New customer relationship management (CRM) tools are constantly being implemented, yet these "innovations" often just complicate the process of converting leads into actual sales. Learn how small and midsize businesses can improve their financial growth and personal connections with leads all at the same time.
Common challenges of CRM for businesses
Small businesses (those that employ fewer than 500 people) make up 99.7% of businesses in the United States. About 50% of small businesses fail in their first four years, their owners facing many challenges that make it difficult to continue operations.
One of the most fundamental hurdles is insufficient cash flow. These small businesses often turn to customer relationship management (CRM) software to earn and sustain a higher return on investment. Rather than being the "relationship builder" that it was originally built to be, CRM is now a bloated catch-all playing servant to too many masters.
The challenges outlined below explain how CRM software can hinder small businesses from achieving financial growth. Then, we'll look at some ways small businesses can make CRMs work better for them.
Challenge 1: CRM 'innovations' that complicate the sales process
When Act! developed the first CRM system in 1986, its purpose was simple: to help salespeople manage relationships with multiple customers, while also building a database of information on potential leads. Despite the many innovations companies claim they have made to CRM software, none of them have actually improved sales or reduced stress for the people using them. So why, with all of the innovation around CRM, is the conversion rate still so low?
Even with the new flashy features built into platforms, they all still have the same basic features of slow operating systems – complicated tools and text-based content – making them confusing and overloaded with information. These new tools have been added not for salespeople, but for their managers. Because reporting on the sales CRM process has taken precedence over actually improving it, CRM software does not offer the simplicity salespeople need.
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Challenge 2: Overcrowded databases
In addition to the convoluted features in CRM software, salespeople are forced to deal with overcrowded databases. Businesses strive to drive sales, so they hire people such as sales development representatives to make sure the right leads end up in a database. The problem with hiring SDRs lies in how many contacts they deem worthy of being in the database.
Salespeople are continually adding new leads to CRM systems, which can be difficult for anyone in sales to deal with. Eventually, all of those prospect leads morph into scores of data fields; reams of tabs, tags and lists; and a blinding assortment of blinking, multicolored sections that demand to be fed new information.
Human brains cannot connect with tens of thousands of leads at a time. According to evolutionary anthropologist Robin Dunbar, the human brain only has the capacity to develop meaningful relationships with 150 people. That being said, human connection and interpersonal communication have a major impact in all facets of life, including sales. With the technologies available today, making those connections is nearly impossible.
A larger database looks great for the marketers charged with generating more leads, but it can be detrimental to the people who are actually using it: the sales department.
Challenge 3: Inability to qualify good leads
In sales, knowing the right people to reach out to and the right time to do it is crucial. With the tools salespeople are using today, it's nearly impossible to know this. Research shows that 80% of sales require five follow-ups after the initial contact, but 44% of salespeople give up after the first attempt.
Salespeople are taught to grow their business by continuously adding new leads. However, they should focus on closing sales with older leads, because those individuals are more likely to follow through with the purchase. Salespeople can't reach them if they are focusing on new contacts they think will lead to more closed deals. CRM software has made salespeople impersonal and stressed as a result of its complicated and ever-changing nature.
Challenge 4: The impersonal nature of software
CRM tools encourage users to manage relationships through software, but that's not how meaningful relationships are built. To boost sales, business owners need to start seeking out tools that take the "R" out of CRM and simply focus on conversion management. Small businesses should not invest time and financial resources into managing a tool that's meant to manage relationships with potential leads; that should be done in an offline human connection. Businesses need tools that will help move existing relationships into closed deals.
What does it take to build a personal connection in a professional setting? Salespeople must start stepping out of their comfort zones and ask questions outside of their usual scripts. It's important to actually listen to your sales leads and ask follow-up questions, to not just talk at them but with them. To break down barriers and increase the likelihood of closing a sale, businesses must be willing to treat leads as people, not just another name in a multilayered database.
Challenge 5: Selecting a system that matches your business's stage of growth
Each CRM program is very different, and some don't offer features that meet your business at its level. If you use a CRM, it's important to find a vendor that has the adequate tools and features your sales and marketing teams need to operate.
"Businesses should consider CRM features they need to effectively fulfill their sales functions, and not immediately opt for the popular software," said Alawna Jamison, founder of KIT Strategies.
If you have a large and fully developed business, you'll need more robust CRM tools to produce the level of work your company needs to manage its customer data. You don't want to use a system that's out of your range, Jamison said, because you may become overwhelmed, which isn't helpful for your team's productivity. You also want to avoid a program that doesn't have enough tools or isn't sophisticated enough to manage your company's customer data, because that will also hinder your production.
Challenge 6: Keeping customer information up to date
A CRM can be a very helpful digital tool, but unfortunately, it won't update your contacts for you. Customer data is constantly changing, and it's up to your sales and marketing team to input contact info like addresses and phone numbers, not to mention more nuanced data like buyers' interests. A campaign is not helpful if your company is relying on outdated information.
Challenge 7: Getting your team to use the CRM
CRM challenges are not limited to technology or functionality issues. Depending on your company's workflow, your sales and marketing teams' buy-in and adoption of the software is hard to guarantee. They may not want to use the new system right away or at all. With a new team, CRM adoption probably won't be as big a challenge, but if you are making the transition with a seasoned staff that's committed to an older or different approach, you might face some pushback.
How to avoid common CRM implementation mistakes
Successful CRM implementation is a tedious task, but it can be a beneficial experience for your team if you choose a CRM application that supports your sales process rather than complicating it, hindering it, or rendering it impersonal. Find a system with social media integrations, as these tools help you understand customer interactions with your brand. The CRM should also integrate with programs your business already uses, allowing your team a smoother workflow. Your sales process may be unique to your team, and your CRM needs may evolve with your business, so you should look for a flexible, customizable system. [To help you in your search, we've reviewed the CRM systems we think are best for small businesses.]
Simone Johnson contributed to the reporting and writing in this article.