There is a lot of theory on operating a startup (just check the curriculum of your local college or business school).
But in the real world, due to the demands of getting a business up and operational, much of the time any theory goes right out the window while entrepreneurs struggle to keep clients happy, keep the bills being paid and seeking out new business.
Back around 2001, one woman decided to start a business settling credit card and bank debt for clients who had run into financial hardships. She began the enterprise in her apartment, with one partner. Three years later when she and her partner divested themselves of the business, it consisted of over 160 staff occupying an entire two-story office building, with plans in the works to move to a larger-three story building nearby. It had over $25 million in receivables.
Analyzing this kind of growth and success, it is easily seen how vital the choice of CRM software solutions actually is right from the start:
Initial CRM Software Solution
The first CRM solution utilized by the partnership was as many were and are: on paper.
In fact, it was by binders—one for each client. Each binder contained chronological data and correspondence regarding that particular client. A service representative would pull the binder and have it to hand when communicating with a client.
But shortly after the company began, it experienced a rather sudden and exponential growth spurt, and it could hardly be referred to as a startup any longer. In a period of 2 months, it went from 200 to 5,000 clients. Needless to say, their hard-copy “CRM system” become very unwieldy, very quickly. At the point they were trying to track their client base with 3,000 binders, the partners realized they needed to find an automated solution, and right away.
From one of their clients (and hence for a decent price), the owners obtained a contact management system. The system had many benefits, not the least of which was being able to enter customer contact details and track them by computer. Additionally, the system had the facility for storing scanned documents—and since banks and credit cards did all their business through paper (still do, for the most part) hundreds of thousands of such documents got so scanned and stored with customer data, for later access.
CRM Software Solutions Issues
In looking back, however, the founders of the company will readily tell you where they went wrong in their choice of CRM software solutions.
- First, while the system they chose did have the facility to be scaled to a large number of users, it was a relatively static system. Put another way, it didn’t have the flexibility needed to fully address the dynamic needs of a fast-growing operation. This was an enterprise that was having to learn as it went; at that time debt-settlement companies were very few and none had achieved the growth of this particular company. They were literally establishing an industry as they went. Hence, the capacity to change the CRM solution as their patterns of operation changed was crucial. They didn’t have that, and instead were forced to come up with additional methods—such as individual departmental spreadsheets and systems—to track activities with their clients.
- Second, the system they had didn’t possess the facility for prioritizing and organizing the massive amount of data the company collected on a regular basis. This lack of functionality also meant the fabrication of other systems, some of which even extended to manual human intervention to ensure important actions were taken.
Trying to Make It Work
In the interest of being frugal with company funds, many business owners will often attempt to make an old solution work by updating or expanding it.
For our debt-settlement business partners this was a mistake—which in hindsight they’ll now readily admit.
They spent a considerable sum of money with a group of programmers trying to make their existing CRM system work the way they needed it to—a project that failed.
Instead, they should have taken a step back and analyzed and formulated exactly what their current requirements dictated. Such an analysis could then be utilized as a rough functional spec for their CRM solution—be it a remake of the current one or a new one.
CRM System for Startups
From this analysis, we can learn that the best choice that can possibly be made by a startup for CRM solution is one that:
- is capable of handling rapid growth of a company, so that the company is not forced to switch basic and relied-upon solutions as it scales upward
- is very flexible, so that as company patterns and needs change, so can the CRM software solution change right along with them, and
- possesses the functionality to quickly and easily categorize and prioritize data and activities, so that operations are never slowed by having to manually figure priorities and set reminders.
Taking these CRM solution basics into account right at the inception of a startup will mean unhampered growth, no matter how quickly it takes place.
See our other articles on startups and CRM solutions.