 percent) and lead tracking capabilities (54 percent) are most frequently requested.
Among buyers who want a customer service and support application, most are seeking functionality for trouble ticketing (78 percent) and escalation tracking (78 percent).
The majority of buyers seeking marketing automation applications want email marketing capabilities (68 percent). Surprisingly, while we expected to see interest in social media functionality among this group, only 5 percent actually request it.
Sales Automation Buyers: Top-Requested Functionality
Customer Service & Support Buyers: Top-Requested Functionality
Marketing Automation Buyers: Top-Requested Functionality
Webs, a marketing platform provider for small businesses, recently reported that 46 percent of small-business owners have (or plan to create) a social profile for their company. So why are social media tools so unpopular among the marketing automation software buyers in our sample?
One reason could be that small-business buyers are interested in using social media for marketing, but are unsure of how to actually go about it.
“Most small businesses understand they need to be on social media—however, they don’t really know what that means. And a lot of small businesses can’t afford to have a social media expert come in and tell them what to do, so they’re learning on the fly. There’s more of a familiarity with the other forms of marketing, … so they’re leaving social for last.”
Sean Alpert, Salesforce
Small-business buyers may also be skeptical of the return on investment in social technology—and how to measure it. Buyers who are unsure of how to tie sales or revenue to social media engagement efforts may choose to invest in more traditional tools, such as email, that they feel are easier to track.
As Angela Hausman, owner of digital media marketing company Hausman and Associates, puts it: “With email marketing, it’s easier to show that ‘something’ happened—people opened your email.”
However, there are CRM software capabilities designed to make things easier. For instance, social listening tools can monitor what people are saying on social media about a business and the topics that affect it. And social analytics tools can be used to measure the impact of social media outreach. Many systems with marketing automation applications include these types of functionality.
Small businesses that engage in social media marketing but don’t take advantage of the tools designed for it are missing out on a significant opportunity. CRM software with these capabilities can help businesses optimize their social media content, gauge the effectiveness of social campaigns and, if necessary, change course.
It’s clear there is strong interest in Web-based CRM systems among small businesses. Certainly, the more affordable pricing of most cloud CRM solutions contributes to this, as does the fact that many vendors now offer systems tailored to the needs of smaller companies.
Many small businesses can benefit from buying systems with both sales and marketing automation functionality and aligning the efforts of these departments. Companies that go this route not only simplify workflows by using fewer tools, but can also nurture customer relationships more effectively.
Finally, while interest in social media marketing is high among small businesses overall, few buyers in our sample request these tools as part of their marketing automation software.
Buyers who are interested in, or already conducting, social media marketing campaigns should consider systems with these tools. They can help buyers improve the outcomes of social campaigns and quantify their return on investment.
The majority of buyers in our sample are from businesses with less than $1 million in annual revenue. A combined 76 percent of buyers plan to have either a single user (30 percent) or between two and five users (46 percent) on their new system. Similarly, over half of buyers (57 percent) are from companies with five or fewer employees; nearly one-third (24 percent) are the only employee in their business.
By Annual Revenue: Prospective Buyer Size
By Number of Users: Prospective Buyer Size
By Number of Employees: Prospective Buyer Size
In addition, the largest percentage of buyers in our sample (38 percent, combined) represent businesses in the real estate and consulting industries.
Prospective Buyer Size by Segment
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The detailed methodology for this report can be found here.