Customer Relationship Management

Customer relationship management, as mentioned in Chapter 2 “Your Business Idea: The

Quest for Value”, refers to “a customer service approach that focuses on building long-term and

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sustainable customer relationships that add value for the customer and the company.” [6] Some

small businesses may wonder whether they really need the added complexity of a small business

CRM solution. The answer will depend to a large extent on the size of the business and its

growth objectives. However, it has been observed that there is no small business out there that,

“sometimes in spite of themselves, didn’t benefit from implementing a…CRM or its watered

down equivalent—a simpler Contact Management software solution.” [7] Recent studies have

revealed that CRM applications account for the following: [8]

• Revenue increases of up to 41 percent per salesperson

• Decreased sales cycles of over 24 percent

• Lead conversion rate improvements of over 300 percent

• Customer retention improvements of 27 percent

• Decreased sales and marketing costs of 23 percent

• Improved profit margins of over 2 percent

It has also been noted that companies can boost their profits by almost 100 percent by retaining

just 5 percent of their customers. [9] What does this mean for the small business that chooses to

go with a CRM solution? As long as the solution is well implemented and actually used, there

should be an immediate payoff and productivity improvement throughout the company.

Additionally, choosing to engage in e-commerce makes the selection of a CRM solution even

more important because the quality of customer relationships is so important to online success.

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