What is a CRM? – an easy guide for small business owners

What does “CRM” stand for?

The term “CRM” stands for a “customer relationship manager software” or “customer relationship management software” . It’s essentially a software tool for storing a database of customer information for a business. In this database, you can:

  • store information about their problems or interests (i.e. segmentation information) so that you can target offers, information and marketing to help make it relevant to them
  • use it to help you maintain a good relationship with prospects, customers, clients or suppliers by giving you reminders of when to reach out to them
  • store relevant personal information about a customer that helps you to make your marketing personalised and relevant (to help it stand out).
  • automate emails, marketing, and other business processes that help you to nurture a prospect or customer to help you make sales at a later moment in time.
  • help you to automate tasks, such as sending out welcome packs or prompting you to make follow up phone calls
  • you can even use it to derive business intelligence and information to help you grow your small business

Regardless of the size of your business, I feel that every small business can benefit from even a simple CRM to help them make sales. It’s an essential piece of business software that makes it easy to keep track of your customers and prospects.

You might not even be looking for a CRM, but I every small business needs a way to manage clients and prospects, and that’s what CRM software tools are designed for.

What customer data can you store in a CRM tool?

When it comes to databases and customer data (particularly due to privacy rules) is that you only store the information that you need in order to conduct business. In reality, there’s quite a wide range of information that you can use and store. There are, of course, rules on what information you can store from a confidential basis. And if you do store confidential information, you’ll need to protect it appropriately.

But we’re not talking about confidential data here.

The customer data that we are concerned with in a CRM tool is the data that we can use to help generate sales.

From that perspective, we might store the following information:

  • A customers/client/prospect’s full name and their nicknames
  • Contact details such as phone numbers, email addresses and social handles
  • Their postal address (which might be a business address, a PO box, or a home address).
  • The names of their children, partner and pets, to help us connect with this person
  • Their key likes (e.g. wine, beer, chocolate, snacks, hobbies) – again, to help us connect with this person.
  • key dates – e.g. a birthday, wedding anniversary or the date that the individual became one of your clients
  • The business name, what their business does, how many staff they have, who their competitors are, and their key challenges.
  • What products and services they have enquired about and purchased.
  • Any previous emails and communications
  • What ‘rating’ you give a customer? – e.g. are they a VIP or Gold level customer?
  • The client’s total spend with you or Life Time Value (LTV)

A good CRM software tool is designed to help you store this information, and find it quickly when you need it.

How does a CRM help with relationships exactly?

This is typically something that’s not explained very well. So what I’ll do here is give you a brief outline of how you can use a CRM platform to help you win a client. And then I’ll give some specific examples of what you can do.

There are 4 areas in which a CRM can help:

1) Being relevant – You can use personal information to make your communication and emails stand out.

2) Being timely – You can use key dates to prompt you to contact someone when the timing means they’re going to be receptive to your messages

3) Being organised – You can use the software make it easy to store lots of details for you, as well as to remind you to do tasks (such as email someone or send them something)

4) Using automation – you can exploit the automation features in CRM tools to take over certain manual tasks from you.

If you have a message that’s personalised to someone, that arrives at the right time and is executed reliably for every prospect you have, with certain elements being automated… you can tell that this is a powerful tool that will win you business.

Being relevant – using prospect information to be personal

Being relevant is all about using the information you have (which you’ve collected through conversation, emails and research) to connect with your prospects on a personal level. Not to be creepy or stalker-like in any way, but simply to make it easy to communicate in a way that cuts through the noise in their lives.

We’re not faking anything here either. Asking someone how their salsa classes are going, or how their new puppy is doing, goes a really long way to helping you connect with someone. You are asking because you really care. And believe me, prospects will be able to tell if you care or not.

In this example, we have the following information about Simon:

  • His name and email address
  • We’ve met him twice at networking events, and got on with him really well
  • That he got his first puppy 3 months ago
  • That he is an ex business coach who has just acquired his 3rd business which is in the final stages of completion
  • You’ve got some background experience due to a past job that relates to his new business he’s just purchased
  • You’ve got some software he’s aware of that you suspect he’ll be interested in

So your email could look like this. This email is nice enough, but it’s very functional and there’s no attempt to connect.

Or you could use this information to make it a much more personal email and connect a little better.

In truth, you could go further with this but we don’t want to overthink our approach.

Which email do you will get Simon’s attention?

Being timely – using dates to help your message arrive at the right time

Effective communication and marketing is personal, relevant and timely.

Running a small business is hard, time consuming and challenging on a frequent basis, So we want to use the information within our CRM to help us with the low hanging fruit. Often that’s as simple as sending an email at the right time.

When you have date-related information in a CRM system, you can make your offers and propositions particularly highly relevant. This of this as laser-targeted marketing rather than emailing 1000s of prospects with the same message.

  • e.g. If you’re a tutoring business and you know a parent has a 2nd child will be starting key qualifications next year (e.g. GCSEs in the UK), you can send them some marketing to encourage them to sign up for tutoring for the new school year. You can even mention that child’s name for additional personalisation and relevance.
  • e.g. If you’re an accounting business and you keep in touch with 2 of your prospects on a very regular basis. You find out that they are both in the early stages of purchasing some property. You might write them a letter to their postal address (perhaps with some chocolate so that it gets attention), offering a 1:1 meeting with them where you’ll give them some great ideas on how to save tax on their new purchase. You can then use that meeting to present your offer to work with you long term.
  • e.g. you store information in your database where 5 of your prospects are coming to the end of their deal with their HR provider this year.  So you start sending them marketing every month by post and by email starting 9 months before the end of their detail, so that you can encourage them to sign with you instead of your competitor.

If you’re emailing, calling, sending a DM on LinkedIn or sending something in the post, your message is vastly more likely to get attention if you get the right timing!

Being organised – don’t rely on your memory, use a simple database

Your business will always benefit from the highest possible quality in terms of data. You’ll want to aim for quality not quantity every time.

If you have 20, 200 or 2000 prospects in your database, you’re going to need to keep track of those prospects and their information. I’m sure that you have a good memory, but even with the best memory in the world, you’re going to forget key details. But why even try to remember it all? You don’t need to!  You can find a particularly good CRM system for a very modest cost, and you’ll be surprised at just how well that software will keep you organised and on top of your prospects.

All good CRM solutions have the following features that allow you to keep data organised:

  • A ‘contact record’ or ‘Contacts’. There are sometimes different names for this, essentially a contact record is a single individual person and all of the information you have for them. In a contact record you have the following:
    • fields – this is where you store names, contact details, website addresses.
    • note fields – this is where you can add your own notes for this person.
    • custom fields – this is where you can store your own custom information (e.g. their favourite wine)
    • previous emails – many CRM systems can store previous emails or link to your email system
  • Lists – this is the most basic form of organisation for your contacts. It is a group of contact records. It’s very broad, and you might have:
    • a list of prospects
    • a list of customers or clients (i.e. ones who have saved you money)
    • a list of suppliers
  • Tags – a contact record can have any number of tags. e.g. for your customers, you might have a VIP tag for customers that on your main customers list. You can then get a list of all VIP customers at a later stage. It’s a lot like a sub category of your list. It’s exceptionally helpful when you’re sending marketing emails as you can target small groups with ease.

Between Tags and Lists, you can target any group of contacts with emails very easily. With fields and custom fields, you can store pretty much any information that you like with each contact.

Using automation – using automations in a CRM to handle admin for you

There is a range of capability when it comes to CRM automation, but it’s hard to imagine what you can do if you’re not used to using a CRM or if you’re not experienced with automation.

How you can use automation is best illustrated with examples, so let’s show you some examples.

  1. Using an automation that checks a date field for a customer for when they first signed up as a customer for your software product. Using an automation, you get an email notification 3 weeks before their annual renewal so that you can start a small marketing campaign to ensure the customer stays with you (or if you refine their package).
  2. You could use an automation to set up a drip email campaign (aka a nurture email campaign) to send customers a weekly email to help remind them that you exist.
  3. An automation could be used to check if a contact is signed up to any of your emails and if not, send them an email with a link, that if they click it, they get your weekly emails. This is because you’d want to check they consent to getting your emails.
  4. You have an email with 3 or 4 options in it, and when one of those is clicked, it captures that information and updates their preferences.
  5. You could have an email that if a custom field is blank (e.g. of their favourite wine) – it sends them an email asking what it is, so you can update their details to build their profile.

I’ve done all of these automations at least once in the past, and they’ve been very useful to me grow my business.

What are the essential components of a CRM?

There are lots of different opinions about what’s needed in a small business CRM, and I have some specific opinions based on my own experiences of using CRM systems to generate sales in my own businesses. To save you having to integrate more than one piece of software to achieve the same objective, you’ll want as many of the following features as you can in one place.

Now of course you’re going to have very specific business needs, and therefore you’ll probably want some specific functionality on top of the features that I’ve listed below. However, these features below you should consider to be the minimum of what you need for your CRM software to be useful to you.

1) Custom fields, tags and lists – these CRM features are the very bare minimum of what you need as they allow you to organise your contacts, store lots of information about each contact, and segment them into very targeted groups.

2) Date fields – having a way to store dates about a customer is incredibly helpful. The ideal is having a way of triggering automation relating to these dates.

3) Being able to send emails from within the CRM tool – you’re going to want to keep in contact with your customers and prospects, and ideally you’ll do that via email from within the CRM software OR within your existing email tool but where the CRM has a copy of that email for reference.

4) Being able to send automated emails from within the CRM tool – this is ideal for email nurture campaigns that are used to keep prospects ‘warm’ and nurture them with content, valuable resources and familiarity with you. This ultimately helps you to make sales because your prospects know who you are. You really want this feature within your CRM software because trying to do this in a separate email tool is awkward, fiddly and can easily go wrong if you’re not technical.

5) Having any automation features – any automation features in a CRM tool that can prompt you to take action are going to be really useful. Typically the most useful automations will be ones that  help with prompting you (or staff members) with tasks, or sending messages on your behalf. Saving you admin and effort is usually something where software helps.

How do you know if CRM software is right for you? What’s the best CRM?

A spreadsheet isn’t a CRM system

Let’s get a few things out of the way. A spreadsheet isn’t a CRM system. It is a good and basic way to store information about customers or prospects but it doesn’t handle the automation elements of what you need in a small business. Yes, it’s invariably free to use a spreadsheet as a way of managing contacts if you have Google Workspace or Office 365, but it’s not a CRM. If you’re serious about getting more sales in your business, a spreadsheet will most definitely hold you back. We want to exploit the benefits of a CRM rather than save a few dollars or pounds on software.

What about free CRM software?

There are a handful of free CRMs out there, but they’re also not a good fit for you if you’re serious about getting more sales. Sure, a free CRM is free, but as often is the case with free software there are hidden costs. Free software is usually a false economy as you’ll have to pay something further down the line.

For example, WordPress itself is free from a website perspective, but now there are many additional costs including hosting, security, updates, custom designs, premium plugins and more. This can add up to be quite a lot.

In a small business (and as a business owner) your time matters more than anything else. Don’t skimp on costs by going for a free CRM tool, but focus on a CRM tool that is an affordable monthly or annual fee but includes customer support. If you have a problem, you’re going to want it solved quickly. And that’s where paid support comes in.

The best way to try CRM software…

We’re working on our shortlist of recommended simple CRM software for you, and you can combine that with our suggested software testing guide to help you evaluate the software. This will help you to get started.

In a small business, CRM software is going to be a very personal choice. Yes there are MANY MANY CRM systems and many will say that they’re the best. Obviously they can’t all be the best!

However, there are some simple rules to help you choose the best CRM for you.

  1. There is no best overall CRM. Pick the software that suits you and that you like.
  2. The CRM tool that you use will always outperform the one you don’t
  3. You’ll need the 5 elements that we’ve listed above (lists/custom fields/tags, date fields, sending emails, automated emails, and automations). Many CRMs do not have all 5 of these features. Obviously you’ll beed to factor in the needs of your business, but you’ll definitely need and want these 5 elements.
  4. The best way to know if CRM software is any good… is to test it yourself! And see how it ‘feels’.
  5. The CRM tool that is easy to learn (and that you want to learn) will naturally amplify your success

Try 2 or 3 CRM software tools, and take advantage of their free trials. A handful of CRM systems have a free plan too (but be aware that many key features will be paid for down the line).

You will need to practice using the CRM daily, even just 10-15 minutes will help you significantly. As you use it more, it’ll become more and more effective for you. Don’t give up before the end of the free trial, see if you can try the software for 3-6 months to gain the experience of using it.

In closing

A CRM or Customer Relationship Management software is like your combined personal database and assistant for managing relationships with customers. It helps you keep track of your clients, their details, and their interactions with you. It also helps you automate repetitive tasks so you can focus on more important things, like growing your business.

Think of it as a tool that helps you build strong relationships with your customers, track your progress, and helps you to stay organised with your prospects and clients.