1. How different are your customers? Consider the people who buy your product or service. Are they spread across a wide geographic area or are they relatively confined to one spot? How about age range, average size purchase and other factors? If your customers are fairly uniform, CRM may not be critical simply because there's not a lot of demographic data that mandates organization. On the other hand, if they're across the board, CRM may be the answer to a data management prayer. "The purpose of the software is to manage what can't be managed well otherwise," says Jeff Tanner, professor of marketing at Baylor University's Hankamer School of Business. "That implies a certain level of complexity."

2. How often do they buy something? If so, what? This addresses two additional elements of the complexity of your customer data. If yours is a business that sells only a limited number of items, or items that tend to last, tracking buying habits may not be much of a headache. An example is a home heating store with furnaces that last 20 years or longer. But, if customers buy on a fairly frequent basis — or buy a variety of products — CRM can be essential in knowing who's buying what, how often and those times of year when those purchases are likely to occur.

3. Do you need help in watching overall trends? When considering a CRM system, many businesses simply are unsure whether they're doing a good job keeping track of their customers or not. A good way to gauge that is the big picture. Are your average transactions going up and down? How about customer satisfaction? Are your marketing campaigns effective or off-target? There may be any number of reasons, but one may be customer information that's become too unwieldy to handle effectively. "Those things will tell you if the customer thinks you're doing a good job of managing information well," Tanner says.

4. Need help watching for internal competition or needless duplication? One reliable sign that a CRM system may make sense is a company that repeatedly trips over its own feet. For instance, a sales prospect will likely be put off by calls from two salespeople within the same company. That kind of needless competition and duplication can be all too common in firms with multiple locations — a headache that can be better coordinated with CRM. "Manufacturing and semiconductor companies end up competing for the same jobs because they have national and international branches," says Elaine Bailey, chairwoman and chief executive officer of Escend, a Mountain View, Calif., company that helps businesses in those sectors implement CRM solutions.

5. How do you communicate with customers? Many would argue that a certain threshold in number of customers mandates a CRM system, be it 500, 1000 or whatever. But arbitrary levels like this are generally meaningless. For one thing, different companies and people will have a different feel for what's really manageable. Far more important is how you keep in touch with customers. If it's simple, then CRM may be unnecessary. But, if it's through varied means, ranging from face-to-face conversation to phone or Internet contact, a CRM system may be invaluable in keeping customer communications focused and organized. "If you have multiple channels, CRM enables you to cross-talk — manage conversations even though the customer may be communicating through several different channels," Tanner says.

6. Will you (and your employees) use it? If CRM seems a good bet, first make certain that it will coordinate with existing software. (Microsoft Dynamics CRM is closely integrated with Office 2007.) And, be sure all employees know how to use the system and value its importance. CRM's varied advantages ring hollow if no one takes the time to enter the necessary information. "It's important that you communicate how important it is for all affected employees to use the application and share data," says Gordon Bridge, president of CM IT Solutions, an Austin, Texas, company that helps small businesses with technology solutions. "It should be made part of all new employee training."

7. Will it enhance your customer relationships — and not change them? You can never assume that using a CRM system is the end all to relationships with customers. Granted, it can prove valuable in knowing who your customers are and how to better address their needs, but you can't toss aside age-old principles of getting to know your customers personally and offering a one-on-one commitment to top-flight service. "While software can make it easier as it relates to purchase trends, it can never replace the warm caring smile and a personal familiarity with a customer's needs," says author, marketing expert and consultant Shel Horowitz. "That's the willingness to go the extra mile."