Startups Need a CRM Sooner Than They Think
Few startups at the time of raising their angel round use Customer Relationship Management (CRM) systems. As a startup founder, you might use a spreadsheet or keep track in a notebook. That is a mistake. You would be wise to develop the habit of using a CRM tool from the time of the first customer contact.
Here are ten reasons why you need to use a CRM sooner than you think.
Keep a thorough history of contacts. Startups will reach out to a prospect many times and in a variety of ways on the path to making a sale. If you use a CRM system properly you will have a record of these contacts in a way you can check the history quickly. You will never have to ask yourselves: What version of the deck did we last send them? What was the name of that other person who joined the call a month ago? What pricing did we discuss with this prospect?
Avoid the big conversion later. Some founders know they will eventually have to use a CRM tool, but figure they can convert later. It turns out that is more difficult to do. Founders are even busier “later” and cannot afford to put the time into it. Some of the data does not map easily into the CRM. And it can take much time retyping notes to improve the records.
Ensure to follow up on hot leads. It costs a lot of money to generate leads and move prospects through the sales pipeline. It is a terrible waste to get those leads or interested prospects, then fail to take action. With a CRM system it is easy to see at a glance which new leads still need a follow-up. Otherwise someone may have clicked the “I want to talk” button on your website, never got a reply, and has called your competitor instead.
Apply the right treatment to the right prospects. A CRM system helps direct the right course of action for each group, without your having to put much thought into it. A prospect who downloaded your whitepaper needs different treatment than one who asked for a price quote. Similarly, a prospect who clicked on the last email marketing campaign to watch your video has shown a greater level of interest than someone who didn’t even open the email, and thus deserves a different type of follow-up. CRM systems enable users to track which prospects are at which stages of the sales process, and direct the actions accordingly.
Appear more informed to prospects. When you capture notes during a sales call and review them in preparation for the next call, you will appear more informed and interested in the client. This pertains to notes about their interest in the product, as well as about anything else the prospect shares with you. On the last call the prospect may have said she was looking forward to a vacation. Take note of that and ask about it on the following call. It works wonders to break the ice.
Measure your sales productivity. Most CRM systems make it easier to track what percent of qualified leads convert to customers and how long the sales process takes. Knowing these statistics will help you forecast future revenues, know how many new leads you need per month, test which programs are working best, and support more informed discussions with investors.
Track your objections. It is a reality that salespeople hear a lot of “nos” until they get to a “yes”. With a CRM system you can easily set up reason codes for why prospects turned you down, then analyze those to look for patterns that will help you either direct your effort at different segments or change your messaging.
Keep on track with ticklers. Few of us like to do cold calling. Consider instead that at the start of the day your CRM system sends you alerts with messages such as “Sally showed interest and asked you to call her back today when she finished a major project” or “Mike wanted to talk more with you about the service when he got closer to the renewal date with a competitor”. Those calls are easier to make, and likely a higher yield.
Scale up the team more easily. Spreadsheets can work when there is one person doing all the selling. But they break down as soon as you add another person to the sales team, even if you are using shared Google Sheets. With a CRM you can split the work by having one person qualify leads and another doing the closing, or can double-team sales calls with everyone on the team having the same account history in front of them.
Make your first newsletter easy. Over the course of the first year or two you will be in contact with scores, if not hundreds of people. Most of them will have some interest in your progress. Potential investors may want to hear when you have traction. Potential customers may remain interested when you add new features. Many startup founders find it useful to periodically send out email newsletters to share news and keep the company in people’s minds. In some cases these newsletters can be targeted to types of contacts. A CRM system can make this easier, as well as indicate which contacts opened and read the newsletter.
By this point it should be clear why, as a startup founder, you should start using a CRM from the start. With just a little more effort doing the setup you will create a tool that will grow along with you. It is somewhat analogous to the early days of spreadsheets when some users said it was faster to create them by hand than to learn a tool; that may have been the case until a colleague asked something like “what would the results look like if we grew 10% faster?” Then it becomes clear that the tool is worth learning.
Which CRM system should you use? There are lots of choices in the market. Salesforce may have started a system for small teams, but is now likely too expensive and feature-rich for small teams. Use the one that works for you.
We recommend Hubspot to most of the startups we work with. They are a partner, but they are also very easy to use, highly customizable, and affordable. The free version may get a startup through the first year. And if you sign up through this link you get access to many resources, and can sign up for deep discounts if you mention you were referred by Sand Hill Angels. Don’t wait. Get started now.
by Steve Lamont