Startup CEO: Don’t Wait With CRM!
You are a smart, scrappy entrepreneur. You are hustling, trying to get in front of customers, partners, investors. You are closing your first pilots, your first seed investments, your first distribution partnership. And you are staying organized, right? You probably have a spreadsheet somewhere, or a beautiful Coda shared doc. CRM? That’s for when you have salespeople, lots of them. Right? After all that’s how it worked in your previous company — the salespeople used Salesforce, the creators used Jira (or whatever). And you, as a founder, are a creator.
No you’re not. You’re a business leader. And as such, no time is too soon to get on CRM.
The TL;DR version of it:
- You miss less opportunities cause things don’t fall through cracks.
- It instills process and prepares the team for growth.
- You look better to investors which helps raise funding and manage the board.
- It’s practically free in terms of both money and effort.
It’s never too early to start using CRM
CRM Puts Your Focus On Your Business
One of the most common mistakes early stage CEOs do is confuse the team’s objectives with the company’s objectives. Your team is probably focused on internal goals — building the MVP, making the algorithm work, or even building a marketing machine and preparing for full market engagement.
The Company is not measured by any of these goals. The company is measured on achieving business goals. Those are expressed in terms in revenue, customers, pilots, partnerships, investments. Even if your early stage deep-tech startup’s next milestone is to show your spaceship can land on the moon, the immediate next one would be to show you can find customers who want to fly in it, and you will be judged on how much they will pay you.
These goals are external — they involve relationships with other companies and other people, and these relationships determine your company’s viability and value. Your ability to spin up this network of relationships, nurture it and eventually harvest it is paramount to the company’s success.
Done well, CRM is a productivity tool for the individual and the team to excel at this process. Used right, it also becomes the way to demonstrate that you are killing it on the business side — which is a strategic asset when you are fundraising. As CEO, you should care deeply about these relationships, because the fact of the matter is you’re always selling — to your customers, your investors, your employees, your spouse. So better get good at it.
CRM in 2020 is Ambient
As a tool for managing “customer” relationships, the key tenets of a CRM system are:
- It manages Customers — with the dual notion of Companies and People (contacts), and Deals.
- It assumes a process that looks like a Funnel.
- It automates data collection about how these customers interact with your company (team), and reminds or assists you in maintaining the dialog.
- It visualizes and forecasts how these Deals are progressing.
A wrong notion to dispel is the assumption that “if you adopt CRM you will have to work in the CRM”. Modern CRM integrates with your email, both as a data source (sucking the info from your communications automatically into the CRM process) and as a work environment (most of the functionality is accessible directly in your web email). Unless you’re a full-time inside sales rep, you will probably spend less than 1% of your time “in the CRM”.
The fact that there is very little manual data entry in modern CRM means that with a minimal amount of discipline, information about the Customers you’re engaging and the Deals you’re trying to close with them is easily tracked and shared on both an individual and team level. For instance you can see your team member’s correspondence tied to a deal, even if you weren’t cc’d, you can see when the last time was when there was contact with a customer, the documents that were shared etc. You can get alerts when there’s been radio-silence for too long, you can share and assign tasks to team members, or you can view dashboards that help you quickly get an overview of (a) what’s going on and (b) what needs attending to. The contact data collected (automatically) can later feed into marketing processes — e.g. newsletter mailing lists, ad targeting etc.
Funnels Are Eating The World
Whether your goal is to sell a product, raise funding, hire an engineer or find a spouse, you are going through a multi-step process where you start with many alternatives (“leads”) and you whittle them down through a multi-step process. For instance, you may start by “qualifying” the lead (does the customer actually need my product and has money to pay?), then have initial meetings, then a successful pilot, then negotiations towards a sale, then a contract. Thinking about the process this way helps you focus on your daily goals, which are to:
- Get as many qualified leads into the top of the funnel.
- Move the deals down the funnel quickly but without losing them unnecessarily.
- Ultimately close as many of the best ones as you can.
When this metaphor is used consistently, and especially when it is literally visualized this way, it helps focus you and your team on the high level objective (drive business) as well as the daily tasks (e.g. don’t lose potential deals due to inaction). It also creates visibility in several ways:
- How far are we from our objectives?
- How quickly are deals moving down the funnel?
- Do we have enough leads coming in? Is the quality sufficient or are we getting bad leads?
This makes it easier to predict the outcomes, especially once you learn the metrics, i.e. what % of deals going into a particular stage in the funnel get to the next stage, and how quickly. This allows the CRM system to predict the value of your sales pipeline and the resulting cash flow. Which is both a management tool and a sales tool in its own. Remember — one of the things you have to do, is sell your business to your current and future investors. And while all investors have seen slides and Excel sheets with lists of customers and deal sizes, a well laid out report from a CRM system that “predicts” that your revenue will meet the desired number is so much more convincing. This is due to Automation Bias, which befalls us humans. Incidentally — this is also why, until those metrics have stabilized (which may be years after you have product-market-fit), you should doubt these numbers.
Your investors are human. Therefor they suffer from Automation Bias
Incidentally, speaking of investors — they, too, use CRM and funnels. I spent a year at a San Francisco firm setting up a modern process, with a CRM funnel to deal with deal-flow — from ‘lead’ through initial meetings, team meeting, term-sheet to investment. A separate funnel handles portfolio companies — as companies move from A round to B round to the eventual exit or demise, and you need to project “when” and “how much”. The ability to easily retrieve historic conversations (“oh, we passed on them at the last round — what’s changed?”), historic documents (“where’s that cap table they sent 9 months ago”) and assess long-term dynamics creates a strong base of organizational knowledge — if it’s executed right. Why did it take so long? That’s a separate story, that leads us right to the “how-to” of adopting a CRM system.
CRM Is A Commodity
There are many good, cheap options. Cheap all the way down to free (e.g. Hubspot CRM). For each person in your company that engages with customers / partners, you should expect to pay less than 1% of that person’s salary cost. And yes, it should make them >1% more productive.
For an early stage startup, you should not expect the choice to be critical so don’t spend too much time comparing and contrasting a dozen systems. Instead focus on a few questions:
- How well does it integrate with the software you’re already using? For instance Copper is focused on integrating with Google Apps.
- Does it automate information capturing — e.g. collecting documents from emails, surfacing data from LinkedIn and other source etc.?
- Is it easy to set up, use and understand (e.g. the dashboards / reports)
I usually prefer Copper, I know many people who will swear by PipeDrive, Hubspot CRM is free and integrates deeply with the Hubspot marketing suite, I’m sure there’s many other great systems. Don’t stress over picking one. You don’t need Salesforce or Oracle (not until increasing revenue by 5% is worth at least $0.5M), these systems are really platforms to build more customized applications on at scale. Some startups build their product on Salesforce, but that’s not what we’re talking about here.
Invest the time in setting it up — design your funnels, onboard your team, and create the usage habits. Lead by example:
- Use it at every business team meeting to review progress
- Use it when debating questions like “who should we target as customers” “what is the product that they will pay for” “how far are we from closing that sale / pilot / agreement”
- Make sure people know you’re expecting them to use it — assign tasks in the CRM, review people’s updates and progress.
Your Silver Bullet In Fundraising
Ditch that spreadsheet list with names and emails of investors and use a CRM system. You’re less likely to forget to get back to someone, send the wrong presentation to the right investors, or have your co-founder flake out on some due diligence call she was supposed to take. You’re more likely to be able to thoughtfully track your progress, realize when you’re stuck and be able to collect the feedback and change course, and later run a smooth due diligence and get from term sheet to closing quicker and with less risk.
Best of all, when the money’s in the bank, you will have strong notions about why and how you want to use CRM to maintain your business momentum. And after all, your startup is a business, and the business momentum is all that matters.
I am not a CRM evangelist. I am a CEO-professionalism evangelist. I work with start-up CEOs and make them better, to the benefit of their companies, employees and investors.
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