All good businesses are customer-driven, but newer businesses tend to make a common mistake: They invest more in what they sell than they do in the process of sales and service. With small business CRM systems more accessible than ever, this is due for a change. For some companies, it might be the key to survival.

Naturally, most start-ups are run on a tight budget. However, without some willingness to invest in the business, the company will wither and die. The key is choosing to spend on things that will have a high return on investment (ROI). CRM applications are a good example of investments that can pay off generously for an organization.

Five Ways to Enhance ROI with CRM Applications

Here are five examples of how CRM software can be used to enhance an organizations ROI:

1. Individual Sales Representative Productivity: Since a new companys sales force is likely to be small at first, a good place to start is by focusing on individual sales representative productivity. CRM applications can help a company formulate activity and effectiveness standards, and measure each representatives progress relative to those standards.
2. Overall Sales Force Productivity: Beyond addressing sales representatives individually, CRM software can also be used to promote training standards and sales aids across a businesss entire sales force. This approach can share the practices of top sales people with less effective ones. Not everyone can be a top sales representative, but pulling the production of the bottom half of the sales force up closer to average can go along way toward improving overall productivity--not to mention improving sales.
3. Formalizing Sales as a Process: According to one estimate, effective management of business processes can cut costs by as much as 20 percent in a single year. For sales organizations, CRM systems provide the data necessary to properly manage the sales process, including monitoring territory penetration and coordinating sales with other marketing activities.
4. Cross-Selling: Cross-selling is one of the most cost-effective opportunities for a new business. In fact, it can turn service calls from a cost of doing business into a new revenue opportunity. CRM applications help representatives track customer buying history. This allows businesses to see which products may be due for upgrade or renewal, and which complementary products may be suggested
5. Referrals: Referrals can be seen as an extension of cross-selling, only they are even more powerful because they expand the customer base. Customer buying activity and customer satisfaction data are good indicators of which customers are likely sources of referrals.

Squeezing Down the Costs of Small Business CRM

Even with the promise of a strong ROI, a small business may be constrained in what it can spend on a CRM system in the early days. Its still wise to get started with compiling and systematically using customer information, and this is possible even while squeezing down the costs of small business CRM systems.

Hosted systems should be explored, since they often require less infrastructure and support to get started. Small companies should also focus on solutions that can be scaled up flexibly, so they can grow without incurring the expense of that growth up front. Finally, choosing systems with standard features that are a good match with the businesss needs allows the company to operate without the time and expense of crafting customized solutions.

Sources

Forbes

Gartner

Salesmanagement.org (PDF)