Do you know your customers? Probably not as well as you think. Customer relationship management, or CRM, helps focus your business on the folks that butter your bread.

Part mantra, part software - CRM includes a wide range of tools designed to understand and serve both prospective and existing customers more effectively. At first glance, this may seem like an additional unnecessary expense with little return. However, taking a customer-centered focus should be able to boost your revenues, lower your overall expenses, or achieve both goals.

CRM applications can be grouped into a few large buckets. Sales force automation tools help track your pool of prospects as they move from interested leads to paying customers. This includes software that forwards incoming leads and tracks interactions with prospects. Armed with such information, you can better forecast your expected revenue, understand your sales cycle, and evaluate the effectiveness of your salespeople.

Customer support automation improves the process of handling customers so you can better satisfy them while minimizing your costs. Whether you support your customers through a call center, in-person, or online, a wide variety of applications exist. They range from live online help, searchable knowledge bases to look up answers to previously asked questions, and case tracking to ensure no inquiry gets lost.

Finally, marketing automation tools help track the effectiveness of your various advertising or marketing efforts. These tools track the expenses from activities like trade shows, mailings, and advertising and compares them to the sales that were generated and attributable to these efforts. While it may be a less than perfect measure in some cases, trying to determine the return on investment for these efforts is a terrific discipline that can only improve any company.

The good news is that CRM has finally come downstream with vendors offering packages designed for small businesses. However, make sure to take the time to evaluate whether the software is truly built to size or simply a large suit cut small. To ensure the best fit, look for CRM that specializes in the need you want addressed.

CRM products can still be pricey though. Do not be surprised to see price tags in the $3,000 to $5,000 range. Prices can easily escalate into the tens of thousands of dollars and even higher for more complex implementations.

To make it easier on the budget and for companies without in-house technical support, hosted CRM applications do exist. Pricing ranges from $50 to $150 per month per user. If you are testing the CRM waters for the first time, this can be a great way to cut your teeth without having to invest the months it can take to get a system actually integrated into your system.

In a world where fewer and fewer customer interactions actually take place in person, implementing CRM technology can be an excellent way to provide a more personalized touch when working with your customers.