If you’re a small and growing business with a lot of clients, it’s bound to come up sooner or later.
Should we get a CRM?
Maybe you see an ad for a new CRM platform. Or you hear someone else complain about managing their CRM system.
It gets you thinking. You start talking it over with your team and with other entrepreneurs. And you notice the answers you get seem to depend on what those people think a CRM actually is and does.
Which can vary. Wildly.
I’ve encountered versions of all the following statements in real life or online …
“We need a CRM so we can consolidate contact info and take notes on our clients.”
“We need a CRM to handle support requests.”
“We need a CRM so we can get more people to join our online community.”
“We need a CRM to connect with our thousands of customers online.”
“We need a CRM to segment our contacts effectively.”
The thing is … none of these things require a CRM. Some of them aren’t really key functions of CRM software to begin with.
The world of CRMs is inherently complex, and it’s likely to confuse even the sharpest entrepreneurs when they’re first starting out. In fact, many of them fall into a major mistake.
They get knee-deep in an expensive CRM system … and then they realize that what they needed all along wasn’t a CRM.
They just needed the ability to keep track of all their contacts—their clients, leads, and prospects—reach out to them, and hopefully get them to buy things in the process.
In other words, they needed a contact management system that works with their marketing efforts.
So let’s break CRMs down to the basics.
Then, we’ll take a look at the alternative approach: contact management.
By the end of this post, you’ll have a better sense of whether a CRM or a contact-management system is what your business really needs. We’ll cover:
What Exactly Is a CRM?
CRM stands for customer relationship management.
If you’re thinking that sounds like too big a task for any piece of software to handle, well, you’re right. In fact, when the concept first arose, it tended to refer more to a business management strategy than to a specific piece of technology.
But since the turn of the 21st century, when you hear people talking about CRM, they’re usually talking about a software system designed to collect and analyze information on prospects, leads, and customers so some combination of sales, support, and marketing staff can access and add to it. The end goal: turn leads into customers and retain your existing customers through high-quality, consistent interactions.
Which means if you want to start researching which CRM—if any—meets your business’s needs, you have a lot of work to do.
Because the decision depends so much on your business’s specific needs, let’s start there: where actual businesses find themselves when they ask the CRM question.
I reached out to a handful of small-business owners and marketers and asked about their experiences researching and adopting CRMs. Some were horror stories, others were uneventful, but all of them helped me get a better handle on when it does and doesn’t make sense to take on a CRM.
The Situation: You’re Holding Everything Together with Spreadsheets & Post-It Notes
“Our system was was a total disaster,” Bryan Clayton told me. Today he’s the CEO of lawncare-booking site GreenPal, but last year he was busy preparing his landscaping firm to be acquired by a national company. When the acquiring company asked to see Bryan’s system for tracking customers and sales, what it found wasn’t pretty: “Spreadsheets, post-it notes, whiteboards, legal pads, emails, you name it.”
They definitely weren’t alone in their haphazard record-keeping. Salesforce’s 2016 Connected Small Business Research Report found that the most common ways for small businesses to manage customer relationships are still individual email accounts, spreadsheets, and paper records.
Bryan had tried to fix this several years before by investing in CRM software—which didn’t go so well. “We basically purchased the software and paid an IT professional to install it, and the result after six months was that nobody used it,” he said.
“In retrospect what I didn’t realize was that I was just adding one more task to our salespeople’s list of things to do. It was like, OK, on top of everything else that you’re already doing, put all of the information into the software so we can track it later at some point if we want to.”
With the acquisition in the balance, Bryan decided to try again with a new, cloud-based CRM and a more deliberate management approach.
“To ensure a successful implementation this time around, I broke down the existing tasks and workflows that our salespeople were already conducting,” he recalled. “For instance, previously our receptionist would take many of the new incoming leads from the phone and write them down onto a lead sheet and give it to a sales person. We replaced that analog task with a digital task.”
This time, the CRM stuck. But even Bryan’s hard-won success points to a common struggle with CRMs: getting all the information into the dang system. It’s very hard for busy staff to see the efficiencies at the end of a tunnel of data entry.
Ideally, then, you want your contact management tool to automatically pull in as much information as possible and add it to the right contact record: the basics such as name, location, and industry, but also maybe things like …
- Appointments they’ve booked
- Payments they’ve made
- Pages they’ve viewed
- Webinars and livestreams they’ve attended
- White papers they’ve downloaded
- Feedback surveys they’ve answered
- Marketing emails they’ve received
- Total revenue they’ve generated for your company
That sounds like a lot—and yet you still don’t necessarily need a CRM to record this kind of data automatically.
If you’re collecting it online, you can have your integrations send it directly into your customer’s contact record inside your email marketing automation platform. Sure, you might still have to upload some CSV files of your existing contacts at the start—but even that should involve minimal human processing.
For instance, Drip’s contact records will display any of the above data that you’re collecting from your integrated applications (such as your payment provider, your website and webforms, your booking system, and more). Decide which data matters to you, and you can use flexible fields, tags, and custom events to record it all.
The Situation: You’re Fairly Happy with Your Existing Tools—But Are You Missing Something?
You feel pretty good about the technology your team has mastered by now.
You know where to find customer data. You have leads flowing from your marketing campaigns into your email marketing platform in an organized way. Everything basically works together.
But you keep hearing about all the new CRM options out there, and you wonder: is there an even greater level of productivity and profitability you could gain if you adopted one?
When Conrad Magalis joined equipment-financing firm Advance Acceptance, he was invited to reconsider everything his department was doing. “I was tasked with revising and reviewing the entire marketing strategy, from sales to digital,” he told me. At the time, the team was using a 2012 version of Act!, a straightforward contact management tool.
Conrad went ahead and demoed the cloud-based CRM options everyone was talking about. But in the end, he said, “I decided that the old system was more than adequate to do the job. Most of the sales team had experience using Act! and I was able to develop additional fields and tags to accommodate an expanding business.”
Furthermore, by not licensing a full-scale CRM, “I’ve saved our company tens of thousands of dollars,” he said. He even found a free plugin to integrate Act! with their email marketing tool.
His advice to other companies facing this question:
“The moral of the story is to document current systems and see if there’s a more sensible and cost-effective solution, to get the same result as a ‘high-end’ cloud service or upgrade. Sometimes, you’ll find that there’s an option right in front of you—if you take the time to look.”
If you like the sales and marketing tools you’re using but wonder if a CRM would help, first make a list of the CRM features your team would actually use. Then, dig a little deeper into your existing email or contact-management software. You may find that those features are already there.
The Situation: You’re Looking for a Magic Marketing Bullet
Max Robinson works for the U.K. ecommerce shop Rugby Store. The business is thriving, but he’s also seen struggles with technology.
“We invested huge amounts in a CRM, and ended up spending more time on the technology than actually trying to make our marketing better,” he recalled.
“The thing that companies need to remember is that a CRM won’t magically make your marketing better—in fact, in many instances it can make your marketing worse because you become lazy, like we did … For many small businesses, especially those who don’t have a firm grasp on their marketing, a CRM can become an unnecessary distraction.”
There’s the rub. Investing in customer-relationship management technology isn’t going to make you smarter about acquiring those customer relationships in the first place. If you’re just trying to get off the ground and grow quickly, focus on tools that serve your larger strategy.
That might or might not include a CRM. And yet every business does need an effective way to keep track of customer info. So how do you know if a CRM will set you up for success or not?
Here are a few common threads.
A Few Signs You Might Want a CRM
Despite some of the CRM horror stories I’ve heard, some businesses really will be better off once they find a CRM that works for them. Specifically, you may want to get serious about looking for a CRM if …
- Your business rests mainly (or entirely) on high-value, one-to-one sales. Does it take dozens of phone calls, personal emails, and meetings to close sales at your company? Are you handling complicated contracts, approval stages, and signoff processes? A CRM can help you keep these intricate client relationships on track.
- You need to manage a large sales staff as well as your contacts. If you need to do things like feed prospects to your sales team, see how often each rep is making calls and sales, and streamline other people-wrangling tasks, a CRM may be your best bet.
- You rely heavily on complex, future-facing reports such as sales forecasts. If you’re managing your contacts within a good automation platform like Drip, you’ll have no trouble determining how much revenue you’re getting from each customer and campaign. But if you need reports that do things like break down revenue by sales rep or analyze your pipeline, you’ll probably want a CRM.
A Few Signs You Might Not Need a CRM
Did you find yourself answering “nope … nah … not really” to the bullets above?
Then you might be able save yourself a chunk of change and get away without a CRM. Especially if:
- The majority of your sales don’t stem from a one-to-one sales process. If people can (and do) buy your products or services directly online, a well-integrated marketing automation platform should be able to manage your contacts’ data for you.
- You have an active digital marketing and lead-gen program. Do plenty of contacts flow your way online? Get them into your automation platform first thing, and then route them from there with automation rules or workflows.
- You don’t have time to feed contact and customer data into a system. Most small, high-growth companies simply move too fast to make time for busywork like entering lots of data into a CRM. If your sales process allows it, an automation-first solution will let you record what you need to know about your leads and customers without blocking off time to update form fields.
Does it sound like the non-CRM approach is best for you?
Then it’s time to map out a contact management plan. Start by asking yourself …
What Are the Features I Really Need for Contact Management?
A great contact management system goes way beyond transferring the information in your card file (or your salesperson’s brain) into the cloud. It helps you see and reach your contacts in ways you never could if you were handling all of their information piece by piece.
If that sounds a little like marketing automation, you’re not wrong. And it’s not uncommon for businesses to go ahead and use their marketing automation platform to manage their contacts, too. Take this finding from our recent Marketing Automation Survey:
When we surveyed more than 500 marketing automation users, one third of them said they used their automation platform for customer relationship management.
Here’s a list of powerful contact management features you can find right inside Drip. Your business may not need each of them, but any level of Drip account will get you access to the full menu (plus, of course, a full-fledged email marketing platform).
1. Complete, Expandable, Flexible Contact Records
You want your contact management system to be able to handle all the information you’re keeping track of now, plus anything you might want to keep track of in the future, with as little data entry as possible.
That’s why an automation platform can be a very smart choice for managing your contacts: it updates contact records automatically anytime new data comes in from your forms, your website, your payment system … and anything else you’ve plugged into it.
And while a Rolodex might run out of space, a digital contact record is infinitely expandable.
For instance, here’s a mere fraction of the tags applied to one very active user’s record in Drip:
With a tag-based system, there’s no limit to the number of ways you can group your contacts automatically.
Of course, you’ll also want to be able to update fields manually, and maybe even jot down notes after a phone or in-person conversation.
You can do those things in Drip, too. In fact, you can create as many custom fields as you need and update them automatically or by hand. There’s also an all-purpose notes field for the miscellaneous details that make certain customers special.
2. Subscriber Merging & Pruning
While it’s fun to see your number of contacts climb and climb, every so often you want to stop and make sure all those people are still valid potential or actual customers.
For one thing, many platforms bill you for the number of contacts you have uploaded, and you don’t want to pay for dead weight.
For another thing, if you’re doing any email marketing, you don’t want inactive subscribers to sink your open and deliverability rates.
Drip has had one built-in tool to help with this for a long time: automated list pruning based on email inactivity.
Now, we’ve just released a new feature to help you manage contacts who are still active, but who’ve given you different email addresses over the months or years. If you find out which record is best, you can collapse the others and delete them from your account completely.
In the dropdown menu next to each subscriber’s email address, you’ll now find a Merge option. Add the email address you want to overwrite to the Secondary field …
… and then review the data for each record.
By default, any unique tags and fields for the secondary record will be transferred to the record you want to keep, while any conflicting ones will be overwritten. But before the merge, you’ll always have a chance to compare both records and make any updates needed to ensure you’re preserving the best data.
This new merge feature is especially helpful for customer support. If someone complains about getting duplicate emails, or not getting important info at the address where they expected it, support staff can simply run a merge and get everything straightened out.
3. Contact Journey Mapping
Imagine you have two leads who have both just requested a demo from you.
One of them has visited your website 20 times in the past two weeks. They’ve attended a sales webinar aimed at a particularly high-spending segment of your audience, subscribed to your blog, and downloaded a couple of your more technically complex white papers.
The other one visited your website for the first time today. They arrived from a landing page offering a 101-level introduction to a basic topic related to your industry. From there, they clicked through to your homepage, then filled out the demo form and left.
When you call to schedule their demos, do you want to talk to each of these leads the same way? Will you plan to supply the same kind of background information and go over the same set of product benefits?
Without a good contact management tool, you’d probably have to—you just wouldn’t have a quick, easy way to assess how each lead has interacted with your company so far.
That’s where Drip’s customer journey timeline comes in. It shows you each contact’s entire history with your company at a glance:
This is automatically updated every time Drip records an action, whether it’s as small as a single pageview or as significant as a major purchase. Sales calls and support chats are much easier when you can see the entire story.
4. Contact Segmentation
While every client or customer may be unique, you probably find it useful to group your contacts in different ways. If you send any communications that go beyond 1:1 emails, you may want to be able to create segments like:
- Customers vs. warm leads vs. prospects
- Clients in different industries
- People who’ve purchased different products
- Customers who’ve purchased at different times
- People in different countries (or just different time zones)
… and more.
If you use Drip, you can identify these segments from your Subscribers tab. In fact, you can set as many criteria as you like, and then save your custom segments for future use. Whether you’re getting a sense of how many people are in different parts of your pipeline or doing targeted email marketing, this function is super useful.
5. Lead Scoring
Which of your leads are most engaged with your company? Which ones are likeliest to buy soon—maybe even today, if you send them an email or give them a call?
CRM platforms—and some revenue-focused contact management tools, like Drip—can point you in the right direction with lead scoring.
You begin by choosing which kinds of actions should add to a prospect’s lead score, such as opening emails, viewing important pages, downloading resources, or any other events you’re tracking.
Once you’ve finalized your scoring system, you can filter your contacts by lead score (and other segmentation criteria) to find the ones who appear to be ready to convert.
As for what happens next, check out our complete guide to lead scoring if you’d like some ideas.
For just one instance, you might want to alert your sales staff when someone crosses the threshold from prospect to lead. A good contact management tool can do that, too, with …
6. Easy Team Access
If more than one person needs access to your contact and customer data, you definitely want to make sure everyone’s looped into your contact management system. You’ll want it to include:
- Notification emails: When someone takes an action that indicates that they’re deciding whether to buy—or maybe that they’re about to request a refund—you want to have the right team member reach out ASAP. In addition to dozens of other automated actions, Drip lets you fire off a custom notification email to anyone you choose with the subscriber data they need to close or save a sale.
- Multiple user logins: CRMs tend to ask you to pay for their product per “seat,” so large teams will pay more than smaller ones. Fair enough, but that can put small businesses in a tough spot. (When you find yourself weighing subscription costs against your staff’s access to data, you know something needs to change.) Fortunately, Drip lets you add multiple users with their own login credentials to your account at no extra charge. And on the flipside, one person can have access to multiple accounts, which is especially helpful if you work with any freelancers or contractors whose other clients use Drip, too.
- Multiple sub-accounts: If you have multiple brands or websites, you can create separate sub-accounts within your main Drip account for free. You’ll just be billed for the combined number of subscribers across your sub-accounts.
7. Conversion & Revenue Reporting
Your contacts produce revenue for your business. But how, exactly? What proportion of them convert at each stage, and how much money is each segment producing?
You shouldn’t have to give up insight into these questions if you decide to go without a CRM. And if you use Drip to manage your contacts, you don’t.
You can track the real dollar values of …
- Individual customers (and their lifetime values)
- Automation workflows (especially useful if you use a marketing-funnel framework to acquire customers)
- Specific email campaigns
- Individual emails
8. Integrations with Your Marketing Stack
Finally, your contact management solution has to integrate with the other key technologies your business uses, or else it’s just a glorified Rolodex.
Depending on how your company obtains and interacts with customers, that could include things like …
- Payment gateways and online shopping carts
- Appointment-booking apps
- Webinar platforms
- Landing-page and lead-gen software
- Your website
- Video hosting platforms
- Chat software
- Online contact forms
- Your own app or members’ community
You want any of these technologies you use to automatically update and segment your contact records for you, so integrations are key. Check out Drip’s long (and growing) list of integrations to see if it might be a good fit for your business’s marketing stack.
Put all these features together, and you get a contact management system that doesn’t require much hands-on management at all.
And that means you can focus on the parts of building and nurturing customer relationships that truly require a personal touch.
Have you tried a CRM for your small business—either successfully or unsuccessfully? Tell us in the comments.