Invest in technology to help manage your customer database

CRM software can help you keep track of customer buying habits, cross sell more effectively, and target your marketing dollars. And costs have come down in recent years as more vendors focus on the small- and midsize-business market.

I recommend: Comparison shop with this list of the top 12 CRM software packages. See destinationCRM for some guidelines on choosing the right system. For a CRM software primer, got to SmallBizCRM and read up on the difference between hosted and traditional CRM software. At BuyerZone, you can get free software quotes. Finally, see if free CRM software can work for you.

Create a loyalty program to reward your best customers

All customers are not created equal. Once you've identified your best customers, pamper them with special offers, exclusive discounts and personal communication.

I recommend: For ideas on how to create specific kinds of programs, go to Microsoft's Small Business Center.

Communicate frequently and meaningfully with customers

Keep your company's name on your customers' radar screens by sending out newsy emails or newsletters about your company. Selling is secondary here; the main goal is to keep in touch.

I recommend: If you can't manage frequent email blasts in house, check out Constant Contact, an email marketing company that caters to small businesses. For $15 a month, you can send out unlimited emails to up to 500 contacts. Or visit Vertical Response, another email marketing company that boasts low prices.

Develop a consistent policy for solving customers' problems

You can have the best customer service policies in the world, but once in a while, you're going to make mistakes. How you deal with them is the true test of your mettle.

I recommend: Create a written "service recovery" policy and distribute it to all employees, empowering them to assuage angry customers in a consistent and predictable way. For some good guidelines, go to The Small Business Advocate and The CEO Refresher.

Teach your employees about the lifetime value of a customer

All of your CRM efforts will be for naught if you aren't also teaching your employees about the value of great service and empowering them to deliver it.

I recommend: Check out the "Return Customer" blog to learn more about the employee/service connection.

Measure the effect of customer relationship management

You need to know which efforts are generating increased revenue, motivating employees, and delighting customers.

I recommend: For tips on measuring CRM, visit CRM Knowledge Base.