The term Customer Relationship Management (CRM) was coined in the 1990’s to describe a system which records and analyses every interaction with a customer, so that people subsequently contacting the customer would see this history of all interactions. It has since expanded to cover systems for sales people (Sales Force Automation, Opportunity Management), marketing people (Marketing Automation, Campaign Management) and support people (Customer Service and Support).
CRM systems were the must-have products at the height of the Internet bubble in 2000/2001. As happens with many new technologies, early projects were overly ambitious and complex gaining a poor reputation when they were late, over budget or failed to deliver the perceived benefits. Today, however, most customer focused organisations are successfully implementing CRM and see it as a lifeline for their business.
Back office financial systems have always been an essential part of any business ever since computers became part of everyday use. It would be inconceivable to still use paper to track your day to day accounting transactions in this day and age, even if you simply use a spreadsheet.
However, until the 1990’s most people kept paper records of their contacts, to-do lists and appointments in diaries and filofaxes. Remembering any follow up work from meetings with other company employees or potential clients involved writing up notes and storing them in folders for reference at a later date. This changed in the mid-1990’s with the availability of PDA’s (Personal Digital Assistants) which stored personal information digitally. But the problem was that they were ’personal‘ and it was not until CRM systems became available that companies could start to store ’company-wide‘ information relating to contacts, appointments, etc. This became especially valuable as you could start to see at a management level all sales activities making financial forecasting more accurate.
Today CRM encompasses all contact with prospects and customers from lead generation, through the sales process and finally from a post-sales perspective. Therefore, the systems are targeted at marketing, sales and support teams. Different systems today have come from different backgrounds and some may be stronger in one area (e.g. customer support) than in another (e.g. campaign management).
A sales person is still able to close deals without needing to use a system, indeed they often prefer not to use any system! Consider the time spent by a sales manager trying to forecast the next quarter deals when he has to gather together separate information from each member of his sales team and then combine this with some degree of accuracy. To get sales people to adopt the use of a CRM system it needs to be simple (how many sales people have the time or inclination for systems training?) and it needs to be fast to use. Unless sales people use the CRM system it will be of little value to the company.
Companies can also benefit significantly from the tracking of marketing campaigns. Marketing teams will use CRM systems to create new campaigns and then track the generation of the leads and the allocation of these to sales people. A CRM system should also be able to hold financial information against the campaign so you can easily see the ROI (Return on Investment) for each campaign in terms of number of leads and sales generated and the cost of generating each lead and sale. In this way a company can start to see which campaigns are more successful and then repeat the same or similar campaigns.
All companies have web sites and CRM systems should also capture information from prospects that visit the web site and downloaded some information; automatically converting this information into a task for a sales person to follow up.
Case management enables support teams to track specific customer interactions and to escalate these to the most appropriate person in the company. Account managers are able to view all interactions prior to customer meetings to ensure they are aware of all outstanding dialogue and be better prepared. However, other post-sales benefits of having CRM enable you to consider being pro-active with your customers (e.g. sending out regular newsletters, or targeting certain customers with special offers) thus helping to keep your customers by providing a better service rather than losing them to the competition. It is widely accepted that the ratio of cost to find a new customer versus keeping an existing one is about 5:1.
There’s no shortage of CRM systems on the market, from cheap & cheerful to large scale systems that are part of ERP suites. If you are thinking about CRM you need to consider what you need in a CRM solution. This will help you to narrow down the range of possible solutions.
Contact Managers
If all you need is to keep a record of name, company and contact details, together with the ability to set reminder flags then you could simply use something like Outlook. This is ideal for a one man business, but once you need to share this information with other people in your company then you need to look for a multi-user solution.
Opportunity Management
If you are thinking about a CRM system then the chances are you need more than simple Contact Management. Opportunity Management focuses on recording sales opportunities (leads and deals), and creating sales forecasting reports. The database will include Accounts (companies) who have multiple Contacts (people) in them, against which you can record multiple Tasks (things to do), Activities (things that have taken place, such as meetings and calls) and Opportunities (possible sales). As this involves salespeople updating the system it needs to be very user friendly and fast to use.
Sales Force Automation
At the more complex end of solutions is Sales Force Automation, a suite of software designed to cover the whole sales cycle. These solutions will include Opportunity Management but will also include other functions such as quotations, inventory monitoring and order tracking. They can run on laptops or handheld PDAs, and can be of quite specialist design, such as systems for pharmaceutical sales representatives or for the collection of electricity or gas meter readings.
Enterprise CRM
Finally you can implement the all encompassing solution found from the traditional Enterprise Resource Planning (ERP) vendors. CRM is closely integrated into ERP (e.g. closed deals flow through to sales, accounts payable ties into the customer records). Capable of huge sophistication, these systems are normally highly tailored and involve significant implementation effort and investment.
Hosted v Local Applications
A second consideration when choosing a CRM solution is whether to implement a Hosted or Local application. In the past all software was loaded on either a desktop or a server. In more recent times there has been significant growth in the popularity of hosted applications.
Desktop applications run and have all their data on an individual’s workstation such as Outlook. They don’t share that data with other users in the organisation, and they don’t have access to other users’ data. Desktop applications are loved by sales people as they are easy to use and highly personal, but the company has no sight or ownership of the data.
Client/Server applications have a client application running on the workstation and a server application running on a shared fileserver that allows everybody in the organisation to share all of the data. The server is owned, managed and maintained by an in-house team. Most traditional CRM systems function this way.
Hosted applications store the application and data on the supplier’s servers which are located in a data centre with fast Internet connectivity. They can be accessed from any device that has internet connectivity such as an office workstation, a home computer or at an internet café. The advantage of hosted applications are that they are quick to install and use, need no IT support, and because they are internet based they can be accessed remotely with no complex data synchronisation required.
In a hosted environment a user pays a rental fee to use the solution rather than purchasing the software, so it is treated as a business expense rather than an asset. The rental payment model can work out cheaper when you add up the true cost of installing and running an in-house system, including license cost, server and associated operating system and database license cost, annual maintenance of software and hardware, internal IT resources applying maintenance fixes, updates and unscrambling out-of-sync laptops.
At the end of the day it is worth remembering that true Customer Relationship Management in its original meaning is not about software or systems, it’s about the way a company interacts with its customers through its people and its culture. No computer system will change the way people interact with customers, it can at best simply help them do what they want to do more efficiently. But assuming that your sales, service, delivery and support people are competent and treat customers like customers, a properly chosen and implemented CRM system will bring sales and service efficiencies to your organisation.
For more information please visit www.reallysimplesystems.com.au or email Simon at simon.hubbard@reallysimplesystems.com.au or call on 02 8987 1909.