A curly-haired woman sits at a table and types on a laptop. The woman is smiling and wearing a white button-up shirt covered with small bow-shaped designs. The room in the background is white-walled with large windows letting in light from outside.
CRM software can help small businesses automate tasks, increase customer retention, and generate better leads for sales and marketing teams. — Getty Images/Westend61

Marketing, sales, and customer service teams require accurate, up-to-date information for effective interactions with leads and clients. However, updating records is challenging and time-consuming if you rely on manual data entry. Small businesses use CRM systems to simplify workflows, personalize messaging, and improve customer service.

Although many startups begin with a spreadsheet or similar tool, adding a CRM is necessary for growth. Use this guide to learn what a CRM does, why your business needs one, and what you can expect to pay. We also offer tips for picking a platform and using your CRM effectively while comparing features from well-known tools.

What does CRM software do?

A CRM is a central database that records customer and prospect interactions. Depending on its capabilities, a CRM can capture conversations or estimate customer sentiment across phone calls, live chat, texts, social media, and emails. A CRM system also syncs with your business tools, from point-of-sale (POS) systems to e-commerce platforms. It pulls information from all sources into a customer profile, giving small businesses a 360-degree view of their client.

Suppose you own a brick-and-mortar retail store. Your CRM integrates with your POS and cloud-based business phone system. When a customer calls, a pop-up appears on your screen. It displays the client’s last interaction with your business, the total value of their sales, and more. You can view this information before picking up the line.

Likewise, POS integrations help you develop personalized marketing campaigns. You can filter the purchase data to reach customers who haven’t shopped at your store in a while or entice frequent shoppers with deals on their favorite products.

CRM systems help with the following activities:

  • Managing contact data.
  • Forecasting sales.
  • Understanding sales pipelines.
  • Assigning and following up with leads.
  • Segmenting and maintaining email lists.
  • Automating marketing and sales tasks.
  • Scoring leads.
  • Overseeing marketing campaigns.
  • Tracking social media interactions.
  • Storing sales and marketing content.

[Read more: 10 Must-Have CRM Features Small Businesses Should Use]

Why do companies use CRMs?

Businesses benefit across the board from CRM usage, from increased customer satisfaction to higher online sales. Indeed, over 80% of respondents to Salesforce-Forrester’s State Of CRM report said that “their CRM system is instrumental in their organization’s ability to deliver seamless customer experiences.” With free and affordable versions, even the smallest teams can deploy and benefit from a CRM.

CRM software helps small businesses:

  • Generate leads: According to a Zoho survey, CRM use can result in a “300% improvement in lead conversion rates.” Most CRMs have lead management tools for capturing, nurturing, and converting. Lead tracking identifies the person’s stage in the funnel, allowing marketing and sales teams to engage them and follow up with personalized messaging.
  • Save time: Nearly all CRMs automate tasks and processing, such as data entry, call logging, and follow-up messaging. Most support collaboration between departments, meaning less back-and-forth between team members and duplication of effort.
  • Enhance their bottom line: Zoho reported that companies reduced sales and marketing costs by 23% when using a CRM. At the same time, they increased sales. Since you can use a CRM for nearly every stage of the customer lifecycle, achieving high-level and granular goals that improve your bottom line is possible.
  • Increase customer retention: CRMs can integrate with help desk software and business phone systems, allowing you to treat every customer with the utmost care regardless of how busy your team is or how fast your company grows. Zoho found that businesses using a CRM realized a “27% improvement in customer retention."

Small businesses optimize their CRM through proper implementation, training, and policies.

How much does CRM software cost?

CRM pricing ranges from $7 to over $300 per user monthly. According to G2, “the average price per user on a subscription CRM generally ranges anywhere from $30 to $80.” Some sales CRMs use a per-contact pricing model, which usually includes 500 contacts for a base fee.

However, several software providers offer free-forever plans. These solutions are great starting points for small businesses with minimal budgets. G2’s review data found that 55% of CRM buyers realize a return on investment (ROI) in six months or less, and 24.5% see an ROI in seven to 12 months.

[Read more: 12 Common CRM Questions, Answered]

Choosing a CRM for your small business

Do you need a CRM? If so, consider why you want one and how you plan to use it. Involve your team by asking about their biggest pain points and what CRM tools could improve their workflows. Decide which problems a CRM could solve, any essential integrations needed, and your expected budget. Then review CRM features to determine which ones fall on your must-have list.

Other factors to consider include:

  • Ease of use: You don’t want to spend a lot of time onboarding and training your team. Nor should everyday tasks take multiple clicks. Always read user reviews and test software during free trials.
  • AI and automation: Artificial intelligence and automation tools enable small businesses to get more done in less time. Look for CRMs that make your processes faster and more efficient.
  • Mobility: Think about where and how you will use your CRM. For instance, a mobile app could be essential if you have traveling sales reps. However, cloud-based apps may suffice if your staff mainly works in the office or from home.

Tips for making a CRM efficient

There are many advantages to having a CRM. Yet, any database with significant information used by multiple people or departments can quickly become unmanageable. Small businesses optimize their CRM through proper implementation, training, and policies.

The efficient use of a CRM benefits your business in several ways. Almost 60% of respondents to a Salesforce-Forrester survey said, “A more effective CRM system would allow them to have better interactions with customers that improve their satisfaction.” In addition, “50% indicated that a more effective CRM system would allow them to be more productive.”

Use these tips when planning your CRM deployment strategy:

  • Develop CRM goals to track adoption and use.
  • Establish an onboarding program tailored to individual roles.
  • Use screen-sharing tools to create CRM training guides.
  • Provide self-serve training opportunities.
  • Ensure your CRM integrates seamlessly with business software.

Comparing top CRM platforms

Low-cost CRM tools offer different features. Some include automation on base plans, whereas others lock this capability behind more expensive tiers. Likewise, certain platforms focus on CRM marketing with more email and social media features, while sales CRMs prioritize lead and deal management.

Here’s how a few well-known CRM systems compare:

  • SalesForce: Small business solutions from Salesforce offer email tracking, web lead captures, custom reporting, and workflow automation.
  • HubSpot: Use HubSpot’s live chat software, AI email writer, meeting scheduler, and sales activity and performance reports.
  • Freshsales: The Freshsales Suite includes built-in chat, email, and phone services, AI-powered contact scoring, and customizable lifecycle stages.
  • Monday.com: Leverage Monday.com’s CRM automations, lead and deal management templates, and customizable pipelines.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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