Fundamentally, a CRM application is designed to capture information about your accounts and the contacts you deal with at those accounts. By accounts, we mean the complete set of other firms with whom you conduct business. Terminology will vary depending on your type of business, but accounts normally represent partners, suppliers, and other companies or organizations.

While accounts generally represent some form of company or organization, a contact is regarded as an individual with whom you conduct your business. A contact is normally related to an account, but can also exist independently. They typically represent individuals who have purchased a product or service from your business, or perhaps someone with whom you are in regular communication with at an account who has made that purchase.

This much is true of CRM use at most businesses, but even this basic capability needs modification at many firms. Some firms focus much more on contacts as they sell to individuals, a philosophy dubbed Business-to-Consumer or B2C, for short. Other businesses, however, focus almost exclusively on accounts, as they sell only to other businesses, a model labeled Business-to-Business or B2B.

Many firms go to the extreme of customizing the navigation system of their CRM so as to only show either accounts or contacts and to clearly represent their model. The good news is that nowadays most quality CRM systems, including SugarCRM, provide this customization capability through out-of-box functionality.

The next major differentiator between firms and their associated CRM implementations lies in the area of leads and opportunities. Leads are commonly recognized as an individual representing potential revenue, usually having demonstrated some level of interest in your products or services. They differ from contacts, as contacts are individuals who already have an established relationship with your business as a buying customer.

An opportunity is used to track potential financial commitment associated with the sale of a product or service to an account, contact, lead, or combination thereof. In addition to the monetary value they represent, many businesses also keep a record of other pertinent information, such as the date on which the deal is expected to close, the products or services being sold, the staff member responsible for managing the sale, and other equally important information.

If your firm uses prospect or potential customer lists, sometimes obtained at tradeshows or even purchased, then you are likely to have a need to distinguish between a lead and a contact. This separation will help keep your database tidy by not cluttering your customer list with entries of individuals who may never buy one of your products or services.

For some businesses, this differentiation is completely unnecessary and instead, these individuals are stored as contacts. In such scenarios, it is common for an attribute to be assigned to each contact which in turn distinguishes potential from existing customers, or even other categories.

Much like other areas of the system, it would be useful to be able to customize the CRM user interface, so as to remove any menus or navigation associated with leads for firms that don't need them. Most good CRM solutions, including SugarCRM, provide this capability.

If you choose to keep leads and contacts separate from each other, you will find that at some point, you will need to promote a lead to a contact. This promotion usually does not occur until after the lead has been qualified. The qualification process is used not only to confirm basic information about the individual, such as their e-mail address, but also identify potential revenue opportunities they may represent. Once an opportunity has been identified, they can be promoted to a contact, linked to an account, and an opportunity. Graphically, it would look something like the following:

Different firms have many different ways of generating leads, for example, from an Internet site, from advertising, by word of mouth referral, direct mail campaigns, and so on. Regardless of which of these your business uses, it is important to measure the success rate of each campaign. This type of analysis will allow you to determine which marketing techniques will yield the most value to your business. CRM systems, including SugarCRM, allow you to track this information by means of an attribute found on leads, opportunities, accounts, and contacts.

This attribute is called the lead source, and a value can be assigned to one of the aforementioned entities by selecting the appropriate lead source value from a predefined list displayed in a drop-down box. The use of a drop-down box in this scenario helps highlight an important point relating to customizations; when planning customizations you should bear in mind the type of data you are collecting.

Some scenarios are better served by a checkbox, while others are best served by a drop-down box, as in the case of the lead source value. A drop-down box is effective for this scenario because it helps reduce data entry errors that would typically make subsequent metrics worthless. However, its use would be limited if you were not able to define the list with your own values.

Populating drop-down boxes with options that are uniquely relevant to your business is a very common form of CRM customization, and one that is becoming widely supported as a "do-it-yourself" feature by all mainstream CRM systems, including SugarCRM.

Another option that commonly needs customizing is the sales stage of an opportunity. While there are relatively standard industry-accepted terms for the different stages of the sales process, they vary quite a bit by the nature of the business involved, its size, its customers, and the length of the typical sales cycle. The list of stages of the sales cycle you intend to track is a customization you will most likely want to make to your CRM.

Related to the sales stage is a percentage representing the likelihood of a sale being won, ranging from 0% to 100%. Some organizations pay little attention to the percentage of likelihood and track opportunities solely based on their sales stage. Other organizations do just the opposite, and rank opportunities by percentage likelihood, paying little attention to the sales stage. Yet others track both. You need to decide which is important to you, and make sure that the list of opportunities and the charts of sales in the pipeline present that information, give you the ability to filter, and focus on opportunities based on that information.

One very important productivity tool that a CRM system can provide is often referred to as Sales Force Automation or simply SFA. While this can include functions such as dashboard, fundamentally, sales force automation is an automated flow of sales leads into the CRM, their conversion into opportunities, and their tracking as a successful or unsuccessful conclusion. This includes features, such as the following:

A key improvement in productivity comes from automated lead capture into your CRM, from an information capture form on your public website, or from leads sent to you from a supplier or other partners. If you have a current supply of sales leads, you should identify how to automate their entry into your CRM. Many CRM systems, such as SugarCRM, have a SOAP-based (Simple Object Access Protocol) application programming interface that external systems can use to enter, read, or modify data from the CRM system. If you do not have a current supply of sales leads, you should consider creating an information capture form on your public website and devise a strategy for diverting traffic to your website.

Once a lead has been qualified as a genuine sales opportunity, it needs to be re-classified as an opportunity within the CRM system. Most CRM tools have the ability to convert a lead into an opportunity. You need to decide if this is how you will use your CRM to manage the transition from leads to opportunities.

Your CRM server will most likely be connected to the Internet and have access to an e-mail system. As a result, it has the capability to automatically e-mail salespeople when they are assigned a new lead or opportunity, or for that matter, a number of other types of information. Typically, your CRM will let you enable or disable this automated notification system and you will need to decide if your CRM will use it or not.

Each opportunity in a CRM system has an expected sales value, a sales stage, and an expected closing date. Adding up this information across all the opportunities in the system produces a prediction of the future sales of the business, known as the sales pipeline.

The sales pipeline is a key tool for anyone managing a smaller business. Usually a smaller business has more limited financial resources to buffer it from a downturn in business, making it that much more important to be able to detect a negative sales trend at the earliest possible moment.

It is critically important to remember that the information represented in the sales pipeline is only of value if users are diligently using the CRM system. Outdated or erroneous sales information is of little value and does not help you properly gauge the health of your business.

Like most software designed to summarize financial activity for management personnel (known as Executive Information Systems—EIS or Decision Support software, or Business Intelligence software—BI software), most CRM systems present the sales pipeline in a graphical chart form, frequently with the ability to highlight some portion of the chart and 'drill down' to the source data that underlies that portion of the chart.

A series of charts that support sales and business management functions is often called a Dashboard or a Digital Dashboard and is a powerful tool for ensuring that sales are on track in the coming months, as well as for diagnosing and uncovering shortcomings in the sales process, product features, pricing, and personnel.

SugarCRM includes a variety of dashboards that represent both pending and closed opportunities. In addition to presenting the data from different angles, you are also allowed to select and click on a segment of the dashboard, to drill down and inspect the data that makes up that particular section of the dashboard. A sample of the SugarCRM dashboard screen follows:

A fundamental choice that has to be made when presenting the sales pipeline is whether or not to discount the opportunities in the pipeline by the percentage likelihood of their closing. The latter is often referred to as the weighted value. For example, should a US$100,000 opportunity with a 25% probability of closing be counted as US$25,000 or as US$100,000? While the truth is that it will most often result in no income, or US$100,000 of income, the fact that the opportunity is considered only 25% likely to result in a sale may mean that you prefer to count this opportunity as only US$25,000 in the pipeline. Both practices are very common, and only you can decide which behavior is correct for your business.

Every CRM offers at least basic customer service and support features. Some of the capabilities typically offered are as follows:

Not every business needs these service and support features. You will need to identify what your business requires in the service and support area and decide if the standard features are a good fit for you, whether or not some need to be hidden as they are not required, or if some extended capabilities need to be custom-built for you.

The employees at your business represent experience and knowledge. Each possesses differing levels of knowledge pertaining to a wider variety of subjects including; the manner in which certain processes are conducted at your business, the solution to a specific problem or fault with one of your products, and the best techniques for handling a customer service situation.

These are all immensely valuable to an organization. Among other benefits, it helps ensure that rules are being followed and helps improve customer service. The problem, however, is that in many organizations, this information exists only in the minds of the various employees, where its value becomes limited.

CRM vendors have long recognized a need for businesses to have a place where they can store not only customer data, but also these invaluable nuggets of knowledge that help a business function more efficiently.

Knowledge management tools are highly adaptable and can be used to store anything ranging from information related to the most recent product promotions your organization is conducting to scripts that tele-sales staff use when placing calls. Customer service departments or call centers tend to have a natural inclination towards these tools. These tools facilitate the process of tracking problems with their respective solutions, that in turn help propagate knowledge among staff. In addition, they help simplify the process of training new staff members, and ensure that loss of business critical knowledge is kept to a minimum if a staff member leaves your organization.

A CRM system is almost certainly the best place for you to enter all your appointments, meetings, scheduled calls, and planned tasks—in short, all the business activities that have a time and date associated with them. Not only does entering this information in the CRM help you to associate the activities with the related accounts and contacts, thereby helping to generate accurate account history, but it also provides a groupware environment for scheduling meetings. This groupware environment is aware of all the scheduled activities for everyone in the company.

Prior to adopting a CRM system, most small and medium businesses used Microsoft Outlook, Outlook Express, or Microsoft Exchange to fulfill their business activity management needs. Other popular solutions include Lotus Notes and many other lesser known groupware products. While Outlook is a reasonable calendaring solution for an individual (and Exchange helps to link together calendars across a business), this solution can never help you to position these activities within the larger CRM context. Tracking of history and getting insight into future or past activities relating to specific accounts or contacts is cumbersome in those environments.

If all this talk of Outlook and Exchange, Lotus Notes, Outlook Express, and so on, is foreign to you—don't worry. They are simply other ways of addressing needs that your CRM will satisfy nicely and more effectively, as they are specifically designed to improve the management of relationships with your customers.

Since its introduction to the masses in the early 1990's, the use of e-mail has skyrocketed. The business world quickly latched on to this new tool as it offered a means for communicating with others that was expedient and inexpensive.

Nowadays, an e-mail address is as common as a phone number, and it is frequently relied upon as a primary tool for businesses to communicate with customers. Over the years, this shift has also been reflected in CRM products.

Modern CRM systems, such as SugarCRM include components that allow you to manage your e-mail communications either through a built-in e-mail client or by connecting to other popular e-mail tools, such as Microsoft Outlook. The value of such functionality is equivalent to that of tracking any other interaction you may have with your customers. E-mail correspondence becomes another item in the customer's history, much like logging a phone call would.

CRM systems provide this functionality to ensure that all communication points are taken into account to produce a more accurate view of any given customer. Without it, your staff is unaware of matters that may have been discussed exclusively through e-mail.

A consolidated view of any and all communications helps improve customer service at your business. You should ensure that your CRM system is capable of managing e-mail effectively, either through built-in tools or through extensions that connect it to your preferred e-mail client.

One of the most valuable traits of a CRM system is its ability to consolidate data about customers. Such consolidation is helpful for many facets of your business, including your marketing team.

All businesses require some level of marketing in order to generate new business. Sometimes this is in the form of online marketing, other times e-mail and even direct mail. Regardless of which option your business utilizes, your CRM system must be able to facilitate the process of mining your customer data and execute marketing campaigns.

Search features should allow you to segment the database using the criteria of your liking. The CRM system should be able to perform bulk e-mail campaigns, as well as merge form letters through Microsoft Word or other popular word processing solutions.

Equally important, your CRM system must provide tools that assist in tracking the effectiveness of such campaigns. In the case of bulk e-mail campaigns, you would want to make sure that you can track the number of click-throughs and other statistics. Later in the process you will also need the ability to monitor the number of leads and opportunities obtained through those campaigns, and measure the amount of revenue they represent. This type of automation helps your business focus its marketing efforts on those methods that are most beneficial to your business.

If your business has only a handful of employees, then an employee directory is likely unnecessary. You may choose to remove access to it from the user interface of your CRM system in such cases.

However, as a company grows and reaches 25, 50, even 100 employees, it gets harder and harder to remember everyone's extension number, their e-mail address, their position, even their face. Even a smaller business will make good use of an employee directory if the business is spread out across multiple regional offices.

An employee directory is a very handy list of everyone's contact information, and it often includes a thumbnail image of the individual in situations where you just cannot put a name to the face, or a face to the name.

Interface consolidation refers to a series of tools and techniques used within a CRM that allow employees to spend much of their day within the CRM system, with few business activities not integrated in some way within the CRM.

Some of the activities and features commonly integrated into a CRM just to reduce the need to jump out of the browser interface to perform miscellaneous business tasks include the following:

Clearly, by adding news, e-mail, commonly used external websites and links to financial systems, the CRM becomes an environment that your employees can live in, one that they can log into in the morning and leave up and running all day. You should give some thought to the other types of information you wish to include within your CRM implementation.

A document that is only stored on the hard drive of the computer of one of your employees is not a company resource. A document that has a copy stored on every hard drive in the company is not standardized or revision-controlled. In between these two situations is the right answer—the document repository within your CRM system.

Typically, your CRM system will allow users to store documents within the system and include a title description, file type, status, and revision number. Some keywords to make it easier to find the document are also normally entered. Unlike storing it on your computer's hard drive, a document repository usually allows the user to update a document with a later revision, while keeping each previous revision intact, in case you ever need to revert to it. A document's status indicates whether it is a draft document, an old archived document, or an approved current version.

Web-based document management provides key benefits for any business, allowing all important business documents—medical claim forms, HR policies and guidelines, employee handbook, designs, specifications, sales collateral, contracts, and so on, to be accessed and downloaded remotely. Document management is a vital capability for any business, and you need to decide which documents your business needs to store in your CRM and how to organize them.

CRM systems excel at their ability to capture and store large volumes of data. Everything from customer phone numbers to the latest revenue opportunities can be and are stored within it.

The true value of a CRM system however, comes from the ability to access this data in different ways, not the ability to store it. When a staff member searches for a contact in order to retrieve their phone number, they are relying on a very basic ability of the CRM system to supply data to a user.

The type of data that needs to be supplied (and the format) will vary based on who the user is and also on the intended purpose. A sales manager, using the same system, may be more interested in seeing a list of all opportunities expected to close in the current quarter. In contrast, a member of the marketing team may be more interested in seeing the number of leads generated by the most recent marketing campaign.

To provide this type of insight, a CRM system must include the ability that allows you to generate reports and other analytic tools. Here lies another important reason why a CRM system based on open source technologies can be many times more valuable than one based on proprietary technologies. In the case of the former, you are free to use the built-in reporting and analytic tools, or if they do not suit your needs, you can leverage the data through other tools more to your liking. In the case of a proprietary system, the ability to leverage other tools to meet your needs usually means additional expenditures, assuming an option exists.