Customer: Hello, this is Jon Clarke. I was referred to you by James Johnson. He had you guys design him a Website for a great price and I'd like the same package.

You: I'm sorry, I don't remember a James Johnson. Do you remember the URL of the site so I can try and figure out what you're looking for?

What’s wrong with this picture? Obviously we’ve failed to connect meaningfully with the person who’s called our business for Web design services. But more than that, we’ve revealed a disturbing lack of professionalism -- we don't even know our previous clients!

Ok, this may be a bit of an extreme example, however, as our businesses progress we’ll need to deal with more and more clients who have an ever-growing variety of needs and questions. How can we manage these clients in a simple and cost-effective manner, so that when we need information, like details of previous client sites we’ve built, we have that information at our fingertips?

The answer is: through Customer Relations Management, or CRM. If we:

• buy dedicated CRM software,
• buy other packages which have strongly integrated CRM solutions or
• develop our own CRM systems through one of many paths,

we can ensure that the above horror story never happens to us.

In this article we’ll:

1. cover what a CRM system needs to do,
   
2. look at several CRM solutions that are either dedicated to the customer and contact management task, or have these tools and functions built in, and
   
3. look at several ways we can build our own CRM systems in-house, if we so desire.

At the end of this article, I want you to have a firm grasp of why you should have a CRM system in place, the essentials of CRM, and several solutions.

What is Customer Relations Management?

Alternately called Contact Relations Management, CRM is software or systems that allow you to simply and effectively gather as close to a 360 degree view of a single customer as you possibly can. CRM should allow you to track such aspects of the relationship as:

• all contacts with the customer,
• all sales and the status of each payment,
• any preferred status the customer may have, as well as
• any leads or sales this one client may have generated.

The Essentials of Customer Relations

Before we get into the various solutions, and how you can develop your own CRM system, we need to explore the basics of what such a system should do, otherwise we'll get caught up in features that sound cool but we don't need, or -- worse -- forget what we needed in the first place.

As we mentioned before, at the very least, a CRM system should track customer contacts, track sales and the status of each payment, and track incoming and outgoing referrals. Ideally it would also allow you to gauge customer satisfaction, and determine what types of offerings might interest a single customer in the future, however, these are more ‘perks’ than they are essential.

Track Customer Contacts

By far the most common reason why companies buy or develop CRM systems is that they provide the business with the ability to know the customer's details (like address, phone number, email address, etc.). It becomes nearly impossible to get in contact with a client when this information is littered across various files and post-its throughout your life. A CRM system will help you get organized.

Track Sales

The simple task of knowing what you've sold a customer, and where the progress of each sale is at, will pay for the cost of a CRM system ten times over. If you have, in the past, designed business cards for a customer, and you know that they’ve recently moved, you have the two keys to a sale: relationship and information. This single aspect of a good CRM system will generate information, and allow you to make intelligent decisions which would be impossible otherwise.

Track Payment Status

This may seem like a rather unexciting task, but as your client base grows -- and it will! -- the ability to know at the drop of a hat whether someone owes you money is essential.

There’s the classic story of a client who calls a music company to get a piano tuned. The music company pulls up the client's record, which shows that payment hadn't been received for a tuning job that was completed 2 years ago. The client promptly pays both the previous and upcoming bills. Granted, it would have been smart for the music company to run a database query to display all past-due payments, but at least the payment was received: due to a successful CRM system.

Track Referrals

Granted not every company has pay-back schemes in place that encourage clients to refer others by crediting them a “referral bonus”, however it is still extremely useful to know who sends you clients and who doesn't. The ability of a CRM system to tell you either on a customer-specific level or in a Referral Report who is performing in this capacity will generate more lead sales than you’d think.

Allow Customer-Specific Notes

The ability to add quick notes to a customer's account is invaluable. This isn't an essential part of CRM, but it will save you a lot of heartache and pain. Simple things like "secretary's name is Judith, remember her son is in hospital" will generate brownie points, but also make you feel secure in your relationships with your customers.

If you ensure that any CRM system you buy or build has these key features, you’ll allow yourself the freedom to grow and expand into even greater and more exciting customer service arenas. After all, if your company isn't evolving, it's going to find itself as an archeological relic in just a few short years.