What does a CRM stand for?
‘CRM’ stands for Customer Relationship Management. It is a cloud-based software that manages relationships between subscribers, leads, prospects, and customers. Ultimately, a CRM is a tool for your marketing, sales, and customer success departments.
Why would I need a CRM?
If you’re a small company with only 1 customer/client and no desire to grow your company… you don’t need one. If you want to grow your company (as I hope you do), CRMs are the ‘Road to Scale’.
CRMs help you collect and organize data about your relationships. This data can then be presented as a dashboard or report that gives you valuable insight to the operations and traction of your business.
How do CRMs help companies scale?
CRMs don’t magically grow your business (you have to do that yourself). People consider CRMs the ‘Road to Scale’ because they help people juggle many conversations. Your CRM stores data about leads, contacts, and customers so you know if a contact opens an email, clicks a link, or submits a form.
What size should my company be before I buy a CRM?
CRMs can be implemented at any stage of the business lifecycle, but the sooner the better. With that being said, you need to know and understand that a CRM is not a ‘nice to have’ app. They’re machines that require regular maintenance, care, and configuration. If your goal is to only have a small number of local customers, adopting a CRM might not be a top-priority project. However, if you want to grow your beyond a million dollars, then you will absolutely need a CRM.
If you’re looking for something free to get started, I highly recommend Hubspot’s free CRM.
How exactly are CRMs used?
To answer this, let’s look at a scenario.
Jerry wants to acquire his first 10 clients from North America this month. He begins by running an advertisement to 25,000 people (known as ‘reach’). Out of 25,000 people, only 1,000 people submit a form (and become a ‘lead’ in the CRM). From the 1,000 leads, 100 have show signals of becoming a customer (‘Marketing Qualified Lead’). His sales team swoops in to intercept the 100 MQLs. Out of the 100 MQLs, 20 become ‘sales deals’ (meaning reaching a proposal is foreseen). From these 20 sales deals, 10 become clients.
Some light definitions from the scenario above:
- Reach: Number of people that a digital advertisement was displayed to (not clicked).
- Leads: People who submit a form on your website and become contacts inside your CRM.
- Marketing Qualified Leads: People who have shown signs of becoming a customer.
- Sales Deals: MQLs that have directly expressed interest in purchasing your product or service (moving further down the funnel towards a proposal).
As you can imagine, working and managing relationships with 1,000 people (the leads) is very hard. That’s why Jerry would use the CRM to help work his marketing and sales departments. The CRM would grant insight on each contact and help Jerry provide more value for his contacts.
From this example, you can see that CRMs aren’t one-shot-apps that magically grow your company. They are a system to manage the day-to-day operations for the marketing, sales, and customer success departments. If you still haven’t grasped the concept of a CRM, here’s a short explainer video from a company called Comelite Design Studio: