CRM

What it means

A CRM records the customer relationship: contacts, the history of conversations, quotes, open opportunities and the agreed next step. It replaces the state where everything known about a client lives in one salesperson’s head and inbox.

At its centre sits the pipeline - deals arranged by stage. That is where a revenue outlook comes from, and where you can see at which stage deals stall.

A CRM is neither an address book nor an ERP. An address book stores contacts; a CRM adds the history and the next step, meaning what should happen with the client. An ERP runs what follows the sale: stock, production, invoicing and the books. In larger companies the two are linked, and the boundary between them decides where the quote is created and where the invoice begins.

How it works in practice

For accounting a CRM is useful in two ways: it links to invoicing so a won deal is not retyped, and it carries the data on churn and recurring revenue. Integrating CRM and the ledger is usually easier than expected.

A small company needs a handful of fields: lead source, value, stage, next-step date, owner. A system demanding more than that stops being filled in.

In an accounting firm the CRM also records what was agreed with a client outside the contract: who sends the documents, when to call before the year-end, which extra services were ordered and what came up at the last consultation. When the contact person on our side changes, the new colleague sees the whole history and the client does not have to explain everything again.

What to watch out for

A CRM holds personal data, so GDPR applies: purpose, retention period and a data processing agreement with the vendor. A contact database collected without a legal basis is a liability, not an asset.

The second costly mistake is a CRM that is not the only home for contacts. When salespeople keep clients in spreadsheets and phones as well, the system holds only part of the truth and the revenue outlook built on it is off. When a salesperson leaves, the contacts leave with them, no offboarding checklist brings them back, and the company finds it knows nothing about half its clients.