CRM vs Deal Management Platforms

Should you use a CRM, a deal management platform, or both?

Real estate investment firms are always searching for the best technology to help them achieve optimal risk-adjusted returns. The rise of specialized real estate technology means that they have more options than ever. To maximize the value of their technology investments, however, firms must be careful to evaluate and adopt the technology that best suits their specific needs.

One software that investors often turn to is the Customer Relationship Manager, or CRM. A CRM like Salesforce is effective at tracking contacts and business relationships. When you’re thinking about managing your business contacts, you’ll want to focus your attention on a CRM strategy. However, when you’re evaluating real estate deals and properties, deal management platforms will better serve your needs.

To determine which technology is right for you, there are several important questions you need to answer. These questions will help you identify your priorities before you begin your software search in earnest, ensuring you will invest in the software that will deliver the best returns.

What data is most important for you to track?

Communication with business contacts

If you’re primarily concerned about tracking business relationships and contact information, a CRM is your best bet. Whether you’re a broker or an institutional investor, you likely have more contacts than you can remember, and staying on top of your follow-ups and remembering previous correspondence is difficult. A CRM is designed to track all the information you need about your business contacts from a convenient, cloud-based platform that your entire team can access.

Real estate transaction metrics

A deal management platform is purpose-built to track, store, and structure all the data involved in a real estate transaction. The platform provides a high-level overview of a team’s deal pipeline, detailed deal-level information, and roll-up reporting. The data most frequently tracked included sales and lease comps, trade area data, market demographics, cap rates, projected IRRs, purchase and bid prices, and critical dates.

What activities do you perform the most often?

Email and phone outreach to customers and potential clients

A CRM is built to manage follow-ups with customers and business contacts. Relationships with brokers, sellers, buyers, owners, and operators all need to be nurtured. CRMs help you stay on top of all your outreach efforts. CRMs are ideal if outreach and communications are a critical part of your day-to-day.

Deal sourcing, underwriting, origination, and due diligence

Real estate deal teams often have a set list of tasks to perform to keep a deal running smoothly. A deal needs to be sourced first, which includes the collection of market data and building history. This is typically followed by underwriting, origination, and due diligence. If a deal progress through each stage without a hitch, it moves onto a closing period. Deal management platforms keep teams on the same page through every step of the deal. They track every task with clinical precision, and they centralize all the necessary data and files. If this workflow sounds familiar, a deal management platform will prove invaluable.

How would you describe your team?

A sales and client service team

CRMs are sales tools first and foremost. They’re designed to assist sales and client service teams with their day-to-day operations. Many real estate firms engage in sales and customer service activities, and brokers are beginning to use real estate-specific CRMs to handle their sales cycle.

A real estate acquisitions or development team

Deal teams involved in the acquisitions and development of commercial property should seek a deal management strategy. Deal management platforms are purpose-built to support real estate transactions, and they’re designed with the distinct requirements of acquisitions and development teams in mind. Many real estate deal teams begin who use a CRM to manage their deals have to extensively configure the software to match their needs. A deal management platform, on the other hand, begins delivering value immediately.

What features are you looking for in your ideal technology solution?

Contact database and automated customer communications

The features of a CRM are geared toward supporting sales teams. As such, they include features such as a contact database and automation for customer communications. In addition, CRMs often have reporting functionality for tracking sales metrics.

Pipeline tracking, task management, and automated reporting

Deal management platforms sport an entirely different set of features than a CRM. The leading deal management platforms have high-level pipeline tracking, detailed task management tools, and automated reporting functionality. They also serve as a collaboration hub and a centralized database for files, communications, and deal data.

CRMs and deal management platforms are built for distinct users, have unique features, exist in separate software categories, and support divergent activities. As such, it’s important to choose the right software to match your needs. Using a CRM to manage real estate deals — or using a deal management platform as your contact database — would be an ineffective use of technology.

That being said, the leading real estate investment teams often use both a CRM and a deal management platform. With that strategy, teams are able to manage contacts and follow-ups on a CRM and evaluate and execute their real estate transactions on a deal management platform. At the end of the day, the choice between a CRM, a deal management platform, or both will be unique for every team. Keep these guidelines in mind to make the best decisions for your firm:

Evaluate CRMs if:

  • You are a sales or client services team
  • You need to keep track of relationships first and foremost
  • You need a contact database and automated customer communications
  • You need an easier way to conduct phone and email outreach

Evaluate deal management platforms if:

  • You are part of an acquisitions or development team
  • You’re involved in deal sourcing, underwriting, origination, and due diligence
  • You need an intuitive way to manage real estate deals
  • You need pipeline tracking, task management, and automated reporting

To learn more about the intricacies of CRMs vs deal management platforms, download our comprehensive white paper: “Building Value with CRMs and Deal Management Platforms.”

Discover how Dealpath can streamline deal management for your team.