CRM’s Essential Role in Early Venture Development

Summary Via ChatGPT. This article discusses the importance of implementing a customer relationship management (CRM) strategy in the early stages of a startup. The author argues that CRM is not just about capturing customer data during the sales process, but also about establishing a customer-centric mindset and managing all relevant stakeholder relationships. The article suggests that a CRM strategy can help a startup align its operations around the customer journey, automate frequent tasks, manage multi-channel customer engagement, create favorable brand impressions, and understand customer needs and preferences.

For most startups, the concept of customer relationship management (CRM) comes into focus at the launch stage. CRM is commonly associated with a specific software application that supports customer data collection and workflow during the sales process. However, I think using a CRM should start much earlier in the venture realization process. In fact, as a founder, you should consider establishing a CRM strategy during the early pre-screening of the opportunity you wish to pursue.

This post will discuss the rationale for starting your CRM process early and how it supports customer engagement from discovery to launch. Additionally, the article explores the use of CRM to manage other significant relationships with stakeholders, from domain experts to potential investors. The main takeaway is that CRM is essential to venture knowledge management. As noted in an earlier post on information search, there is a great deal of information and data to manage throughout the venture process. Establishing a structured way to capture and collect this information will be a critical success factor for a new venture.

CRM Basics

Traditionally, CRM is considered a method to capture information about your customer during the sales process. In effect, notes about every interaction from initial engagement through post-purchase activity. This use case has many benefits. First, it establishes a customer-centric mindset, aligning all company operations around the customer journey. As I will discuss, this is a critical mindset for early ventures. The difference lies in the information collected and metric monitored. Vital information and metrics change throughout the venture realization process.

Secondly, today’s CRM systems tend to support workflow across business operations. The focus tends to revolve around sales, marketing, and customer service. For startups, most of these activities revolve around a small team, making workflow efficiencies all the more critical. Many CRM applications offer automation to support frequent tasks such as emails, follow-up communications, social media scheduling, and lead generation tasks.

Thirdly, CRM systems involve customer engagement. Enterprises of all sizes need to manage and track customer communications across multiple channels. Startups face the same communication challenges, meeting the customers where they are, whether in person, via SMS, or social media. Managing multi-channel engagement is difficult.

Fourthly, whenever a customer comes in contact with an enterprise, the customer can form an impression of the brand. Of course, this is important for all organizations to create favorable brand impressions. As a startup founder, every customer contact is helping them form this brand image, primarily by assessing your and your team member behavior. In larger companies, customers may come in contact with many different people. This situation has its challenges as well. But for startups, it is hyper-focused on a small number of individuals, so these engagements must be well managed. 

Finally, CRM processes provide a systematic opportunity to understand customer needs and expectations to create products that offer the proper value to them. The more you learn about your customers, preferences, and behavior, the more likely your product offering will be on target. For larger enterprises, this knowledge helps build successful product portfolios. In addition, this information drives new product development and testing activities in the startup context.

CRM in Startup Context

Many advocates advocate for a more comprehensive application of CRM systems and processes across the business. Today, many CRM systems support a more holistic view of the enterprise, encompassing all relevant stakeholders. For a startup, this holistic approach should include employees, domain experts, influencers, advisors, investors, vendors, and other strategic partners. The focus should be on relationships and engagement, both internal and external, to the venture. Traditionally, CRM systems focus on marketing, sales, and operations. For startups, this narrow focus does not allow for the proper alignments across all aspects of the business model. In the early stages, every central element of the business model should be under scrutiny, with most assumptions needing validation. An effective CRM system provides founders with a great deal of actionable information. 

I suggest startups develop a CRM system very early as the target customer comes into view. As you define the market opportunity, it becomes increasingly clear who your target customer is. For startups, early customer segments are individuals or firms actively trying to solve a problem or address a situation and are highly dissatisfied with current solutions. At this stage, you should be able to a CRM process that focuses on the target customer while allowing for future segment expansion. This hyper-focus on the target customer enable the founder and team to identify, engage, and build relationships with an optimal early customer base. 

While there are many categories of information that you can collect in your CRM system, I want to suggest a few areas for startup founders to focus on as they develop their venture’s system. The information categories break into three major areas, target customer profile, early engagement, and sales funnel transition. The primary purpose of a startup CRM is to follow your customer engagement journey from before you have an actual product and to acquire a paying customer. 

The Customer Demographics Profile

All CRM systems capture essential customer information, from contact specifics to market segmentation data. For startups, considering each contact through the lens of your target segment helps ensure you learn as much as possible about your customer’s overall profile. Target customer profiles include specific demographic, geographic, and behavioral information. Additionally, you are interested in understanding the reasons for their interest in a solution and potentially one that you develop. Capturing this information keeps you hyper-focused on your target segment and helps validate early assumptions about these early potential customers. Finally, of course, you may connect with individuals outside your target and, thus, helps to identify later buyer segments. 

Geographic. I suggest that you establish geographic boundaries for your early venture launch. From a geographic perspective, where will you most readily reach and engage your customers? You must consider all aspects of customer engagement, including marketing to the customer, answering pre-sale questions, distributing your product and service, responding to customer service issues post-sale, and hopefully selling additional products later. You should re-evaluate your geographic limits if location limits any of these engagement activities.

Demographic. The next segment category for you to research is the demographics of your customer base. Commonly-used demographics include age, gender, ethnicity, income, disabilities, mobility, educational attainment, homeownership, and employment status. In this early stage of customer definition, you should envision the characteristics of your typical customer. How old are they? Is your product most relevant for specific gender and or ethnicity? Are your products or services related to homeownership or renters? Is income level a significant factor in purchasing your product? Once you identify the most relevant demographic categories, you will have a good start on imagining your typical customer. Collecting this data in your CRM can fine-tune these early assumptions as you engage more target customers.

Firmographic. For Business-to-Business (B2B) profiles, segmentation focuses on business entities, the purchasing decision-maker, and the end user where applicable. If you are collecting enterprise-level data, you are now looking at industry classification, firm size, product or service categories, and the firm’s geographic reach. For behavior, you collect information on the company’s procurement process, including critical decisions and sales cycle. You will probably identify more than one decision-maker, especially in a larger enterprise. You will collect notes on all crucial individuals associated with a purchase decision.

Context. An essential element of understanding your customer’s needs is to identify precisely their situation’s what, when, where, and why. Why is the customer actively looking for a solution? When and where do they experience various pain points? What actions are they currently taking to solve the problem? The context in which the customer opportunity sits is a significant driver of segmentation. A change in one element creates a different segment. For example, the customer who experiences a specific issue at home is likely another segment from the individual who deals with the same problem at work.

Lifestyle. Lifestyle is the behavioral patterns you expect to observe in your target customer. A customer’s lifestyle includes activities, attitudes, interests, opinions, values, and income allocation. It reflects your customer’s self-image—how they see themselves and believe how others see them. The lifestyle definition goes hand in hand with the specific behaviors essential to your customers’ overall behavioral profile. So if you plan to target health food enthusiasts, you will want to know about their behaviors around finding and selecting healthy restaurants and menu preferences, choices, and frequency of visits. CRM data on a customer’s lifestyle becomes highly relevant as you think about marketing and brand messaging.

Behavioral. Another critical way to segment customers is around common behaviors that manifest in general or are related to the task and problem area your venture is attempting to solve. Startups must obsess over identifying critical customer behaviors that are specific and measurable. For example, suppose you are starting either a retail food establishment or possibly an app that connects consumers to particular types of restaurants. In that case, you will be interested in your target customer’s behaviors around selecting and going to restaurants. It would be best if you quantified behaviors when possible. For example, how many times does your typical customer go out to eat per week? This specific behavior is different from an overall lifestyle, which has more to do with behavior patterns. Labeling as a “foodie” or “health food enthusiast” are lifestyle definitions that break down into specific behaviors. 

Special Characteristics. This customer segmentation category identifies unique product ownership or characteristics related to the customer task or problem. For example, if your product or service offers smartphone accessories or support, you want to target customers who already own a smartphone or a specific operating system. 

Reason for Solution/Purchase. This last category allows you to articulate the core reason that the customer wants to purchase your solution. These reasons should coincide with your value proposition. In other words, the key benefit the customer will want to derive from purchasing your product or service. Your understanding of what is essential to your customer during early startup development will change. Your CRM can help document these changes and may signal another way to look at future segmentation. Customers value products differently, leading to new segments.

As you segment your market, look at all the above categories. The more you use your CRM to group customers into well-defined segments, the easier you can target these individuals for specific engagement opportunities and marketing messages. Here are templates to support B2C and B2B segmentation. 

Early Customer Engagement

Once you have defined your target customer segment, you can begin to capture information during two major engagement points, customer discovery and minimal viable product testing. These two customer engagement touch points provide startups with information about the customer’s current experience without your proposed solution, followed by their perspective on your new product offering. You should manage these engagements to engage the customer multiple times as you shift your focus from problem to proposed solution. You derive a good deal of information during this process. Thus, having a CRM system helps capture data and manage the associated workflow of multiple engagements. 

Customer Discovery. As you initiate customer discovery, you can capture important information about your customers and the target segment. Right from the beginning, I encourage students to develop the customer profile as quantifiable as possible. This effort is vital for several reasons, including market size calculations and early access metrics. Demographics are readily quantifiable, but lifestyle and behavior are more complex. I always suggest that founders establish goals for finding and engaging early customers. I have them set up a spreadsheet with categories to check, including critical demographics and behaviors (or behaviors that serve as a proxy for the actual customer behavior). You want to measure how many target customers you find within the specified segment, where you access them (sources), and how many convert to actual engagement. If you are not increasing these numbers, it says something about your market access and the challenge of creating early awareness.

Once you begin customer discovery and engagement, you can start to validate your core assumptions about the importance of solving the problem in question, the severity of the pain points, and the degree that the customer is dissatisfied with current market solutions. You should create a scale that measures these customer sentiments during your interviews or survey efforts. Pay particular attention to any variation across segments or differing contexts. For example, look for the number of customers who desperately want to solve the problem versus those that see it as something that would be helpful but not urgent.

Founders can gather fundamental data from this early-stage activity during this early engagement phase. By asking customers specific questions, you can, in essence, begin to generate early sales funnel data that can be useful in establishing your market entry strategy later in the venture process. The first question asks the customer how they heard about your venture. Do you want to capture how you are accessing your customers? What access channels are most effective – professional networks, social media, email, etc.? This information provides early historical data about your sales funnel. What are some of the best ways to create awareness and potentially quality leads for your venture?

By monitoring the interview process, you can build data on customer channels, time to access, and the percentage of leads participating in the discovery process. As you interview or survey more customers, you will learn how many leads are coming from specific access points and what percentage are actively engaged in this early discovery process. 

The second set of data that complements the channel information is the percentage of customers that transition from customer discovery to product testing. Later, founders can measure how many of these early customers participate in minimum viable product tests to measure continued interest. You now have some early sales funnel data to apply to early financial projections and post-launch benchmarks. 

One final customer engagement area to monitor is the time it takes to move customers through the engagement process – from awareness to active participation. You get a sense of potential sales cycle time by collecting data on how long it takes to find your target customer, scheduling interviews or surveys, and actual participation. This metric is crucial in B2B business models when soliciting interest from enterprise decision-makers. 

Early Product Testing. As you engage your customer with early product designs and functionality, there are opportunities to capture more information about your customer. For example, your CRM can document data points regarding the customer’s reactions to your product. 

Critical information includes customer prioritization of product benefits and features. Additionally, this is a good time to solicit feedback on the economic value placed on each feature. This combined information gives you a clear picture of what this customer segment values the most about your offering. Eventually, as you collect information from additional segments, you may learn that the value proposition may vary across different customer bases. 

During product testing, your customer can learn more about your product, its benefits, and its features. This situation allows you to understand how your customer positions your product against competitors. During customer discovery, you learned about what current competitor products they have tried to meet their needs. Hopefully, you discovered what they liked and did not like about these products. During product testing, they now have a new frame of reference by comparing competitor products with your new offering. The distinction is critical for understanding how the customer positions your product in the marketplace. Now, you know who you are competing against and what pricing ranges customers are applying to a purchase decision. 

Finally, during minimum viable product (MVP) iterations, you can collect data on how many customers stay engaged (retention rates) from one test version to another. For example, what are the attrition (churn) rates? Which features are they using, and do they continue to use them during the MVP testing period (stickiness)? Are these early participants referring your solution to other potential customers (referral rates)? You can also integrate pricing sensitivity data to provide support for pricing strategies. Eventually, you can tie testing data with the percentage of MVP participants who become paying customers.

During these early engagement activities, you can collect and document important information in your CRM. Of course, every venture is different, and some of these data points will not apply to your business model. The issue to remember is that you have an excellent opportunity to learn a great deal about your customer’s engagement and decision-making process before formally launching your product. 

Sales Funnel Transition

Once you enter the marketplace, your CRM will capture customers’ engagement as they progress through your sales funnel. At this point, your CRM now functions in familiar territory. CRM systems are designed to manage customer activity as they journey from initial contact to post-purchase engagement. While there are many sales funnel variations, I suggest you start with these four – Awareness, Consideration, Decision, and Post Purchase. At this point, the information at each stage becomes increasingly more detailed. Here are some suggestions as to what information to capture at each stage. 

Awareness. When does your target customer know you are offering a solution to their problem? Understanding this starting point can be challenging to identify how this can happen. Are your customers actively searching for a solution? What precipitated the search? Where do they look for an answer? Who do they speak with to learn about possible solutions? You will want to consider possible answers to these questions to determine the best ways to get your offer in front of your customer at the right time. 

Consideration. Once interested, your target customers will look for additional information to help them decide whether your solution is correct. At this sales cycle stage, you want to provide information demonstrating how your product will solve their problem. An in-depth understanding of the customer’s pain points is helpful. You want to show that you understand what they are going through and possess what they need to improve their current situation. 

Decision. Once your customer leans towards going with your product, you want to guide them through purchasing. Nothing is more frustrating to a customer after deciding to purchase something and finding it difficult. I can’t tell you how many times I have tried to buy something and found it challenging to complete the transaction. 

Post Purchase. It is not unusual for early startups to focus on selling to the customer and celebrate each successful conversion. However, I consider engaging the customer after the sale even more critical for continued growth and sustainability. Data shows that acquiring new customers is six times more costly than retaining them. So there is a clear economic advantage. But there is a more compelling reason to have a successful strategy to keep existing customers happy. You want your customers to become advocates for your brand, helping you spread the word about the benefits of your solutions. 

Applying the above sales cycle to your CRM provides a valuable framework to outline your marketing and sales engagement strategies. Additionally, you continue to monitor specific data about how long it takes for the customer to move through the funnel. Which promotional channels and touchpoints are most effective? How much are you spending on marketing activities, and how does actual spending compare to your projections? Finally, what are the conversion rates at each stage of the funnel? How do those compare to your initial estimates?

DIY CRM Approach

Like my view regarding early product development, building your CRM system during this early venture stage has several benefits. Your venture is unique in many ways, including industry classification, product categories, business models, and target customer base. By creating your own CRM database and workflow system, you can look critically at optimizing customer engagement throughout early venture realization. 

There are many tools that you can use to build your CRM system. Each application has its merits, but I suggest starting with something you already use, such as your favorite spreadsheet software or note-taking application. Beginning with something you are already familiar with shortens the learning cycle and allows you to focus on the design of your CRM system. Primary selection criteria may include ease of use, customization, cost, and integration with other tools. Standard CRM software features include a customer database, engagement tracking, workflow automation, and reporting. CRM products will vary as to these core capabilities, so you want to consider which is most important for your venture over time. Some features will become more critical as your venture moves from early development to launch. 

Today, it is pretty simple to build a seamless workflow using a no-code technology stack. For example, I develop my CRM using Evernote, Google Drive, and Gmail. However, I prefer using a robust note-taking application to easily capture information and not feel limited by the amount of content collected. 

Creating a customer database is easy in Evernote. First, you make the main customer page with all contact and profile information. This main note provides a quick review of all critical data and the current status of engagement. Next, you can easily add internal or external links to other information you want to document about the customer. Additional information may include work or personal websites, media articles about the individual or company, etc. I find it helpful to capture customer interviews and video session transcripts and have them as part of my customer records. You can capture audio directly using Evernotes and then play it through transcription software. Alternatively, using an IOS phone or tablet, you can record voice-to-text within a customer note.

One of the most vital benefits of using Evernote as your CRM is its best-in-class search capabilities. Once you create a note about a customer, you can store information as text, images, PDFs, and web clippings from articles to Youtube videos. Your notes are stored in notebooks and can be further organized. by various tagging conventions. You can easily search for any information associated with the customer and across customers. For example, you can create tags that represent various sales funnel stages. As a customer moves from one stage to another, you can tag their note by where they are in the journey. For example, you can readily search for all customers in the “consideration” phase and send specific messages to facilitate a purchase decision. Tagging is an effective way to track customer engagement throughout the customer journey. 

Finally, Evernote integrates with various Google Drive applications and, most importantly, Google Calendar and Gmail. Additionally, Evernote has well-designed task & reminder features, thus supporting your workflow. Besides these internal integration capabilities, you can generate specific workflow functions like automated emails using an application like Zapier. 


As a startup founder, you must inculcate a customer-centric culture that is evident to all stakeholders. One of the most important ways a startup can differentiate itself in the marketplace is through impeccable customer engagement. A CRM supports being attentive and responsive to your customers and their needs, which is essential for success.

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