MBA2366 Q&A Wednesday: What's the difference between a CRM and an Email Marketing software?

Summary

Podcast Summary: The $100 MBA Show – MBA2366 Q&A Wednesday: What's the difference between a CRM and an Email Marketing software?

Release Date: September 20, 2023

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Introduction

In episode MBA2366 of The $100 MBA Show, host Omar Zenhom delves into a fundamental question posed by a listener named Adam: "What's the difference between a CRM and an Email Marketing software?" This episode serves as an essential guide for budding online entrepreneurs navigating the complex landscape of business tools.

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Understanding CRM and Email Marketing Software

Omar begins by demystifying the acronyms and clarifying their distinct functions within a business framework.

• CRM (Customer Relationship Management):
  Omar defines CRM as a comprehensive system that manages "relationship management for your customers from A to Z" ([01:12]). This includes everything from capturing leads, nurturing them into customers, and maintaining ongoing relationships post-purchase. CRMs track all interactions, purchases, communications, and behaviors of customers, providing a holistic view of the customer journey.

  Examples of CRMs mentioned include:

  • Keep
  • HubSpot
  • Intercom

• Email Marketing Software:
  In contrast, email marketing tools are primarily designed to "nurture your leads so they can become a customer" ([01:12]). They handle tasks such as sending newsletters, automations, and email courses aimed at converting leads into buyers and maintaining communication with existing customers.

  Examples of Email Marketing Software mentioned include:

  • Mailchimp
  • ConvertKit
  • Sendfox
  • Mailerlite

Omar emphasizes that "email marketing software is not going to serve you as much as a CRM" when it comes to managing customer relationships comprehensively. However, both tools are not mutually exclusive and can be used in tandem for optimal business operations.

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When to Use CRM vs. Email Marketing Software

Omar shares his personal experience with using both tools in his business, Webinar Ninja, to illustrate their complementary roles.

• Using Both Tools:
  Omar explains, "We use ConvertKit to market... but once they become customers, we manage them inside of Intercom, that's our CRM" ([05:45]). This dual approach allows for specialized functions—ConvertKit excels in marketing automation, while Intercom provides robust customer relationship management.

• Cost Considerations:
  He points out that "CRMs are typically more expensive than email marketing software" ([06:10]). To manage costs, businesses often keep their bulk email lists, predominantly consisting of leads, within email marketing platforms due to their affordability per contact, while reserving CRMs for active customers.

• Type of Business Matters:
  The necessity of a CRM also depends on the nature of the business. For service-based businesses like agencies that require extensive interaction and data management with clients, a CRM is indispensable. Conversely, businesses focusing on selling products or informational courses might find email marketing software sufficient in the early stages.

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Cost and Scalability

Omar advises entrepreneurs to "play with their pricing on their pricing page" ([07:30]) to forecast future costs as their business scales. He recommends evaluating how the pricing structure of a CRM or email marketing tool will adapt when the number of contacts or the business size increases, ensuring that it remains sustainable as the company grows.

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Choosing the Right Tool

To aid in selecting the most suitable tool, Omar outlines a practical approach:

1. Utilize Free Trials:
   He encourages taking advantage of free trials to "make sure that it's user-friendly" ([08:15]) and aligns with the business's operational needs.

2. Involve Your Team:
   Including team members in the decision-making process ensures that those who will be using the tool are comfortable and invested in its adoption.

3. Assess Affordability:
   Omar stresses the importance of not overcommitting financially. If a CRM is too expensive initially, starting with an email marketing tool and gradually integrating a CRM as the business expands is a viable strategy.

4. Evaluate Essential Features:
   He recommends focusing on tools that "help you take action" and serve as effective leverage in the business operations, rather than getting bogged down by unnecessary features.

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Final Recommendations

Omar concludes the episode by advocating for proactive decision-making:

• Start with Email Marketing:
  If unsure, begin with an email marketing software like ConvertKit, which "is essential" for marketing and can be a cost-effective starting point ([09:59]).

• Adapt and Expand:
  As the business grows, entrepreneurs can integrate a CRM to manage more complex customer relationships without regret, as it's merely an addition rather than a switch from their initial tool.

• Mindset on Tools:
  He reminds listeners that "all software is a tool to leverage your efficiency and velocity in your business" ([09:59]). The right tools should facilitate business operations and not hinder them.

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Conclusion

Episode MBA2366 offers a clear and actionable differentiation between CRM and email marketing software, tailored for online business beginners. Omar Zenhom effectively breaks down the complexities, providing listeners with the knowledge to make informed decisions on which tools to invest in as they embark on their entrepreneurial journeys.

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Notable Quotes:

• Omar Zenhom ([01:12]):
  "CRM stands for customer relationship management or manager... it's the total record of communication and actions your customer takes throughout the buying journey."

• Omar Zenhom ([05:45]):
  "We use ConvertKit to market and to turn leads into sales. But once they become customers, we manage them inside of Intercom, that's our CRM."

• Omar Zenhom ([07:30]):
  "Play with their pricing on their pricing page. How much is it going to cost when your business doubles, triples, quadruples in terms of number of contacts, sales..."

• Omar Zenhom ([09:59]):
  "Don't buy something you can't afford. If the CRM software that you need is expensive and you can only afford an email marketing software, go with the email marketing software because that's really essential."

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Recommendation for Further Learning

For those interested in delving deeper into effective business tools and strategies, visiting The $100 MBA Show and exploring their extensive library of actionable business lessons is highly recommended.

Transcript

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[Omar Zenhom]

To the $100 MBA show. Because a better business begins with you. That's why we deliver practical business lessons. I'm your host, your coach, your teacher, Omar Zenholm. I'm also the co founder of Webinar Ninja, an innovative software company I started back in 2014. And today's episode is Q and A Wednesday where we answer a question from one of you, one of our listeners. If you got a question you want to ask, go ahead and email me over at [e-mail]. Today's question is from Adam and Adam asks, hey Omar, I'm new at online business and I've only been doing it for about six months and I'm a bit confused about the difference of a CRM versus an email marketing software. What's the difference? What do I actually need if I'm just getting started and will I regret choosing one over the other if I grow and expand quickly? Thanks for your help. Thanks Adam. I love this question because in business there's so much jargon out there. There's so many acronyms, CRMs and pipelines and all this stuff that you hear and you're not really sure what it means or what's the difference between one thing versus the other. And I love the fact that Adam is just asking the question and I will answer it in today's lesson. There is a difference between a CRM and an email marketing software and it doesn't necessarily mean one is better than the other or one is good and the other is bad. It really depends on what you need or what you perceive you will need in the future. And I'll give you a little insight on how to figure that one out too. I want to set you up for success and make sure you're investing your money in the right thing and not only your money, but your time. Because it's going to take you some time to learn how to use a CRM versus an email marketing software. So let's sort you out, let's get into it, let's get down to business. I want to start out by just flat out explaining what a CRM is and an email marketing software. CRM stands for customer relationship management or manager. While email marketing is primarily used to nurture your leads, capture your leads first, I should say, and then nurture leads so they can become a customer. This is email newsletters, this is email automations, email courses, whatever you want to do to get somebody to become a buyer. You also may want to use your email marketing to send emails to your actual customer like a customer newsletter. And the best way to look at this is email marketing software is not going to serve you as much as a CRM. A CRM is basically relationship management for your customers from A to Z. From the moment that you capture the lead, you nurture the lead, they become customer even after they become a customer. Do they buy other products from you? Do they book calls with you? How many times have they reached out to you or been on your website or whatever it might be? So it's the total record of communication and actions your customer takes throughout the buying journey. While email marketing is more like a one way type of situation where you're marketing to somebody to become a customer once they become a customer. Email marketing really is not really used that much other than maybe sending bulk emails to customers. Examples of email marketing software are like Mailchimp or ConvertKit or Sendfox or Mailerlite. These are really primarily to send out newsletters, automations, that type of thing. And they're not bad software. They're actually really good at email marketing and that's why they're so popular. We use ConvertKit ourselves in our businesses because of that, because they're really good at that. A CRM is more like an infusion software, whether called Keep now or HubSpot or Intercom, even where all your customer communication is stored and tracked. Typically CRMs are more expensive, are more expensive than email marketing software. Now why would you use an email marketing software over a CRM? Well, you might be in the situation that we're in, right? We use both. We use email marketing convertkit in our case to market and to turn leads into sales. But once they become customers, we manage them inside of Intercom, that's our CRM. All the customer service emails go through there. All our communications, we see what they buy, what they didn't buy, how they upsells, downsells, upgrades, the coupons they use. All that kind of stuff happens inside of Intercom. We can see that any automations we create for the customer happens inside of Intercom. So you might be saying well why don't you just use Intercom? Well, there's a lot of reasons. Number one, email marketing is really well done by some of the professional softwares like ConvertKit, like Mailchimp, they specialize in this and they do it better than Intercom. So when it comes to marketing, which is a big part of our business, we want to use the best. So that's why we use ConvertKit to market. The second thing is that cost, it's really expensive. It can get really expensive with the CRM software if you put your whole list, leads and customers in your CRM. Most businesses their leads versus customer ratios like 1 to 5 or 1 to 10, meaning they're gonna have 10 times as many people on their email list that are leads versus customers which will bloat the list and make your CRM bill really expensive. So a lot of people separate this and just keep their customers in their CRM, pay you know, a reasonable price. And since email marketing software is not as expensive per contact they they'll put the bulk of their email list which is leads in the email marketing. A little bit of a pro tip insight tactic there for you. So let's get into why would you use one or the other at what stage in your business? First of all I want to say you may want to check out how your website is managed, what software you're using for your website. You might have a built in CRM already in your website. You might be using a tool like Shopify if you have an E commerce store and there's kind of built in CRM aspects in there or maybe using something like ClickFunnels that also has kind of CRM qualities in there too. So you don't really need to buy a CRM. So that's the first thing I would say is like contact your website provider or the software you're using and find out is there a CRM in there or maybe an add on that's not that expensive. It'll save you some time and effort and of course money. The second thing is that what is the nature of your business? How much back and forth are you going to have with your customer from a transactional point point of view. For example, if you're in the services, you have a service based business, you're an agency and you're billing your customer month after month. Maybe you have different kinds of projects, different price points, they're going back and forth with you with milestones on the project, they're emailing you, they're sending you information. There's a lot of data to manage really, and a CRM is really important here to manage this properly. But on the other hand, if you are a business that sells one or two products, maybe they're informational products, online courses, maybe a coaching program and you're really providing a product and not a service, maybe you don't need a CRM of the Star when we started Webinar Ninja, we only had email marketing for the first few years and then once we started to grow and expand, we needed a CRM and we just added it to our suite of tools. It wasn't like something I had to switch to, it was just in addition to our email marketing this episode is brought to you by the Jordan Harbinger Show. This is a podcast you need to add to your rotation. 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[Omar Zenhom]

Here'S the other thing. Cost. Don't buy something you can't afford. If the CRM software that you need is expensive and you can only afford an email marketing software, go with the email marketing software because that's really essential. You need to market so you can have customers. You can actually manage your customers to some degree with your email marketing software along with spreadsheets or other project management tools that are less expensive. Don't buy into the fact that, hey, I gotta buy something expensive if I want to do it right. No, there are ways to do it right without spending a lot of money, especially when you can't afford it. Hey, before these softwares exist, people just did this in spreadsheets. That's not broken. You could still do it. It's not really ideal, it's not as efficient, but it's still doable. And if you can't afford that versus a CRM, go with that. Next, when you're choosing a CRM or an email marketing software, look at what it looks like as you grow. Play with their pricing on their pricing page. How much is it going to cost when your business doubles, triples, quadruples in terms of number of contacts, sales, whatever their value metrics, whatever the pricing is based on? Play around with that and figure it out. Say, okay, my business right now I'm dealing with, let's say 20 customers or 20 clients and I have an email list of 2,000 people. How much is that going to cost me now? What if I double in the next year? How much is that going to cost me? Is it worth it when I double in terms of my profit margins to pay that amount? Or is it going to get really tight? What about when it triples or quadruples? This is a good way for you to forecast and see if this is a good company for you to invest in and build your customer relationship management needs on. Lastly, all these tools, CRMs, email marketing software, they have free trials. Sign up. Okay, make sure you play around with the software if you're going to use it yourself. Make sure that it's user friendly, make sure that you like the style, make sure what you want to do with your emails and all that kind of stuff. Your automations it can do for you. Sometimes you can't tell by the website or the features page or whatever. Just get your hands dirty. Spend a weekend figuring this out. Take some notes on each of them and then make a decision on which one you like to use the most. Listen, if you like to use it, if it's enjoyable, if it's not a pain to use, you will use it more. Which means your business will grow, you'll market more, you'll manage your customers better. If there's somebody else that's going to be doing this in your team, get them involved in this decision because they're going to be doing this. Make sure that they have some buy in. Put in your calendar when the trial is up so you can cancel if you don't like it before you're charged. And that's simple. Keep the one you like. Lastly, if you don't know what to choose or how to take action, just take action. Start with the email marketing software. You can't go wrong. We recommend Convertkit. If you go to 100mba.net convertkit you can get a free account. Up to 2000 contacts is going to do enough for you to get the ball rolling. Inaction is not an option here. Take action, move forward if you're not clear on which to choose. And then as you start doing and working and building you'll realize okay, this is what I need or I need something else or I might need to upgrade my plan, whatever. But you're really not going to know until you start actually doing the actions and the work you need in your business to see if the software will fulfill those needs. Thanks so much for listening to the 100 MBA. Thanks Adam for the great question. If you got a question you want to ask just like Adam, go ahead and email me over at Omar at 100 MBA NET. Before I go I want to leave you with this. Remember all software is is a tool to leverage your efficiency and velocity in your business. These software supposed to help you, not hurt you. They're not the end all and be all. It helps you take action. It's not the actual business. It's the thing that helps you do the things, the work that you need to do in your business. It's a way for you to communicate regularly with your customers so that they can buy more of your products and services. It's a form of leverage. It's like AI, right? It's basically automation. That's what these, these softwares do the automate a lot of the work. So just choose the right tool that you need right now and then expand as you grow. Thanks so much for listening, and I'll check you in Friday's episode. I'll see you then. Take care.

[Jim from Sales]

And we're back, folks. It looks like Jim from sales just got in from his client lunch, and he's got receipts. His next meeting is in two minutes. The team is asking, can he get through his expenses in that time? He's going for it. Is that his phone? He's snapping a pic. He's texting Ramp Jim is fast, but this is unheard of. That's it. He's done it. It's unbelievable.

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