Why Startups Should Use CRM?

Reading Time: 6 minutes
Reading Time: 6 minutes

In general terms, Customer Relationship Management (CRM) is a function that pertains to every aspect of communication related to customers. A CRM strategy can help organizations understand their customers better to meet their demands, and in turn, boost the bottom line.

As per definition, CRM refers to practices, strategies and technologies that companies use to manage and analyse customer interactions and data throughout the customer lifecycle, with the goal of improving business relationships with customers, assisting in customer retention and driving sales growth.

The right CRM software can enable organizations to automate all customer databases and interactions, and consolidate them on a single platform to make it more manageable and analytical.

Benefits of CRM Software for Small Businesses and Startups

Unlike the common notion that CRM software is only beneficial for large enterprises, actually crm for startups and small businesses can implement it to sell their products and services effectively. These days, the availability of simple CRM tools for small businesses makes it easier for businesses of every size and nature to manage their customer relationships. In fact, according to a report, 91% of companies with more than 11 employees are already using CRM software.

The following merits of CRM will convince any startup owner who still wondering ‘why do I need CRM?

    • Organized information

When there is a steady influx of data from scattered sources, it can difficult to manage and analyse information in a spreadsheet. CRM helps to compile, store, automate and study information, and present it in chronological order through various single screen dashboards and reports to gain meaningful insights.

    • Unified and collaborative interface

Customers are contacted at different points of time by various teams – sales, marketing or customer relationship. Often, the communication at each touch point gets lost and the other team doesn’t know about the latest update on customers. CRM software can plug these loopholes and unify the contact management (emails, calls, campaigns, demos, meetings) across all functions without remaining person dependent. This way, lead/prospect and opportunity management becomes easier, resulting in a short sales cycle, improved win rates and enhanced customer satisfaction.

    • Scalability

Every business is launched to sustain in the long-term. May be, in the short-term, CRM may not look a good investment, but as the business grows, the number of customers increase and scalability may become a concern. Some of the best CRM for startups can store a high volume of contacts, generate multiple quotes/invoices and track the entire customer journey at a few clicks.

    • Customer retention

With streamlined information, organizations can not only record prospect progress or close deals faster, but also offer create customized responses and experiences. Sales reps can identify buying patterns of customers, classify them into segments and make personalized recommendations (for example, through targeted email campaigns) to nurture them and source repeat business. Hence, CRM for startups is quite a useful tool for customer retention.

    • Improved ROI

Businesses are driven by ROI and it’s apparent that CRM effectiveness is also measured in the same terms. While, calculating returns on CRM is tricky, various studies indicate towards favourable ROI. For instance, according to Nucleus Research, CRM yields $8.71 for every dollar spent. Then, there was a Forrester case study of Microsoft Dynamics CRM, which revealed that:

        • 50% of teams improved productivity.
        • Sales productivity and uplift was 5%.
        • Consultation time was reduced by 10%.
        • Revenue increased by 2%.
        • Customer service labor cost was reduced by 40%.
        • Labor costs overall decreased by 20%.
        • Marketing budgets saved at least $75,000.
  • Types of CRM Tools


Types of CRM Tools

There are two types of CRM tools that startups can consider buying:

    • On-premise CRM

It is the conventional system where CRM is implemented at the organization’s premises. The responsibility of control, security, administration, upgrades and maintenance lies solely on the organization’s in-house IT team.

    • Cloud-based CRM

It is also known as SaaS or on-demand CRM, is hosted on an external, remote network (internet). The users can access it 24/7 from anywhere, from any of their devices as long as there is internet availability. It can be implemented with the help of a third-party vendor who takes care of everything, right from installation to maintenance.

Both have their own pros and cons (as depicted below). However, over the years, cloud CRM has taken over on-premise over the years among enterprises of all sizes, specifically due to its ease to use and cost-efficiency. In 2008, 88% CRMs were operated on-premises whereas today, 87% of CRMs are cloud-powered.

On-premise CRM SaaS CRM
Normally involves big fund investment Inexpensive compared to on-premise CRM
You would need to purchase the package from its manufacturer at one time cost Expenses involve subscription, maintenance and customization
Installed in client’s system Hosted in a cloud with cloud service provider and available to its clients through internet
Takes time to fully integrate the CRM to client’s business environment Often preferred for easy deployment
Its performance depends largely upon the expertise of the IT staff of the company Does not need the service of in-house IT staff and thus, reduces your IT budget
Functionality doesn’t depend on the internet connectivity of the company Depends on internet connection but has less downtime complains
Installed to a fixed destination Can be accessed from anywhere since hosted in a cloud
Customization can be done to meet client’s requirements The SaaS CRM provider often allows the clients to customize the CRM with custom fields
It’s a better choice for more complex business needs More suitable for businesses with limited technological expertise.
Big enterprises with established IT infrastructure are often the appropriate client for on-premise CRMs Often a preferred solution for small and medium size businesses (SMBs)
You’ll need to maintain an internal server to host the CRM Often the hosting facility is offered by the SaaS service provider
Need to maintain a set-up to ensure data security and data recovery Data security services are also offered by the hosting service provider and thus, lowers your expenses further


  • Checklist for Buying CRM Software

Checklist for Buying CRM SoftwareCRM for startups should be low cost, given their budget constraints. However, it is also equally important to ensure the availability of the following features before buying CRM:

    • Automation & reporting

These two are the core functionalities of any CRM software. It should be able to automate all those aspects of sales, marketing and other business processes that are crucial to customer communication. For example, it should automatically schedule follow-up reminders or send follow-up mails. At the same, time it should also enable to analyse the existing data and present the insights into real-time methodical reports.

    • Ease of Use and Integration

It has been found that 72% users would trade functionality for a CRM that’s just easier to use! If the software is challenging to understand and use, the CRM adoption rate will not be as per the expectations. A good CRM should have clean and simple user interface so that users don’t feel frustrated. CRM implementation should not require complex configurability or replacement of existing business systems and applications. A good CRM is one which integrates efficiently within the current framework without much ado.

    • Scalability

A good CRM should be flexible and capable of adapting to a startup’s evolving needs on a continuous basis. It should grow as the startup grows. Switching CRM for startups is best solutions every two or three years is not a viable option.

    • Reliable Security & Recovery

CRM is after all a technological tool, and prone to failures. But, the right CRM software can not only safeguard organizations againsu&r.ch as cyber attacks and theft/loss of data, but also salvage information by deploying adequate recovery mechanisms

    • Customization

Choose the CRM software which is tailored to the specific requirements of the business and incorporates features that can deliver the most fruitful results. For instance, CRM for QuickBooks should be able to offer any degree of customization, depending on the nature of business.

    • Remote and Mobile Access

With startups crossing geographical boundaries and recruiting remote/virtual workforce, they need CRM which can overcome the physical limitations. A SaaS-based CRM would fit the bill perfectly by giving round-the-clock access to users from any location and on any mobile handset. A study by Nucleus Research has revealed that mobile access to CRM increases salesforce productivity by an average of 14.6%. Also, the organizations which use mobile CRM have a much higher percentage of achieving their sales quotas.

    • Training

The users of CRM need to be trained in using it the right way, whether it is the first-time installation or upgrades. If the CRM vendor doesn’t offer training component, it is advisable to explore other options.
CRM for startups can be a game-changing tool . It can ingeniously streamline all internal and external customer communication, and empower businesses to focus on the most important aspects of businesses.

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