CRM: stand and deliver!
At its most basic, CRM is a software application that allows you to manage and, to a certain extent, automate three key commercial functions within your business – marketing, sales and customer service. So fundamental are they that some in the industry refer to them as the’ blessed trinity’‘.
Although the chill wind of recession is being felt in virtually every sector of the software industry, this – in a perverse way – could be good for CRM. Tough trading conditions force companies to strip cost out of their business while holding on to customers. CRM is a tool that can help them achieve these twin objectives.
“People are thinking about costs and how to manage their businesses and processes more closely,” said Andrew Kehoe, senior consultant at Aspera Solutions, which sells CRM into the distribution and manufacturing sectors.
“Therefore they are looking at systems that will help them do that.”
Kehoe reported a growing interest in CRM solutions of late, even if investment levels were still dragging, which he took as a sign that businesses might see CRM as an application that could help them get through the recession.
“Sometimes people make the mistake of thinking CRM is just about prospecting and about the sales pipeline, when actually it’s just as important – particularly in a recession – to manage your existing customer base,” said Alex Reeves, managing director of Access Ireland, the largest reseller in Europe of Frontrange/Goldmine CRM.
Tim Barker, head of European partner marketing at Salesforce.com, said he saw evidence of this happening.” We’re seeing a huge rise in companies deploying Salesforce within their service departments. One reason for this is that it is known to be five times more expensive to acquire a customer than it is to sell to an existing one. In these tough economic times, customer retention is a top priority.”
If a lot of firms do suddenly start investing in CRM, it will represent a startling turnaround for the technology. A decade ago, CRM was the new technology on the block and one touted as having a “transformational’ effect on business. A lot of enterprises bought into the dream, jumped in and proceeded to roll out the technology without proper planning.
Projects foundered. Money was squandered. Customers were left fuming and CRM itself was left very tarnished. It’s not just perception, either: industry research firm Gartner calculates that up to 70 per cent of all CRM projects have failed.
But lessons have been learned from these mistakes and the technology has moved on. One of the big differences between modern CRM and early incarnations is that the degree of customisation required today is much less than before.
“A few years ago, creating self-service portals for customers or employees was a development job that took a lot of man days, was costly and the return on investment could be quite low. Nowadays, the applications we’re supplying come with the tools to build portals, etc, without using developers. Companies can just do it with their own internal IT resource and nonIT people can be trained to use portal-based tools,” said Kehoe.
What all this added up to, he claimed, was lower total cost of ownership (TCO) than ten years ago – up to 60 per cent lower. Cian McNamara, general manager of Galway-based Vulcan Solutions, which undertakes large CRM projects within the public sector and financial services, primarily around the Microsoft Dynamics CRM line, agreed that customisation was much easier and quicker now.
“I think that there is an awful lot more available out of the box than there has been in the past; the functionality available is tremendously advanced compared to what was there previously. So much can be achieved around customisation without having to do any programming at all,” he said.
Another way in which CRM software has changed is in terms of scope. Not only does it manage the blessed trinity, it does a lot more besides. So much so that some providers think the term is outdated and have instead begun to refer to ‘XRM’ – where the ’X’ can stand for any relationship, be it employee, customer, supplier or partner.
“It’s taking CRM beyond customer management to any relationship management. The proposition here is that, once you’re talking about relationships, there are many principles that apply to relationships from a systemisation point of view, whether they be customers, partners, vendors, citizens, and so on,” said McNamara.
“Personally, I think the term’ CRM’ boxes us in unnecessarily,” said Darren Sexton, commercial development manager with Sage Ireland.” CRM can cover a really wide area.”
In addition to the project scope, one of the key decisions that users will have to make before embarking on a CRM project relates to the delivery mechanism – the choice being between on-demand (hosted by a third party via the internet) and on-premise (installed on your own servers and fed out from there).
It is worth noting that some major vendors offer users both delivery mechanisms. Users can either opt for an on-premise version of the software, an on-demand version or, indeed, they can start off with on premise and later switch to on-demand.
Pioneered by Salesforce. com and now offered as an option by many providers including Microsoft, SAP and Oracle, on-demand allows users to access a hosted service via a browser and pay a monthly per user subscription. The key benefits are no upfront investment in IT infrastructure or licensing, and greater operational flexibility. It also appeals to companies that do not have internal IT capabilities.
According to Barker, on demand CRM is also a more client-friendly form of delivery.” It’s a model that’s a lot more geared around client success and lower risk.”
But despite its apparent benefits, on-demand has still not conquered the Irish market. Kehoe felt this was due to a combination of two factors: the unwillingness of many organisations to have their data hosted offsite by a third party, and poor broadband connectivity, which impairs the quality of service experienced by users in many parts of the country.
“It is changing, and we think there’s a great future in software provision as a service, but at the moment the take-up is low,” he said.
In fact, both models have their pros and cons, and users need to carefully weigh these up before making their decision. For example, on-demand CRM has a reputation for being harder to integrate with other applications and less flexible – ie, less customisable – than an on-premise version. This is because of the ’multi-tenancy’ architecture that’s used, which relies on multiple users using basically the same application.
Yet, equally, on-premise CRM can involve significant upfront hardware and implementation costs and companies on tight budgets will probably prefer the’ pay-as-you-go’ nature of on-demand CRM. That said, organisations that have already invested in a server on which to run their accounting or payroll packages may simply piggyback the CRM on that hardware, saving themselves substantial hardware costs.
For this type of user – and there are many – on premise CRM would probably be seen as the logical move.
“It’s very rare now that a medium-sized user is not operating with some type of server farm and an SQL database – that’s the standard these days,” said Alex Reeves of Access, which provides both accounting and CRM software.
Users that do decide to go down the on-premise route face the considerable challenge of successfully implementing the software. While CRM may not be the unwieldy beast it used to be, great care still needs to be taken during its implementation to ensure it delivers the looked for benefits rather than just a large line item of expenditure in the year-end accounts.
The starting point, according to Sexton, was a strong commercial imperative to undertake the project in the first place.
“CRM is really worthless unless it creates a business value to the company,” he said.” How do you measure that value? It depends. CRM has to either eliminate an existing problem or create a new result that’s beneficial to the business. If it doesn’t do this for you, implementing CRM simply becomes a very costly event in your company’s history.”
McNamara pointed out that where CRM implementations failed, it was often because there was not a good understanding of the requirements – ie, what the user intends the software to achieve.
“It’s important the various stakeholders have got together and know what they want the CRM to achieve, both strategically and from a business process perspective.” It is particularly important that CRM was seen as a business strategy and not just an IT tool.
“CRM is a strategy for business and for successful implementation it is important that businesses are clear on what their CRM strategy is, how they want to engage with their customers and to have executive-level sponsorship of that strategy such that when it becomes an implemented solution, you’ve every chance of success,” said McNamara. Having detailed requirements is essential, said Kehoe.
“CRM can mean different things to different people. Some people use it for customer service, others use it as a new-business tool for managing prospects and others still use it as a helpdesk for dealing with problems. CRM can be very different, depending on the type of business you are. Therefore, establishing the requirements early is usually very important.”
Also important is clearly defining the business processes that the CRM system will map to.
“CRM is really about managing process and if those processes aren’t clear, the implementation will run into difficulty,’ ‘said Kehoe.” It’s not about building processes that fit the software; it’s about building processes that best suit the business and then implementing those.” David Walsh, financial director of Sign & Digital, a signage materials distributor with recent experience of installing CRM (see panel),said he strongly agreed.
“You cannot implement CRM on top of existing company structures unless they’re really, really good. SMEs generally aren’t that good about having clear and solid internal structures and processes.
You have to have them for CRM, but once you put the effort into doing that, you reap the benefits – a streamlined organisation that reacts quickly and hopefully makes you money.”
The final success factor for CRM is integration. Knitting it together with other applications that hold customer data gives the system a much better chance of success.
“Your CRM system should represent your master record of customer information. To have a successful CRM strategy, your CRM system needs to be integrated with those other systems that hold some part of your customer information, such that one updates the other and you have a single view of your customer,” said McNamara.
This is one of Microsoft Dynamics’ key selling points, he said – it natively integrated with all Microsoft desktop products’ outlook and the user interface could be delivered via the Outlook client, so that, as far as users were concerned, they were using one system not two.
Reeves agreed that integration was crucial, particularly with regard to the financial system.” If you don’t have your CRM system interfaced with your finance system, you can’t see what orders are outstanding to that customer or what their credit balance is. You may be trying to sell them something new when they already owe you €50,000.”
But integration doesn’t just have to be with back office systems such as finance. An emerging trend is to integrate CRM with social media sites such as LinkedIn and Facebook.
Only last month, Salesforce, for example, launched Twitter integration, which allows users to monitor Twitter, find mentions of their product, and log those mentions as a query. They can also respond to them as if they were any other customer query, Tweet back an answer and measure the level activity that’s going on.
“It really provides a way for companies to engage in the conversations that are happening out there,” said Barker.
However, other providers warned against integrating with social media tools without first doing an appraisal of its business value – and how some customers might react.
“Some companies have tried to use Twitter and have had a very negative experience with their customers as a result,” said Sexton.” Some customers feel it’s an invasion of their privacy if they are getting bombarded with sales promotions on their mobiles. I think you first need to crack what you want to get from the social media side – define the business value.”
As with many technologies it is wonderful what CRM can do, but not every new feature and innovation will necessarily be right for your business.
Therefore, it pays to take a moment and do your homework before taking the plunge. As the saying goes,’ fail to prepare, prepare to fail’.
