A good knowledge of your customers enables you to develop marketing strategies that target their specific needs - and increase your sales. But where do you get, store and sort customer information? Emma Allen finds out how a customer relationship management (CRM) system can improve your marketing and increase your revenue
A customer relationship management system can be a powerful tool in your marketing armoury. By recording your customer's product likes and dislikes, their spending patterns and even their location, age and gender, a CRM enables you to build up a detailed picture of their tastes, needs and buying habits.
This in turn enables you to segment your customer base into groups of buyers with different tastes or budgets. You can identify your most profitable customers, for example, or promising prospects, and target them with marketing messages and offers devised just for them. If the message - and its timing - is right, you could improve your sales conversion rates considerably.
"CRM is a customer focused business strategy designed to optimise revenue, profit and customer satisfaction," explains Jason Nash, product marketing manager for Microsoft CRM UK. "The more you understand your customers, the easier it is to target new prospects and boost sales.
"If you have your marketing database, your sales pipeline and delivery going through your CRM system, you can monitor the relationship and accurately measure your return on investment," he continues. "By using data effectively, you can also drive sales from an existing customer base, rather than spend a lot of money on trying to attract new clients."
According to Nash, a CRM system can be a boon in the current economic climate. "Nobody can afford to lose customers at the moment, and managing the sales process properly is crucial for any firm," he points out.
"Smaller businesses don't necessarily need a highly sophisticated CRM package either. But if it's implemented properly, most systems should pay for themselves within twelve months," adds Nash.
Many businesses now opt to set up a cloud-based CRM system. This can have a number of benefits: cloud-based systems can be accessed simply and easily by sales people working out of the office; cloud-based applications are often cheaper as they don't require a large up-front investment as businesses can subscribe on a monthly basis; it may be easier to scale up an online CRM system.
A micro business can expect to pay as little as £3 per user per month for an entry-level, cloud-based CRM system. However, businesses with around 10 employees should expect to pay around £50 per user per month for a cloud-based system.
Alternatively, businesses can buy and set up a CRM system on their computer network. Initially this is likely to cost considerably more as it will include IT support and one-off fees such as software licences. It might be advisable to check out your existing IT support contract to see what it covers. Cheaper options might include accountancy firm Sage's entry-level 'ACT' CRM software for around £150 - it is basic but useful, and you would have to set it up yourself.
With many CRM systems on the market, you will need to be clear about what you want yours to do. Do you need something that will work seamlessly with your existing software, for example? Do you want it to schedule sales calls or send automatic emails to customers confirming orders?
"You should try to find one that is easy to use," advises Nash. "Some, for instance, are compatible with common email clients which many people recognise. In turn, that is likely to encourage staff to use it because it's familiar."
Whatever package you choose, making it accessible to everyone is crucial. "Too often, CRM systems are just rolled out to sales staff and you miss other opportunities across the organisation where you can gather data to build customer loyalty. For CRM to be effective, all staff should have input," concludes Nash.
For more information on setting up an using a CRM system, see: