Shopping Guide to CRM Software for Small Business

Lauren Simonds

Updated · Apr 21, 2010

If you own a small or medium business, entering the CRM software market can involve a system-wide implementation of a new business suite, or it can simply be the equivalent of dipping a toe in the water with the addition of a basic contact manager.

In either case, it’s easy to dive into a solution that later turns out to be too small for your company’s needs or too expensive to customize.

“I think it’s really important for companies that are going down the CRM path to make sure that they know what they need before they even look at a vendor,” said Brent Leary, co-founder and partner at CRM Essentials, “Do a really serious and honest analysis of what you’re trying to accomplish, what your challenges are — what are you trying to fix? Is it something related to losing customers, or is it something related to finding more customers or keeping them longer?”

Keeping It Simple

Assessing the needs of your business is essential. A small business with fewer than 25 employees may need only a limited range of services. “You [may] need some basic contact management, you want some basic marketing,” said Sheryl Kingstone, director of Yankee Group’s enterprise research group. “You have a sales channel. You don’t have tons of money and you’ll adapt to the product… That’s when you can potentially evaluate an ACT! or a contact manager or something that has some basic functionality and doesn’t cost hundreds of thousands of dollars to implement.”

A simple, out-of-the-box CRM solution may provide everything a smaller business needs. “Traditional players like Sage, with ACT! 2010 have millions of users at the low end, and they’re actually incorporating some of the on-demand functionality into their installed product,” says Leary. “So, for example, they have the ability to do email marketing, which comes through a partnership they have with a company called Swiftpage that allows you to do email marketing services right from your ACT! 2010 database, which is really important because email marketing is a critical piece of how small businesses are promoting themselves and staying in touch with customers.”

Still, a small business with more complex needs, such as remote users, may be frustrated by the limitations of a basic contact manager. “If you keep it simple and you keep it basic, it’s fine,” said Kingstone. “If you’re really looking to deploy it to remote users, I don’t love the premise-based approach for keeping costs low and complexity low, because it’s just too hard to offer remote services to.”

For businesses that want more than just basic functionality, the marketplace offers a myriad of other on-premise CRM solutions and Software as a Service (SaaS) CRM solutions. In choosing between these options, the first thing to evaluate is your company’s resources. “Many of these smaller companies, quite frankly, do not have the IT resources to do the typical implementation and maintaining of on-premise applications,” says Robert DiSisto, vice president and distinguished analyst at Gartner Research.

Keeping CRM Software on Site

For companies that do have an in-house IT department or an IT vendor partner, an on-premise solution can promise greater control. A company may want total ownership of their data, or be worried about SaaS outages. How large a concern this should be will depend on the way the CRM software is used. “If it’s a call center supporting customers, [an outage is] a big problem,” says DiSisto. “If it’s a sales force automation thing and I can’t get my forecast in, well… when it comes back up, I’ll do it. So a lot depends on the mission criticalness of the app.”

Though security has traditionally been a motivator for companies choosing an on-premise solution over a SaaS CRM solution, it is becoming less of a factor. “Security, I would suggest, doesn’t necessarily become a big issue,” says DiSisto. “It’s like people using a credit card in the 90s on the Internet were a little bit concerned, but now, obviously, they’ve moved off that… There hasn’t been a huge security breach to this point.”

Mobility is a more significant concern. While Web-based CRM vendors have focused heavily on smartphone mobility, “the part of mobility that doesn’t exist really for SaaS is disconnected laptop [mobility where] you’re running a local database… The [SaaS] vendors offer it to an extent, but it would lack some functionality that would be available in the online version,” says DiSisto.

Companies eschewing an online CRM solution “can potentially implement a premises-based solution and be able to train and deploy and look at different laptop solutions,” says Kingstone. “It’s still more complex to manage and maintain and deal with, but it’s a viable option for businesses if they really want control of something.”

Maintaining an on-premise solution can be a challenge, and it’s important to look to the future when choosing to go in that direction. “The desire to have a local presence to help you with things instead of over the Web can be a huge consideration for small businesses,” says Leary. “A lot of times, companies solely look at the solution and not at the vendor itself and what help they can provide. And so it’s important that you’re not just buying a software package; you’re actually buying a relationship or a vendor relationship.

Looking at short-term needs as well as long term goals for service and growth will allow a company to get the most out of any CRM solution. “Too many an SMB may get caught up in what the software actually does,” says DiSisto. “Understanding that the partner is actually as critical, if not more critical, in actually being successful with it would be another major factor that I’d look at.”

Still, for companies that don’t have the resources to customize and maintain a CRM solution over time, CRM application service providers have stepped in to fill the void. “Many of these vendors offer dedicated administrators that the user or the company can leverage for an extra fee,” says DiSisto. “So, for example, for an extra 10 percent on top of the price you negotiated (or 15 percent, it varies), the vendor will offer an administrator so you don’t have to hire one yourself.”

The Online CRM Option

If implementation time and cost seem too significant a challenge, Kingstone said, a “Software as a Service type of solution lets you focus on what you do best — using the tool for what it is, and less about implementing it, configuring the database, worrying about whether it’s up and running. And that really does take a lot of cost and time out of what you’re trying to accomplish with these solutions.”

As CRM vendors compete for market share, many SaaS CRM providers are now targeting the SMB owner. Salesforce, for example, has “created some offerings that are more in line with the needs of very small all the way up to the very big,” Leary said. “So they actually have offerings that could take you through your whole lifecycle.”

In particular, Kingstone said, “NetSuite Small Business [is] turn-key to a small business. You don’t have to worry about implementing it on site and so you get a lot for the money, especially if you’re looking to have a full suite, because that’s where the price incentives come in.”

In the SMB market, pricing is competitive. Many smaller businesses are unwilling to enter into long-term contracts, and so some providers are offering pay-as-you-go services. In spite of the attractiveness of a given package, it’s important to ask the CRM provider what you get for your money. One company may provide you with “a platform and some sales, service and marketing functionality, [but] you still need to pay for the accounting package,” said Kingstone. “You still need to pay for the e-commerce site. You still need to build in potential other functionality.”

“In the big picture, on-premise can be less expensive over three to five years, because it’s a capital asset that gets depreciated,” said DiSisto. On the other hand, with maintenance and customization, “premise-based software can be just as costly [as SaaS] CRM,” Kingstone said.

One key issue to watch out for in any CRM software package or service is the cost of implementation. “What people are not budgeting enough on [is] making the applications work the way you want them to work,” said Kingstone. No solution is turn-key, “so that’s where a lot of the dollars are potentially spent, with some of these value-added resellers to help you configure the product — even if it’s on-demand — to your unique needs. Because nothing is perfect.”

No matter what your needs may be, the first thing to do before jumping into the marketplace is to ask around. A CRM solution you had never heard of before may well turn out to be a perfect fit for your business. “There could be [software solutions that] are much more attuned to your business that just don’t get the brand awareness,” Kingstone says.

Lauren Goldman is a regular contributor to

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