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Hey everybody, this is Gene Marks and welcome to this week’s Hartford, Small Biz Ahead podcast. I want to talk about different things every week, of course, that will help you run your small business and run it better. And this week I want to talk about inflation, but I know you’re hearing a lot of news and a lot of things about inflation. But I’ve got something that I think is a little bit more of an angle to it. And that has to do with inflation and CRMs that’s customer relationship management applications. If you’ve got a CRM application, you can be using it to help you navigate your way through this period of rising prices. Now, look, there’s no need to tell you that prices are up and inflation is high. I mean, you’re reading the news, you know that the current inflationary environment will likely pass.
It’s gonna last throughout the rest of this year, probably into 2023. So, the key question you have of course is what do I do about this? And I’ve talked about this before. I mean, your concern is navigating your business through this period of higher prices. I see lots of my clients doing the things that you would expect in a time like these. Like they’re trying to lock into long term contracts or they’re buying inventory in bulk or they’re cutting costs and of course everyone is raising prices. We get that and that’s something that we are all seeing and expecting and it ain’t great. The question is though, is that, if you’re thinking of raising your prices, are you doing so intelligently? Because sadly many of my clients are not, and they’re taking the risk of losing future business because of it.
And that’s where your CRM, your customer relationship management software comes in because the biggest difference between running a business today during this inflationary period and our last ones, when mom and dad were running their businesses back in the late seventies, early eighties, is data. We have lots more data than the generation before us. I mean, the data is in our accounting systems or our ERP systems, but then also in our CRM systems. Again, customer relationship management. And the smartest companies that I’m talking to and some of my best clients, they’re leveraging their CRM tools so that instead of upsetting their customers with like a blanket price increase made in the dark, they’re targeting these increases based on customer profitability and margins and product lines. Now listen, there are many good CRMs that are out there. You’ve heard of Salesforce and Zoho and Microsoft Dynamics and Insightly and Nimble. There’s a bunch of them that you can choose from.
And this is really not a conversation about choosing the right CRM because a good CRM will provide certain tools for you. They will sit on top of your core applications and they will integrate with your core applications, your accounting system, for example. If you have the right kind of CRM system and you set it up the right way with the right tools, you can extract pricing and customer and product data from the CRM system, from the accounting system, excuse me and bring it into your CRM system. It depends on the industry that you’re in, of course, but if you’re running a retail shop or a distributor or a manufacturer, I mean, even a small adjustment to a price can result in a significant increase in your margin. You’ve gotta leverage some of these business intelligence tools, these integration tools to bring this data into your CRM system…
So you can better analyze your pricing and margins and more efficiently target those price increases to certain customers and avoid upsetting others. So, be smart about who you’re targeting for price increases, do it to those customers that you think really need it because of their margins or their history with you. But, you might not wanna have a blanket price increase to all of your customers, particularly your better ones that you might wanna give them a break because they’re gonna be there for the long term. So doing your price increases smartly, using your CRM system is one big thing. The second thing that you want to do with your CRM system is leverage it’s communications because assuming that your CRM system has been integrated with your ERP or accounting system, and you’ve determined which customers and which product lines will be affected by a price increase and how much those increases will specifically be.
Well, now your hard job begins, right? You’ve gotta communicate with your customers. That means emailing, texting, even calling. It means giving your customers advanced notice of when price increases will occur, right? It means updating them on lead times and product availability. It means capturing and analyzing their responses and perhaps adjusting your plans. If it means the loss of revenue. If it’s done the right way and with the right data, though, you probably won’t lose that revenue. Using your CRM system the right way means helping your customer know what’s coming so they can adjust their own plan. I mean, they know prices are going up. They read the same news that you read. They’re raising prices for their customers. They like you. They hate surprises. I mean, remember Tom Hagen and the godfather talking about his boss saying…
Mr. Corleone is a man who insists on hearing bad news immediately. Well, knowing the facts will help your customers in advance, make their better plans. And by the way, it may avoid them having a horse’s head left in their bed as well. So look, there’s no silver bullet for fighting inflation. I mean, my best clients are doing multiple things to navigate their companies through this time of higher prices, but many of them are leaning heavily on their CRM systems. They’re using the data their parents never had back in the seventies and the eighties. They’re targeting their price…
Increases. They’re optimizing their revenue. They’re focusing on product lines that are most profitable and they’re turning to their CRM systems to manage their relationships when this bad news has to be delivered. This is what my smartest clients and business owners are doing in 2022, to fight inflation. Ultimately this challenge will pass. And I know for certain that they’ll still be in business long enough to tell their grandchildren what they should be doing the next time inflation comes back again. Hopefully you’ll be in the same spot as well. So look to your CRM system, leverage it, use that data for not only figuring out your price increases but communicating them to your community. My name is Gene Marks and you’ve been listening to this week’s episode of Small Biz Ahead. I hope you found it helpful. If you need any more advice or insights or help in running your business, please visit us at SmallBizAhead.com or SBA.TheHartford.com. Thanks for listening. I will be back next week with something else that will hopefully help you run your small business. Take care.
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