Spreadsheets or CRM software: Do you have to switch?

Love them or hate them, spreadsheets are incredibly useful for number crunching. They may be clunky, difficult to navigate, and downright monstrous to repair when data errors occur. But they’re also indispensable for many small businesses, not only because they’re inexpensive but also because they’re so… familiar. The standard spreadsheet interface is clean, plain, and easy to get used to. There are problems, but they are problems we can understand and expect.

These days, however, talks about the digital revolution are ceaseless. New tech solutions are coming out every day, aiming to usurp the familiar tools we've been working with for decades and bring us into a new era of business management. This has led to a rise in emphasising long-term customer relationships over one-time conversions.

So do spreadsheets still have a place in this kind of professional environment? And if so, are they worth sticking with to maintain that familiarity? Let's break it down.

Can you use a spreadsheet as a database?

Of course, you can. You don’t even have to create it yourself—there’s a whole industry of spreadsheet experts and consultants who’ve created thousands of hours’ worth of videos and a whole hard drive’s worth of templates for you to get started.

Spreadsheets can hold a lot of data, and they can do so fairly efficiently. Google Sheets, for example, represented an immense upgrade from the vintage Excel that many of us were using on Windows '99 and before. Since then, Excel has also evolved and grown—so much so that online spreadsheet software is now the cornerstone of any numerical operation, whether you’re analysing revenue or a trying to figure out how much each person owes for a team lunch. The reason we still gravitate towards spreadsheets for powerful data calculation and storage is because they offer a lot of features to ensure data integrity.

Of course, there are still some valid problems with spreadsheets, such as data entry errors or formula overwrites, edits that don't carry over to other relevant cells, and—perhaps one of the most annoying—tracing who did what when you have multiple people accessing the same document. These are all good reasons not to rely entirely on a spreadsheet, but many small businesses don't have time to copy data from one database to the next. The benefits outweigh any potential issues, and spreadsheet programs are evolving to rectify some of those common problems anyway.

That said, the classic spreadsheet is not the one tool to rule them all. There are drawbacks, especially once your business starts to forge lasting relationships with customers. At that point, a database full of basic details will no longer cut it.

Can you use spreadsheets as a CRM?

A CRM helps salespeople track their customers’ details. This involves a lot of data, so technically, you can use a spreadsheet as your CRM—if you’re used to using a spreadsheet as a database.

Let’s not get lost in technicalities, though. A CRM is a database of your customers’ information. So a standard database (which spreadsheets can be) can hold your customer data, and help you manipulate some of that data.

But a database is not a CRM. Sales is not just about storing customer data and knowing when they last purchased from you so you can arrange a follow-up. If that’s all you want to do with a CRM, then yes, a spreadsheet is more than enough. But as businesses transition to employing increasingly effective techniques for upping customer experience, there's the risk of being outdone by competition.

To build strong relationships with your audience, you need to know all there is to know about your customers (within reason, of course). This includes information like:

• What they purchased from you
• When they purchased it
• Which salesperson they bought it from
• Their feedback about that specific salesperson or transaction
• Any details of that conversation, like discounts or add-ons offered
• Every customer support ticket they've made since that purchase
• Their overall satisfaction with the product
• How long they've been a customer
• How many bad experiences they’ve reported since first becoming a customer
• How that number compares to the overall amount of interactions they've had with your business

And that's not even half of the data you need for every customer. Good luck storing all that in a spreadsheet, not to mention retrieving it on demand.

Case in point:

Funding Strategies is a financial advisory firm that caters to small businesses seeking capital as well as large businesses and individuals looking for investment opportunities. Until 2015, the Funding Strategies team used spreadsheets to track customer data.

"Essentially we were managing each client using spreadsheets and, often, we would have one investor looking at multiple investment opportunities. This was really messy to track. We'd be in meetings with investors and, because the information was scattered across multiple sheets, we didn't have a good visual of everything they were interested in,"
Mark Rainbird, Co-founder

That’s why CRM software is important for salespeople. It’s purpose-built for relationship building. Unlike a spreadsheet, a CRM doesn't load all the data at once. Instead, it loads a single interface from which you can navigate, search, and filter to find exactly what you need whenever you need it. The less intimidating the interface, the more productive you can be.

In the case of Funding Strategies, the team implemented Zoho CRM and immediately saw an improvement in their operations. Read more about the company's journey with Zoho CRM.

Can’t you build customer relationships using spreadsheets?

You can. Conditions apply: If you're a solo or micro business with customer numbers in the tens to about a hundred.

As a micro business, you (and your staff, if you have any) can easily remember a hundred people. You may not know their entire purchasing history and preferences, but you'll still know enough to recollect elements of their relationship with your business—elements like their name, where they live, a mutual friend you have, or a cool tie they wore to your first meeting—all those triggers we use to remember and recollect conversations with random people. Because you know them all individually, it'll be easier to locate the data you need in a spreadsheet and update it.

One drawback of having such a spreadsheet setup, even for a micro business or solopreneur, is that you’ll still spend a considerable amount of time manually entering, updating, copying, and verifying data.

You might be able to automate most of that manual work, but that’d mean introducing an integration between your systems. You’d use APIs or no-code tools like Zapier and Zoho Flow to connect your primary data source to your spreadsheet. For example, if you have a sign-up form on your website, you’d connect that with your spreadsheet so that the next time someone fills out your form, it’ll be automatically added to your prospect sheet. It's an extra step (and sometimes cost) each time you integrate an additional system, whether that's social media channels or online marketplaces.

Even if these integrations would save you huge headaches, would you want to spend the time and money integrating your systems comprehensively when you have fewer than 100 customers? That’s a question to consider before making software vs spreadsheet decisions.

When is it unrealistic to depend on spreadsheets?

Businesses are apt to grow, and when you have find yourself with thousands of customers you haven't even met and long sales pipelines with multiple points of discussion, you don’t want to have all of that on a spreadsheet. In fact, Gartner research found that 58% of sales managers struggle to complete all their tasks within a given deadline. 52% say they have to work around internal processes to get their work done.

As your organisation expands, those spreadsheet problems that you were content to deal with before suddenly get overwhelming. Accidentally overwriting a formula or having to update an email address across multiple spreadsheet tabs becomes much more time-consuming and stressful. Not to mention that, even though cells can hold an immense amount of information, they're small, and aren't designed to allow easy access to that data. A proper CRM dissects your information and presents it in a way that's easy to examine, analyse, and draw conclusions from.

Final thoughts

A good customer experience stems from salespeople who are empowered to provide the best service to their customers and prospects. Having the right tools is essential to ensure that you're offering unparalleled support. As your business grows, don't be afraid to recognise when you're outgrowing your spreadsheets. The cell-based formula is a great product to have around, but a CRM goes even further.

"A straight spreadsheet will only do so much. As you start adding macros to do clever things with it so you have enough data to support a customer service operation, you'll very quickly have to stop because it's a waste of energy. When you're building a customer-facing business, you realise that literally on day one. And you've got to go out and shop for the right tool to do the right job."
- Ray Trevisan, Fund Manager and Director of OTG Capital

As a Zoho customer, Ray wanted to make sure he had a tool that offered a comprehensive audit trail so he could keep track of who did what and when, and have everything in a reliable cloud architecture so that he'd have the flexibility to work remotely. You can read Ray's story here.

An efficient CRM makes it easy to keep up with your sales pipelines and increase your profits. We highly recommend trying one out first. If you need some guidance, just ask. We'd be happy to help—no strings attached.

Read next: How to choose a CRM that'll help your small business thrive