What is CRM? CRM 101 Part II: Fundamentals, Implementation & Choosing CRM

CRM is at the heart of how businesses manage relationships, yet many people only see the surface. That’s why we created our “What is CRM” series – a 101 guide to break it down step by step. This article is the second part, where we go deeper into the fundamentals and strategies you need to know. If you haven’t read the first part, I highly recommend you do so to get a better grasp of the basics.

In this article, we’ll dive into the fundamentals of CRM, exploring the universal elements that will help you understand CRM much better. We will also look at two different approaches to CRM, which will lead us to a discussion on implementation strategy and, finally, how to choose the right solution for your business.

So, sit back, get comfortable, and let’s get started!

The Four Pillars of Every CRM

Every CRM system in the world works on the same basic principles. It stores data, provides a user-friendly way to access that data through well-designed screens, and enables you to create reports. These core elements are Entities, Fields, Relations, and Records.

This is an oversimplification, but it provides a level of abstraction that allows you to analyze the various systems on the market through your own lens.

Let’s explore each of these elements.

Fields

Let’s start with fields. Fields are just like cells in an Excel spreadsheet. You can name a column “First Name,” and all the cells below it should contain first names. You could name another column “Phone Number,” and all the cells below it will contain phone numbers.

The main difference from Excel is that a CRM stores this data in a specific format. If a field is meant to contain a number, the system won’t allow you to store a name in it. Because a CRM is a database, you can only store specific types of data in specific field types.

There is a limited number of field types, but the combination of these different types leads us to entities.

Entities

Entities are abstractions that represent real-life phenomena, such as people or companies.

For example, imagine you want to store contact details. How do you know that certain fields are related to contacts? You would group them together by entities. Some vendors, like Salesforce, call them “Objects,” but the name doesn’t matter.

Examples of entities include Accounts, Contacts, Leads, Opportunities, and Quotes. They all have a different set of fields under them, allowing you to organize your data within the system and differentiate between different types of data.

Relations

Next, a CRM allows you to link entities with each other.

Imagine you want to store a customer’s orders. How do you know which orders are linked to a specific client? You create a relation to the Client entity. In a CRM, a client is usually represented by the “Account” entity, so we’ll use “Account” to refer to clients.

Relations are often just another field on the screen. They look very similar to other fields. The only difference is that you will choose from the list of existing records that are stored in a different object. 

Records

Finally, now that you know about fields, entities, and relations, it’s time to learn about records.

Fields, entities, and relations together create what’s known as a Data Model. This is the skeleton of your information system and client database. However, you still need to fill the system with information.

To fill the system with information, you create records. Every time you create a new client, you create an “Account” record.

Every time you want to register a business opportunity, you create an “Opportunity” record and link it to the “Account” record.

You type in all the necessary information about the opportunity in various fields. For example, you might type the amount in a currency field, the close date in a date field, and select an existing account record to fill in the “Account” field.

Now, you can create reports. Thanks to relations, you can pull all accounts with won opportunities for the last six months, for instance, or all accounts that bought a certain product.

At this point, you might be wondering why you need to know this. It’s because different vendors try to differentiate their products from others, which makes it hard to compare them. By knowing the basics of data models, you can get a better and faster idea of what each CRM is about.

Choosing the Right CRM for You

There are around 3,000 CRM systems on the market, and choosing the right one is very difficult. Unfortunately, I can’t give you specific recommendations on any particular software, but I can provide context that will help you make your own decision.

There are two large, non-scientific categories of CRMs. These are my own
groups, I’ve invented them just to make life easier: Platforms and Niche CRMs.

Platforms are non-specialized CRM systems that can be heavily customized and could theoretically be a one-stop-shop for all your business processes in a single piece of software.

Niche CRMs, on the other hand, focus on a single use case or industry. For example CRM for dealers, would focus on dealership. Or CRM for plumbers, would focus on plumbers. And so on.

Let’s discuss them one by one.

Platforms

Platforms are like LEGO blocks. You can purchase a platform CRM like Salesforce, Zoho CRM, Oracle, or SAP and configure it to your specific needs.

Here are the pros of Platforms:

• Versatility: You have the ability to use one system for all your processes and potentially cover your entire business with a single tool.
• License Costs or less licences to purchase. If your process is sophisticated you may save a lot of money on licensing. In theory.
• Expert Availability: There is a larger pool of professionals who know the platforms, so it will be easier to hire a consultant or developer who can guide you.

Now, let’s talk about the cons:

• Longer Implementation: Platforms are almost always more complicated, which translates into longer implementation cycles.
• Steep Learning Curve: With platforms, flexibility is powerful but requires careful planning. Unlike smaller systems that limit customization, platforms demand clear design from the start to avoid costly missteps. It’s like building a custom house vs. buying a pre-built one: the custom option offers freedom, but only if well-designed from the beginning.
• Costly Implementation: While you can save a lot of money on licenses, you may need to hire expensive specialists to implement the system.

Platforms are great for established businesses and startups. They could help in
cases when you approach your industry in a unique way.

Generally, with the right approach, platforms could fit any company, but they
require knowledge and a lot of attention to details.

Niche CRMs

Niche CRMs are specialized tools designed for specific industries, such as outreach, videography, legal, plumbing, or construction, etc. They come with built-in processes tailored to these fields.

Here are the pros of Niche CRMs:

• Quick and Inexpensive: Ready-made processes mean faster and cheaper implementations. You don’t need specialized knowledge and could start using the CRM literally within weeks or even days of the purchase.
• Follow Best Practices: You can often learn how other companies in your industry or niche work by applying the standard processes built into the niche CRM.
• Quick Adoption: Such systems tend to have a simpler user interface that allows for quicker training of users. Sometimes they are so intuitive that learning is not even necessary.

Now let’s go through the cons:

• Limited Customization: This may become restrictive as your business grows or if you deliver unique services.
• Outgrowing the System: Companies often outgrow these systems, eventually moving to platforms that can support their expanding needs and unique processes.

Hybrid Setups

Finally, I have to mention hybrid setups. It’s when a niche CRM is built on platforms
like Salesforce, blending the best and worst of both worlds.

These systems offer out-of-the-box functionality typical of niche solutions but are built within a larger ecosystem. The most common platform for these hybrid CRMs is Salesforce, where solution providers develop industry-specific tools within its environment.

Here are the pros of Hybrid CRMs:

• Flexible, Yet Ready to Use: They combine ready-made industry processes with the flexibility of a platform. I’m specialized with Salesforce, so I’m mostly describing Salesforce use cases, where you could purchase prebuilt CRM and later customize it. However, customizations are often limited, it really depends on the vendor.
• Future-Proof: Such setups secure you from the necessity to migrate to the platform CRM in the future, while enabling you to use pre-built features.

However, hybrid systems come with a few serious drawbacks:

• Licensing Cost: It requires dual licensing – one from the solution provider and one from the platform like Salesforce. While it enables you to start using pre-built CRM relatively quickly, since you don’t have to pay for the customization, in the long run this could end up being a much more costly solution. And honestly, most of the time it is too expensive.
• Complexity: Hybrid CRMs inherit complexity from both niche systems and platforms, which may increase setup time and costs, and basically level out all benefits and make the solution not worth it.

At this point, you may be asking which one I would recommend. I would say it all depends on your business, your industry, your digital maturity, the number of employees, your business processes, your available budget, the skills within your company, and a number of other factors.

Your Digital Strategy and CRM Implementation

Now, let’s move to our next topic, which is the approach to your digital strategy that will dictate which CRM type you should choose. It’s a debated topic whether you should first choose your approach and then find a product that fits it, or if you should base your approach on the product. In any case, if you are choosing a solution, you will have to make that decision at some point.

The first approach involves using a separate app for each specific task: one tool for invoicing, another for tracking opportunities, another for managing expenses, and so on.

Take invoicing, for example. At Muncly, my company, we don’t rely on complex accounting software. Instead, we use software to send invoices to our customers, track whether they’re paid on time, and send reminders if a payment is overdue. For lead tracking, we use Salesforce. To log billable hours, we use the Harvest app. For each specific need, we use a standalone app.

The reason for this is simple: we’re a small company, and it’s easier for us to choose specialized tools that do one job at a time. When it comes to invoicing, we look for an app that’s straightforward and focused solely on invoicing. We don’t have the budget to customize complex software, and frankly, there’s no business justification for it.

But there’s a trade-off. We don’t have a single place where all our business transactions are visible. If a payment is overdue on an invoice, our CRM wouldn’t be aware of it. So, theoretically, someone working with a customer who has an overdue invoice might offer new services without knowing there’s an outstanding payment.

We’re okay with that, though, because we’re a small company, and everyone knows each client. It’s simply impossible for someone to work with one of my clients without me being aware of it. And vice versa, I couldn’t contact someone’s client without the account owner knowing. We made that decision because it was best for our company.

I’ve named this approach, where you use multiple different services for various types of tasks, the micro-service approach. I borrowed the name from software development terminology, but it really describes what it does well. You have multiple small services, each doing one job. They could be connected to each other, but connecting them may be a costly project.

To overcome the issue of services being interconnected and exchanging data, there is another approach, which I call the mono-service approach.

Mono-service

In this approach you build your CRM on a single integrated system that handles
most, if not all, tasks in one place.

Everything I said about microservices is just the opposite here. You build everything on a single platform.

It’s costly and takes a lot of time, but it’s worth it if you need to have information about your clients all in one place.

Implementation

Now, it’s time to get our hands dirty and talk about some practicalities. There are two main pillars that I want you to learn. These two pillars, unfortunately, lead to massive failure rates.

As a matter of fact, many studies show that 80% of CRM implementations fail. This pretty much aligns with my own observations. But I have some good news. There are a few very simple things you can do to increase your chances for success by orders of magnitude.

The first thing is standardization. If you want your CRM software implementation to succeed, you will have to standardize your business processes. This means you will likely have to sacrifice some of the ways in which you currently work with your clients.

The challenge here is that we are all humans, and we all have our own ways of dealing with clients, even if we work for the same company. Every employee does it slightly differently. You will have to standardize your way of working with clients by finding the right combination of entities, fields, and relations that best describe your relationships with clients.

Later, you will have to communicate this standard to your employees and convince them that this is the best way to approach customers. It’s a very lengthy and complex topic that I don’t want to dive into now. Just remember: be prepared to standardize your process. Be prepared to give up some custom services you provide, and even be prepared to let go of a few of your clients if they won’t fit into the new system. You will have to do all of that for the sake of scalability.

That takes time – a lot of time. And to give yourself time, you have to find your CRM implementation pace. Some companies are capable of “consuming” large and complex systems fairly quickly. Others need more time to learn. Very few companies, like Amazon or Google, are capable of a massive digital transformation fairly quickly. Most businesses are not capable of “digesting” large and complex systems. You have to go small. This leads us to our next point.

To implement a CRM, you have to learn a very important skill: agility, or rather, the ability to iterate.

There is a simple recipe for any CRM implementation, big or small. Just make sure you implement it right:

1. Define a minimum viable product (MVP). Define the absolute minimum that would be enough to launch. It’s called MVP (minimum viable product). Make it as small as possible. Ideally at the launch you should be tracking a maximum of 7-10 fields (depends on your process of course, there’s no one-size-fits-all recipe, but keep it ultra lean).
2. Implement routines. Make what you have implemented your everyday. Track the progress of what you’ve just implemented. Make use of the product for a couple of months.
3. Create a backlog. It’s a list of features or changes based on your knowledge after owning CRM for some time. Apply the same principle as in the first point – make it as lean as possible. Don’t be afraid to go to extremes here. You would only benefit from that.
4. Repeat.

It’s as simple as that, yet surprisingly hard to implement.

Final Thoughts

I’ve done my best to immerse you in the world of CRM using simple, practical language. Let’s quickly summarize the key points:

• Every CRM is built on four pillars: Fields, Entities, Relations, and Records.
• There are Niche CRMs and Platform CRMs which could dictate your approach to your digital strategy where you could have one software to cover all your needs or use multiple software solutions to cover the same needs.
• Finally, make sure to learn how to be agile and lean in your implementation not to burn your budgets and not fail with your CRM.

If you’re feeling overwhelmed or unsure about which approach is right for your business, don’t worry – you don’t have to figure it out alone. Our team of CRM experts at Muncly can help you design a strategy that fits your company’s unique needs and ensures your CRM works effectively from day one.

Reach out to our team today, and let’s start building a CRM strategy that’s future-proof and tailored to your business!