What Is a CRM System? A Guide for Small Businesses and Startups

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Building strong customer relationships is critical to the success of small businesses and startups. Whatever your company’s industry or the product or service you offer, you must have a loyal customer base to maintain healthy sales and profit. But how do you effectively manage your customer list, especially when growing it is the name of the game? Customer Relationship Management software helps organisations to efficiently manage interactions with customers, build positive relationships and streamline their business processes. A CRM can enhance customer service, increase sales, boost profits and improve customer loyalty.

In this guide to “What is a CRM system?”, we’ll take a closer look at:

What Does CRM Stand For?

CRM stands for Customer Relationship Management, and it refers to the strategies, processes and technologies that an organisation uses to monitor, manage and analyse customer interactions. “CRM” is often used to refer solely to the software a company chooses to use to support these processes, which will be the focus of this guide.

Graphic with a definition of CRM

How Does a CRM Work?

CRM software digitises processes and improves efficiency by automating selected tasks. Data is collected at each point of contact between the customer and the company and consolidated into customer records. A CRM can collect a wide range of data via contact forms, search engines, emails, phone calls and social media. At the most basic level, customer information such as an email address, telephone number and social media profiles will be collected. The system can also be configured to automatically gather information such as company news or a client’s communication preferences.

The CRM collates this information into customer records, which customer-facing staff can quickly access when a client or customer calls. Marketers can also use the data to analyse the effectiveness of marketing campaigns in generating leads and conversions. Combining a CRM with marketing automation provides a powerful tool for managing the entire sales and marketing funnel.

CRM software has come a long way in recent years and most systems offer far more than a means of collecting and storing basic customer information. Additional features may include call recording, automating workflows, performance tracking, marketing automation, contact centre automation, sales tracking, lead management, analytics and more. Top CRM vendors such as Salesforce, Oracle and SAP now offer AI (Artificial Intelligence) capabilities, and more complex features and functions are being developed all the time.

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What Are the Benefits of Using a CRM?

The benefits of using CRM software are many and varied. They will also depend on your business goals and the software you choose. However, all CRMs offer the following business benefits:

Gain a Better Understanding of Your Customers

CRM software collects data at every point of interaction between a customer or prospect and the company. It’s easy to see an individual’s entire history with the company, from the purchases made to complaints lodged. This is a goldmine of information for marketers and sales agents, who are in an excellent position to deliver a highly personalised service that achieves exceptional levels of customer satisfaction.

Marketers can identify patterns in groups of customers and individual behaviour, allowing them to create personalised marketing content and campaigns. “Personalised” marketing is on the rise, and according to recent research, 72% of consumers will only engage with personalised marketing messages. A CRM provides marketers with the information they need to create such messages as well as the automation to manage its distribution efficiently.

When a customer or prospect calls, sales and customer service agents can quickly access an overview of the individual’s previous interactions with the company, allowing them to respond immediately to their needs and concerns. An agent can pre-empt questions or complaints and quickly identify opportunities for upselling or cross-selling, resulting in satisfied customers and a healthy bottom line.

Provide a Consistently High Standard of Customer Service

A CRM provides customer-facing staff with all of the information they need to resolve a caller’s needs quickly and efficiently. One of the most common customer service complaints is experiencing multiple transfers and being asked to repeat their needs time and again. When a call comes in, any agent in the organisation who has been granted access to the CRM can pull up the customer record, review previous interactions and promptly identify a solution. If the solution is not obvious, a CRM makes it easy for the sales or customer service agent to contact colleagues for support via internal social platforms to locate help information in the company’s customer portal. Because data such as emails and phone call details are automatically stored in one place, it can be easily accessed by staff members within and across teams. Customers are not reliant on one sole point of contact. If a customer is allocated to a particular member of staff, it’s easy for colleagues to take over should that person be unavailable — without the tiresome back and forth (for both parties) that often accompanies a handover.

Delivering a consistently high standard of customer service is crucial for business success. Happy customers will enhance the reputation of a business, increase the number of new customers via word of mouth and reduce churn rate — the number of lost customers during a given period. According to research by Salesforce, CRM software can improve customer retention by as much as 27%.

Automate Everyday Tasks

Automation is one of the biggest benefits of CRM. It can streamline business processes, increase efficiencies, reduce errors and allow employees to focus on more complex tasks. “Automation” is a means of using technology to perform tasks previously undertaken by humans. A business may employ CRM automation, which generally relates to sales processes, marketing automation or both.

With CRM automation, the system can take care of the administrative elements of the sales process. Sales agents can focus their efforts on tasks that require human interaction or expertise — such as addressing any pain points and objections or securing the sale! — and leave the CRM to manage necessary but time-consuming everyday tasks such as sending out forms, distributing reports and ensuring that certain legal boxes are checked.

By integrating a CRM with marketing automation, a business can deliver highly personalised campaigns by targeting specific customer groups based on the detailed information collected by the CRM. Now that these leads are segmented into more appropriate groups, you can nurture them more effectively. Because all teams have access to the same data, marketing automation also facilitates collaborative working between sales and marketing departments.

Better Reporting and Business Planning

CRM systems store all customer information in one location, which makes it easier for personnel across an organisation to analyse data concerning the business as a whole. There is a reduced chance of finding gaps in information, making miscalculations or identifying overlaps in reporting. Most CRMs are compatible with a range of plugins and tools that can be used to generate automatic reports, saving a significant amount of time. By personalising the CRM dashboard, a user can create an at-a-glance view of headline statistics and set up reporting that contains only relevant and useful information for them.

Access to better data, analysis and reporting enables staff to make more informed decisions and provide business leaders with the necessary insight to plan effectively for the future.

What Are The Disadvantages of Using a CRM?

Introducing any new system to an organisation will present challenges. A business should plan to address the following potential issues when implementing a CRM for the first time.


There are countless CRM providers and costs vary significantly. When choosing CRM software, a business must consider the total cost of implementing the new system. This will include not only the fees for purchasing the software and any ongoing subscription costs but also customisation options, add-on features, additional user fees, hardware or software requirements, technical support and training for staff. There may also be some periods of disruption and downtime when staff are unable to perform allocated tasks and contact with customers is limited.

Implementation Issues

Implementing a CRM will affect an entire business. By its very nature, it will need to be integrated across multiple departments. This is likely to bring with with it the challenges inherent in introducing any new system to the workplace.

People are often resistant to change and feel intimidated by the prospect of new technology, either because they fear it will be difficult to use or they believe their existing methods of working are more than adequate for them. There may also be technical issues that arise in terms of compatibility with existing hardware and software. The management team will need to balance the needs of the business and its customers with the necessity of giving staff time to learn how to use the new system. Successful implementation of a new system requires efficient communication, buy-in at all levels and strong leadership.

Loss of Control over Data

Many CRM providers store customer records on their own servers or remotely; the company using the software does not store and, therefore, cannot control the data. This can cause problems if the CRM provider experiences technical issues or an outage and the company loses access to essential customer records. Companies that experience a permanent loss of records could suffer major damage to their brand, lose customers and see their revenue drop by thousands.

Can a CRM Improve Customer Relationships?

With improvements in technology and more choice of services and products than ever before, consumers have become increasingly demanding when it comes to their experience with brands. Companies must build positive relationships with customers to maintain their brand reputation and ensure a loyal customer base. Recent research has found that 86% of buyers are willing to pay more for great customer experience, at the heart of which are positive customer relationships. According to a study by Walker, customer experience will be the key brand differentiator by the end of 2020 ahead of price and product. But what role can a CRM play in improving customer relationships and experiences?

Communication is key to positive relationships, and a CRM provides businesses with all the information they need to keep in touch with customers. This data can be used to set up an automated flow of company updates, special offers and other news that is relevant to the customer based on their history of interactions with the business. Remember personalised marketing? This is where it really comes into play. A customer may have expressed a preference for receiving emails over SMS messages or they may have stated that they only wish to receive a certain type of marketing communication. More than this, they may have opted in to get insights into a particular topic regarding your business, such as employee retention or Key Performance Indicators (KPIs) for an HR business, or designing an office or home interior design for an interior design firm. A CRM system can segment customers according to their preferences and previous interactions, allowing a business to carefully select the best marketing message for each person in the system.

CRM software enables call agents to personalise the service they offer, which facilitates the development of great relationships. The CRM records every interaction a customer has with the company, including every email they’ve opened and link they’ve clicked, providing sales and customer service agents with a wealth of data they can use to build customer relationships. When a customer is referred to by their name or preferred term of address, they will feel more connected to the company. You can even add notes to a customer file to help agents personalise interactions. For example, “Mrs Smith’s cat died recently and she is very upset” or “Mrs Smith dislikes being referred to by her first name”. These small and seemingly insignificant pieces of information can enable agents to deliver the highly personalised service customers enjoy and have come to expect.

A satisfied customer is a happy customer. CRM software makes it easier for sales and customer service agents to quickly resolve any issues and give the customer exactly what they want. An agent can see at-a-glance the purchase history of the customer, enabling them to swiftly arrange repeat purchases, suggest appropriate products or provide details of relevant promotions. Problems and complaints can be identified almost before they occur and quickly resolved. Customers who are satisfied with the service they receive have a positive relationship with the company and will remain loyal.

Are CRMs Only for Big Businesses?

CRM software can help businesses of any size to track customer interactions, manage sales and marketing funnels, increase sales and enhance the customer experience. Knowing and understanding customers benefits small, medium and large enterprises. Any B2B business that has the budget for a CRM will find it a worthy investment.

Even startups with a small client base will benefit from using a CRM. If you’re tracking your client base with an ever-growing spreadsheet and forever cross-referencing customer data with past orders and email communications, you’re needlessly investing countless hours that could be spent pitching to new clients, gaining additional funding or investing in Search Engine Optimisation (SEO) to grow your business.

Although CRMs were traditionally designed for B2B companies, there are now solutions on the market for B2C businesses too, allowing you to easily keep track of your growing customer base and effectively market-relevant promotions to them.

How to Choose a CRM

A CRM requires a significant investment of time and money, so it’s important to choose the most suitable software for your business. With so many different vendors and systems on the market, how do you decide which one is right for you?

  • Consider your primary business goals and objectives. What aspects of the business are you hoping to improve with a CRM? What features and functionality do you need?
  • Review your business’s finances and set a realistic budget for all costs involved in implementing a new CRM system (software, subscription, training, etc.).
  • Calculate how many members of staff will need to access the system. Many CRM subscriptions are priced based on the number of users.
  • Conduct an audit of existing software and hardware. Will you need to purchase additional items? Will the CRM integrate with your existing systems?
  • Choose between cloud-based or on-premise solutions. Cloud-based systems require no hardware or major setup but are vulnerable to internet failures. Other solutions provide direct access to the information stored on your server, as you own the software and it is hosted on-premises, but setup costs are higher and you will be responsible for the ongoing maintenance of the system.
  • Arrange a demo of various options and take advantage of free trials. Shop around and try out a few different CRMs. A system may sound great on paper but in reality, you may find the interface is clunky and doesn’t suit the needs of your business. Try out the features that are most important to your business and see if they do what you need them to. You may be tempted to opt for a CRM that has all the bells and whistles, but if you won’t use half its features, it’ll be difficult to justify the high price point, and a cost-effective solution might be more appropriate.
  • Choose a vendor that has experience working with businesses in your industry. If other companies in your sector are using the system, this could indicate that it is an appropriate choice. Equally, the company will have relevant expertise to support the effective implementation of the system in your business.
  • Consider the level of support and training you require. If you’re lacking an army of IT whizzes in your company, you should check what training and support are available from the vendor and how much they charge for this service. Having a fantastic CRM that nobody knows how to use or troubleshoot is a waste of time and money.
  • Ensure there is scope for growth and customisation. Are there options to upgrade to a higher number of users and advanced functionalities? A CRM is a considerable investment, so you want to make sure it will be a useful tool for your business now and the years to come. Is the software customisable? Can you scale the service as the business grows? If you don’t check off this crucial box, you may find yourself looking for a new solution in a few year’s time — and facing even more resistance from employees who have to learn how to use yet another piece of software.
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What Is the Best CRM Software for Small Businesses and Startups?

For small businesses and startups, the most important CRM features are the fundamentals — contact management, customer segmentation and reporting. The most expensive CRM software provides advanced functionality that a startup can survive without initially (and you can always upgrade as your business grows).

We’ve identified our top three options for small businesses seeking a budget-friendly and easy-to-learn system that integrates well with other tools. We’ve also considered the level of customer support, which may be important to small companies without in-house IT expertise.

1. Zoho

The free version of this software allows new businesses to get a feel for what a CRM can do without having to make a financial commitment. This can help startups to identify the functionalities they need, and it’s easy to scale up when you need to. There are three price plans, starting from as little as $12 per user per month. This “Standard” plan includes scoring rules, email insights, workflow conversion, web forms and the ability to store up to 100,000 records. Although many of the advanced features are only available with higher-cost plans, Zoho offers startups an affordable way to dip their toes in the CRM waters.

2. Hubspot

Hubspot is, to many businesses, the holy grail of CRMs. The paid-for version is a huge system that offers extensive features and a high level of customisation. However, Hubspot also offers an entirely free version that provides a good level of functionality for small businesses. You can track company activities, create contact and company profiles and assign sales deals to agents. The user-friendly dashboard makes it easy for all team members to access and manage all the data collected. Hubspot offers a wide range of integrations too, so there’s a good chance it will be compatible with your existing tools and those you might choose to use in the future.

3. Insightly

This is a popular choice for startups as it’s easy to use right out of the box. However, it’s not a free option — prices start from $29 per user per month. For a CRM at the lower end of the price scale, it offers a good level of customisation and integration. It also has the bonus of project management features. There are no custom reports, but for startups and small businesses just getting started with CRMs, Insightly is a great, user-friendly option.

There are hundreds of CRM systems available. Each one has something different to offer. Use free demos and trials to find the best CRM for your business and make sure it’s a system that can scale as your business does.

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