What Is Contact Management, and Why Is It Important?

  • Contact management is the process of storing and tracking data on customers and leads.
  • In addition to providing quick access to customer data, investing in contact management can help you grow and diversify your customer base.
  • Upgrading to customer relationship management software can provide advanced data that allows you to increase engagement between your company and its customers.
  • This article is for business owners who want to improve their customer relationships using contact management software. 

Gone are the days of exchanging napkin notes and business cards. In today’s fast-paced business world, it can be hard to remember every customer’s name and their individual  preferences. That’s why it’s essential to store data electronically, share it with team members when needed and continuously gather information to successfully interact with clients and customers.

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Contact management, a digital method of storing data, can help you grow and diversify your customer base. As your business grows, it will get more challenging to collect data and determine which information is valuable to you, your employees and your company’s sustainability.

But who has time to input all of this information manually? Fortunately, contact management software can automatically collect and analyze data from purchases, marketing campaigns and previous conversations.

Contact management is a means of entering customer and lead data for storage, quick access, editing and tracking. Contact management can be as simple as a spreadsheet or as complex as customer relationship management (CRM) software.

By digitizing contact management, you can give your employees access to valuable customer data. All departments can view the same data, so you speed up communication and streamline processes. When you make communication more efficient, you can focus less on business tasks and more on your customers.

In today’s business environment, you have to do more than just personalize a sales email with someone’s name in order to make a sale. Customers are loyal to companies that remember their specific preferences, and they expect a stellar experience every time they place an order online or receive a package in the mail. Going above and beyond not only creates repeat sales but also encourages referrals, which could significantly decrease your overall customer acquisition costs. 

Key TakeawayKey takeaway: Contact management is how you enter your customer and lead data for storage, access, editing, and tracking, so it’s essential for growing and diversifying your customer base.

Contact management software can keep information about your prospects and current customers organized in a searchable format. The software can handle basic information, such as names, phone numbers and email addresses. It can also track fundamental interactions between the company and the contact, and keep track of important calendar events.

Although contact management software and CRM software overlap in some areas, there is a difference: A contact management system offers basic features, whereas CRM software provides advanced tools to integrate sales, marketing and reporting tasks. Having business goals in mind before comparing the two types of systems will help you decide which software is right for you.

For example, while a contact management system can use a few contact details and organize them for easy access and essential interactions, a CRM increases the amount of data you can gather on customers and leads, and uses that data to segment your audience and provide reports that can improve your relationships with customers. While contact management allows businesses to store customer information, CRMs enable companies to go a step further by taking that stored information and creating and nurturing relationships in real time. 

Here are some of the benefits of CRM software: 

  • Access to real-time data. By choosing a cloud-based CRM, you can access customer data in real time and keep your entire team informed of any additional data or changes to contacts. Plus, you are not tied to the office; employees who travel or work remotely can access the data in real time, too.
  • Integrations. CRMs often have third-party integrations that automatically fill in data gaps. You can even utilize third-party apps to analyze customers on their social media accounts. Integrations can be beneficial for not only managing customer service but also tracking where your customers spend time online.
  • Collaboration. Often in business, brainstorming brings new ideas and can help close a complex sale. CRMs make it easy for sales and marketing teams to collaborate and succeed together, such as by creating a higher level of personalization for the customer, A/B-testing campaigns and measuring return on investment. 

Did you know?Did you know? While contact management software and CRM systems both collect and store data, CRMs give you advanced features for sales, marketing and reporting.

If you are in the business planning stage or have just launched your business, a CRM might not be the right fit. After all, using a contact management system first to learn who your loyal customers are will help you narrow down contacts when you are ready to upgrade. Plus, you will save money on monthly software costs, integrations, employees and training while you are still building your business’s foundation.

But if you have an established business or have recently seen an uptick in revenue, you may be ready to move from a contact management system to a CRM. Before you sign a software contract, though, ask yourself these questions: 

  • How many loyal customers do you have?
  • How many employees are available to enter and analyze data?
  • Is it necessary to record detailed information and interactions with your customers?
  • Does your industry require lengthy, complex sales?
  • Does your industry need quick, repeat purchases?
  • Does your company sell across a significant geographical location?
  • Do you expect upward business growth for the next few years? 

Thoughtfully answer the above questions to weigh the pros and cons of using a CRM. If you have only a few employees (even if it’s common in your industry), a CRM might cost more than it’s worth. The same goes for customers; a small customer base can be easier to maintain via a contact management system, since a CRM can be complex, with details spanning multiple pages. Plus, a business with fewer customers will need more periodic data recorded, as it can be more accessible to segment customers by a couple of factors.

If your industry requires long, complex sales, or short-shelf-life products that force quick sales, a CRM can help you garner data to increase your chances of a successful sale. A CRM can also be beneficial for state-wide, national or global scales. Advanced data can segment customers by location so you can provide the best products and services for each territory.

Check out our CRM software guide to find the best option for your business. 

TipTip: Analyze your current business status using the above questions to choose between a contact management system and a CRM.

After you consider your business goals, it’s time to narrow down the software options. Because most business software has many competitors, you will need to research them before choosing one. [See our more detailed guide on how to choose CRM software.] 

Here are a few areas to review in your search: 

  • Colleague recommendations. If you have a trusted colleague who is in the same industry or follows a similar business plan, reach out to them for feedback on contact management and CRM software. For example, ask them which systems have better customer service, payment plans and integrations. Consulting colleagues or mentors can save you time compared with trying out every system on your own. 
  • Online reviews. Seek out reviews from other users by doing a simple Google search. Look for positive reviews about customer service, frequent software updates and ease of use. Beware of companies that lack current reviews, have complaints about a broken feature that is important to you or have experienced billing issues. 
  • Free trial. Free trials give you the opportunity to explore the dashboard, navigation and customer service options of a system before paying for it. Look for contact management software that offers this option so you can try before you buy. 
  • Excellent customer service. Choose software that has responsive, professional customer care. A system with 24/7 service is ideal, but seek out a company that can answer your question within a few hours or at least provides an online FAQ tutorial database for simple issues that may arise. 
  • Onboarding. If you have never used contact management or CRM software, you may want to choose a company that offers in-person or virtual onboarding so you can get the most out of the software. Having someone walk you through the features you plan to use can save you time and frustration. Plus, you will want to have a good grasp on the software if you need to train additional users.