Customer Relationship Management (CRM) software for small and medium businesses (SMBs) is generating a lot of buzz these days. Niche vendors such as ACT! and SalesForce.Com as well as big boys like Oracle and Microsoft are busy rolling out CRM applications for SMBs. If you read trade journals, it is easy to get an impression that doing business without CRM software is absurd, if not impossible. Is it a myth or is it the reality?

To answer the question, let us begin with what CRM really is. CRM is a strategy to learn more about the customer’s requirements so as to serve them better. The strategy is implemented by collecting interrelated bits of information about customers and their needs. The information is analyzed to provide better customer service, and, hopefully, to generate additional sales. CRM software provides the repository for this information, and a front-end application to access it.

If you call a credit card company, for example, the representative has access to a record of all your interaction with the company as well as your payment history and buying patterns. The representatives can provide faster, more efficient service because they have all that information handy. Based on your spending pattern, they may also offer you additional services such as credit insurance and automobile club memberships, while you are on the line. That’s CRM in a nutshell.

Every business has customers. Every business also has some repository for customer information. For small businesses, the repository may be an Excel spreadsheet, Outlook’s Contacts folder, or even handwritten entries in a notebook. How should a business decide whether its current repository is good enough or whether it needs full-fledged CRM software?

Some people argue that CRM is strictly a big-business strategy. The likes of the credit card company, in their opinion, need a CRM system because they are so big. You are not likely to speak to the same representative every time. A given representative probably deals with thousands of customers. He is unlikely to know you personally or remember you by name. And if he doesn’t know you, it follows that he can’t decide what to sell you. So the company needs a CRM system that will give him an instant synopsis of your dealings with the company and help him get more business from you. Small businesses, on the other hand, have fewer customers and tend know them personally. Small-business owners are often on first name basis with their customers. Therefore, in the opinion of CRM-is-for-big-business-only theorists, a CRM system is little more than additional work for the already overworked small-business owners.

People in the CRM-is-for-everyone camp believe that CRM is simply a business process. They argue that suitability of CRM strategy is independent of the size of the business. Even if a business is small, they say, it still needs to capture and process customer-related information to provide better customer service and improve the bottom line. Why keep this information in the owner’s head when it can be formally recorded by CRM software?

Because both the arguments hold water, it will make more sense for a small business to consider its own requirements and business model in deciding whether it needs CRM software than to subscribe blindly to either theory. Here are some indicators that CRM software will make sense for your business:

1. You sell a broad range of products and services that are related to each other


2. Your products have short to medium life cycles and customers come back to you to replace them


3. You have multiple retail locations and a customer is likely to visit any of them


4. You have multiple sales-people and service personnel who need to share customer information


5. You sell your goods by various methods: on-line, over the phone, by mail, or in-store


6. You are losing customers to competitors

Here are some indicators that your business DOES NOT needs CRM software:

1. You sell few products or services


2. Your products are long lasting, big ticket items


3. You have a one person operation


4. You don’t have to spend a lot of effort on finding customers, they come to you by referral or word-of-mouth publicity


5. Your mostly deal with a customer only once or twice

Although these indicators belong largely to this-is-just-common-sense category, few people think of them. Many start off backwards by trying to zoom in on CRM software first, simply because CRM seems to be the fashionable thing to do.

Of course, most businesses fall somewhere in-between and making a decision is not always easy. But if you decide that CRM makes sense for your business, you should try out a couple of free online services to get a feel for CRM software:

1. SalesForce.com – These folks practically invented e-CRM. They offer a free account for a single person. It has full functionality of the paid version and it is has n advertisements. The account has a storage limit of 5 Megabytes, but it is ample for a one-person account. It even comes with an Outlook add on that lets you synchronize your SalesForce.com information with your Outlook data. You can sign-up here ( http://www.salesforce.com/products/personal.jsp ). 


2. FreeCRM.com – This service allows unlimited users in free accounts, but it is ad-supported. You can sign up here ( http://www.freecrm.com ).

CRM is not for everyone. Using CRM software, whether on-line or desktop, is the easy part. The real challenge is in deciding whether you need CRM at all.