Why Every Venture Capital Firm Needs a CRM Software and How to Select It
According to Gartner, the market size of the custom CRM solutions will soon exceed $ 40 billion. Such an impressive figure is quite understandable: modern marketing is increasingly seeking to automate all and everything, and therefore successful companies monitor, analyze, and customize different aspects of data processing. Because forward-looking businessmen and investors know that it's difficult to draw the right conclusions and predict results without a reliable data management system. This applies to companies of any type, and especially venture capital firms.
Manual data processing is possible only for the time being, and after a certain point, when the number of startups reaches 10-15, XSL tables can no longer satisfy your needs. And it's much more reasonable to implement a customer relationship management (CRM) system and, thus, automate these processes.
So let's discuss how mainstream CRM systems help VC firms improve their efficiency. Also, we're going to describe the best data analytics strategy and explain how to avoid CRM failures. We hope, you'll find our article useful.
What data should be managed?
A lot of top-tier firms use data and CRM tools, and if you've decided to join the leaders, you should figure out what data management you need.
We'll tell you what type of information is being usually processed by traditional CRM solutions, and then it's up to you what to choose.
Standard CRM offerings:
- contact management. Contacts may include information about startups' owners, partners, clients, etc.
- startups management. The feature helps to manage startups: keep track of new projects and check the status of old ones (both abandoned and accepted by your company).
- the deal flow which contains everything related to transactions and relationships with startups and partners. The feature is aimed to help you see the history of your interaction with a particular company.
- fundraising and investments. We’re talking about the processing of cash flows. You must clearly understand how much funds you've already allocated and to whom. And future investments should also be tracked.
You can expand the list as you please because effective CRM platforms mean reporting and tracking systems which meet your specific requirements. And you're the only one to know these requirements.
Still don't see why your company needs CRM? We're ready to explain your benefits by points.
What CRM benefits do venture capitalists get?
Now we’ll try to convince you that getting CRM systems for firms would be a great business decision.
We’re not going to be unfounded, we have arguments in favor of creating market mainstream CRM solutions.
- Reduced costs, which is due to the automation of complex calculations (and other operations of the sort) and the formalization of business processes.
- Workflow optimization. Notifications (mail, SMS), reducing the number of unnecessary routine tasks, and simplification of data processing lead to significant optimization of all activities.
- KPI based management. For each process, you can select performance indicators (metrics) and start tracking them with your CRM solution.
- Standardization of business processes. The work of the company is being carried out according to a certain scheme incorporated in your mainstream CRM system. This also improves business efficiency.
- A powerful analytical tool which provides comprehensive information about the current state of affairs in a company in real time.
- Increase in business transparency. The item in question logically follows from the previous one: with all the data at hand and the possibility of their detailed analysis, the business becomes more transparent (and therefore more trustworthy).
- Better internal communications. Among others, the company leverages CRM system to store information about each employee, both public data (general contacts, his position, etc.) and confidential information (which is available only to management). Such an approach helps to strengthen the relationship in the teamwork.
What to consider when choosing a CRM platform
You can implement a CRM system by building it from scratch or selecting one of the ready-made solutions. The second option isn’t the most perfect, but it'll do if you have a limited budget or think that creating new CRM software for clients management would take too much time.
Anyway, we strongly recommend that you take into account a few factors when choosing a CRM platform.
Data storage security
Custom CRM solutions involve working with data, which means that there is a risk of losing the information, stealing it (in a case of hacker attacks), and other similar problems.
What could be done to improve data security? We’ll give a few examples of appropriate measures:
- Encoding data. Each transmission must be secure and encrypted. The step is obvious but inevitable.
- Immune to hacker attacks. Again, such a security measure seems rather traditional, plain as a pikestaff, but logical at the same time.
- The use of several centers to store the data. Then you shouldn't be afraid of failures in work of any of the centers. In the end, there are also others to keep your information stored.
- User security. Multiple measures should be provided to secure the processing of user data, including multi-stage authentication, limited access to information, session time, etc.
- Updates. And, of course, the security system must constantly evolve and improve.
The problem of finding the perfect ready-made data management system
We guess everyone knows how to use CRM systems but what about finding the best one? Is it an easy task?
Of course not, because you need to choose the best one of the ready-made web-based management systems - the perfect tool which your whole company is going to use. So, you may encounter a couple of difficulties, such as:
- Each project (as well as every venture capital firm) is unique, and the mainstream CRM system you've found is universal. You'll have to create a data management solution in accordance with your specific custom CRM requirements in order to be fully satisfied with the result.
- Sometimes it's difficult to meet the needs of all departments with a single software. In order to make sure everyone is satisfied, you should test the selected tool, compare it with other solutions, and take other similar steps. Otherwise, choosing a system without such measures and disregarding the opinion of the future product users, you just waste your time and money.
In general, the difficulties we’ve described lead us to the next item, namely…
Customization of ready-made CRM systems for firms
If you decide to take advantage of one of the existing CRM systems for firms, then, sooner or later, you'll have to customize the chosen tool, adjust it to your needs. Of course, you're unlikely to cope with the task on your own; you'll probably have to hire the following experts:
- backend and frontend developers. They'll be able to expand or customize the functionality of your mainstream CRM system, set up a dashboard, integrate new tools and perform other similar tasks;
- UI/UX designer to help you redesign your data management platform and make it more intuitive and easy-to-use. Also, your company needs CRM which would fit into your corporate style.
- QA team to ensure the error-free operation of web-based management systems. Without these experts, you won't manage to succeed either!
Additional points worth considering:
- access to API. If the CRM provider doesn't care to give you a free API, customization can become a difficult task;
- server data output format. The fact is that not all systems provide data in the convenient JSON format, and then it won’t be easy to make any changes later;
- the programming language, in which CRM has been written. Such a parameter affects the issue of finding the right specialists. You must make sure the developers you hire are versed in this language.
How to select the best mainstream CRM system
So, you intend to select a ready-made CRM solution (or create one from scratch). But what to consider in the process of choosing a particular system (or drawing a list of requirements)? To figure out what to look for (or what task to delegate to the developer), answer the questions below.
- What is the list of features you want to get? All the CRM systems for firms are somewhat similar, but there are also nuances, of course. Say, the owner of the online shop wants to have a possibility to monitor buyers, and the representative of the venture capital fond should keep track of startups.
- How much time do you have to implement a CRM system you need? You won't manage to create data management software too quickly (especially when talking about developing from scratch). Customization of the existing tools may take some time either. These factors must also be borne in mind.
- What about pricing? There are free ready-made solutions as well as paid ones. Of course, the latter offer more advanced and flexible functionality. Determine your budget and think how much you can allocate to implement a customer relationship management (CRM) system.
- What is the size of your venture capital firm? The larger the company, the more advanced your mainstream CRM system should be. In addition, be sure to consider the project scaling factor: perhaps, you're planning to expand your company in the future?
- What are you using now for data management? Maybe, you already have an effective CRM platform, and you just want to add new features to it? Otherwise, if you're unhappy with the existing tool, then, of course, the best option is to abandon the old version in favor of the new one.
To get a successful CRM, you need to clearly understand your expectations. Do enough preparation, and only then proceed to the project implementation.
We'd like to believe we've convinced you of the importance of competent data management, and now you understand how to leverage data and CRM systems to your benefit - so that it would lead to the company growth and increasing business efficiency.
If you have questions left or need expert advice on the data analytics strategy, you're welcome to contact us!