A complete guide to CRM software for small business: How to connect it and use it to track and grow your business

Published Friday 5 December 2025

Table of contents

• What is CRM software for small business
• The customer is key to business success
• What can CRM applications do?
• Best CRM software for small businesses
• Free CRM solutions for small businesses
• How to choose a CRM application
• Integrate with your other systems
• Don't let the data go stale
• Run regular reports
• Automate repeated processes
• Making CRM work for your small business
• FAQs on CRM software for small business

Key takeaways

• Choose CRM software that integrates with your existing tools like accounting software to create a unified system that provides clearer business insights and eliminates duplicate data entry.

• Maintain data quality by logging every customer interaction immediately and updating contact details regularly, as outdated information makes your CRM system unreliable and reduces its value.

• Automate repetitive processes such as quote reminders, lead notifications, and follow-up scheduling to save time and ensure no opportunities fall through the cracks.

• Run regular reports on your sales pipeline, team activities, and customer issues to transform stored data into actionable business insights that help you identify opportunities and problems before they impact revenue.

What is CRM software for small business?

CRM stands for Customer Relationship Management. At its heart, a CRM is a system that helps you manage all your business's relationships and interactions with customers and potential customers. The goal is simple: improve business relationships to grow your business.

Think of it as more than just a digital address book. A good CRM system helps you stay connected to customers, streamline processes, and improve profitability. It gives you a central place to store customer and prospect data, track interactions, and manage your sales pipeline.

The customer is key to business success

Customer retention drives small business success more than customer acquisition. Here's why:

• Cost efficiency: Keeping existing customers costs 6-20 times less than finding new ones
• Revenue growth: Loyal customers buy more and refer others
• Competitive advantage: Strong relationships protect against competitors

This is why managing customer relationships makes financial sense.

CRM software has been around for years, helping businesses keep track of their interactions with clients and offering tips on improving contact. Your software helps your business most when you and your team use it consistently and correctly. Here we look at ways in which it can help your small business, with tips on what to do – and what to avoid.

What can CRM applications do?

CRM applications function as comprehensive customer databases that store contact details and track every interaction. The software adapts to your business needs and can handle multiple functions:

• Contact management: Store customer details and communication history
• Interaction tracking: Log calls, emails, meetings, and support requests
• Automated reminders: Schedule follow-ups and contact alerts
• Campaign analysis: Track marketing results and identify opportunities
• Sales performance: Monitor team productivity and training needs
• Customer retention: Create targeted offers for at-risk clients

Simple CRM software can help you get more value from the customers you already have and win new ones, placing your business among the 85 per cent of small businesses that use at least one digital tool. So once your small business reaches a certain size, it makes sense to use good software.

Best CRM software for small businesses

With so many options, finding the 'best' CRM software depends entirely on what your business needs. A tradesperson might need a CRM that's great on mobile for on-site updates, while a consultant might prioritise a system that tracks project progress and client communication.

Instead of looking for a one-size-fits-all solution, focus on what will make your work easier. A good place to start is to look for CRM software that connects with the tools you already use, like your accounting software, as some platforms have marketplaces that contain about 700 apps for various industries. An integrated system gives you a clearer view of your business and customer health.

Free CRM solutions for small businesses

When you're just starting out, every dollar counts. Many CRM providers offer free plans, which can be a useful way to get organised without an upfront investment. These are great for managing basic contact information and tracking early sales leads.

Keep in mind that free versions usually have limitations, such as a cap on the number of users, contacts, or advanced features. It's wise to choose a provider that offers a clear growth path, so you can easily upgrade to a more powerful plan as your business expands.

How to choose a CRM application

Choosing the right CRM requires evaluating key factors that match your business needs. Focus on these essential criteria:

1. Pick the right features

Feature selection should match your business size and complexity. Large enterprise solutions often overwhelm small teams.

Choose features that:

• Meet current needs: Essential functions you'll use daily
• Allow growth: Capabilities you'll need within 12 months
• Stay simple: Interfaces your team can learn quickly

Research what similar small businesses use before deciding.

2. Review competitive pricing

CRM pricing must deliver positive return on investment (ROI) to justify the spend, and the rapid growth of business software providers – with some now worth A$11 billion – highlights the value companies place on these systems.

Steps to evaluate cost:

• Forecast revenue increase: Estimate sales improvements from better customer management
• Compare subscription costs: Factor in per-user fees and setup charges
• Calculate break-even point: Determine how long to recover your investment

3. Plan for scalability

Scalability planning protects your investment as your business grows. Evaluate these factors:

• User capacity: Can the system handle your projected team size?
• Cost progression: How do per-user fees change at different tiers?
• Feature expansion: Will advanced tools be available when needed?
• Data portability: Can you export information if you need to switch?

4. Provide good support

Support quality reflects how the provider will treat your business. Research their customer service approach:

• Response time: How quickly do they address issues?
• Problem resolution: Do they follow through until problems are solved?
• Resource availability: Are help docs, tutorials, and training accessible?
• Customer feedback: What do recent reviews say about support experiences?

5. Consider cloud connectivity

Cloud connectivity enables real-time access from anywhere, essential for modern small business operations.

Cloud CRM benefits:

• Mobile access: Update customer data during meetings or site visits
• Automatic backups: Protect against data loss without manual effort
• Team collaboration: Share information instantly across locations
• Automatic updates: Get new features without installation hassles

Integrate with your other systems

CRM integration multiplies your software's value by connecting customer data across your business systems. Key integrations include:

Email and scheduling software

Email integration centralises customer communications and automates scheduling.

Benefits:

• Message tracking: Automatically log emails in customer records
• Search functionality: Find past conversations quickly
• Meeting coordination: Schedule appointments directly from contact records

Accounting software

Accounting integration connects customer relationships with financial performance. This combination enables:

• Revenue analysis: Track which customers generate the most profit
• Purchase history: View complete order records for each client
• Cross-selling opportunities: Identify products customers haven't tried
• Payment tracking: Monitor outstanding invoices and payment patterns

Other cloud apps

Cloud-based integration happens automatically through pre-built connections. When evaluating CRM options:

• Review integration lists:Check which apps connect to your CRM
• Verify key connections: Ensure your essential tools are supported
• Test functionality: Confirm integrations work as expected during trials

Integration with other systems will save time and remove the need to enter data twice. That in turn will save money and give you useful information to help you deal with your customers.

For applications that integrate with CRM software – such as HubSpot and MailChimp – check out the Xero App Store.

Don't let the data go stale

Data quality determines your CRM's effectiveness. Outdated or incomplete information makes the system unreliable.

Essential maintenance tasks:

• Log every interaction: Record calls, emails, and meetings immediately
• Update contact details: Verify phone numbers and email addresses regularly
• Track meeting outcomes: Note decisions, next steps, and follow-up dates
• Assign data responsibility: Ensure team members know their update duties

Think of this system as a treasure trove of useful information that can be mined in all sorts of different ways. The more up-to-date the information, the more valuable it is to your small business.

Run regular reports

Regular reporting transforms customer data into actionable business insights. These reports help you identify opportunities and problems before they impact revenue:

• Pipeline report: Track sales opportunities and identify which leads need attention
• Activities report: Monitor team productivity and upcoming customer contacts
• Issues report: Manage customer problems and track resolution progress

You can and should configure your software to send these reports automatically and frequently. The information they contain will help you manage your business more effectively.

Automate repeated processes

Process automation eliminates repetitive tasks and ensures nothing falls through the cracks. Most CRM systems offer these time-saving features:

• Quote reminders: Get alerts before proposals expire, preventing lost sales
• Lead notifications: Receive instant updates when prospects take action
• Contact scheduling: Identify customers who haven't been contacted recently
• Follow-up tracking: Ensure no leads from marketing campaigns get forgotten

All good CRM systems have automation built in, reflecting a wider trend where nearly 40 per cent of small businesses have adopted some form of artificial intelligence (AI) to improve processes. Once you set up your CRM properly, it can handle these parts of your business faster and more productively than before.

Making CRM work for your small business

CRM success depends on proper implementation and consistent use. Follow these steps to maximise your investment:

• Choose wisely: Select software that matches your business size and needs
• Integrate thoroughly: Connect with your existing accounting and email systems
• Train your team: Ensure everyone uses the system consistently
• Maintain data quality: Keep customer information current and complete
• Use reporting: Turn data into actionable business insights

When implemented correctly, CRM software helps you retain existing customers while attracting new ones through better service and follow-up.

Ready to streamline your customer management? Try Xero for free and discover how integrated business software can transform your small business operations.

FAQs on CRM software for small business

Here are some of the most common questions small businesses ask about CRM software.

What's the best CRM software for a small business?

The best CRM is one that fits your unique business needs, budget, and integrates with the tools you already use, like your accounting software. Look for a solution that solves your biggest challenges, whether that's managing sales leads or improving customer service.

Is there a free CRM system available?

Yes, many providers offer free CRM plans. They're a good starting point for managing contacts and basic sales pipelines, but often have limits on users, contacts, or features. They can be a great way to get started before you need more advanced tools.

What are the four types of CRM?

CRMs are typically categorised as operational (automating sales and service), analytical (analysing customer data), collaborative (sharing info across teams), and strategic (focusing on customer-centric processes). Many modern CRMs combine elements of all four types.

Is Excel a CRM software?

While you can use Excel to list contacts, it's not a true CRM. It lacks the automation, real-time tracking, and collaborative features that help you manage customer relationships effectively and save time.

How long does it take to set up CRM software?

This can vary. Simple, cloud-based CRMs designed for small businesses can often be set up in just a few hours. Choosing a CRM that integrates easily with your existing software, like Xero, can make the setup process much quicker.