The Relationship Equation: Is Customer Relationship Management Software the Answer to a Cry for Help or Just Another Useless Tool that Takes Up Precious Time
By Andrew J. Birol, President, Birol Growth Consulting, Inc.
In the early 1990s, contact management software was popular among sales people, who used it to keep organized. It spawned an industry known as sales force automation.
Around the same time, business leaders heard the cries of marketers demanding that customer data be extracted from accounting systems on the company’s mainframe. That led to database marketing automation, which also enjoyed success.
Today, almost a decade later, most companies with very large customer bases, sales forces or complex integrated marketing programs have invested in automation. Smaller companies have been more cautious and less successful.
Now there’s a new trend — sales, marketing and customer service automation have converged into “suites” of formerly stand-alone products. These suites are marketed further up the organization to senior executives of middle-market companies instead of the traditional target of IS managers in Fortune 500 companies.
The reasons are twofold: Senior executives make these decisions in smaller firms; and hardware, software, database and Internet technology suppliers need to convert the corporate middle market in order to maintain sales growth. This repositioning has also brought about some repackaging — defining these products more in terms of the benefits promised than the features offered. It’s called customer relationship management software (CRM).
CRM is being marketed as the tool a firm needs to take a systematic approach to finding, keeping and growing customers. But does it work?
Companies with less than $100 million in sales face automation choices that are more confusing and riskier than ever. Has the time for CRM come and has it come for your company? Will this latest “hot thing” catch on or become obsolete? Did the last “hot thing,” CRM is expected to replace work, help or pay back?
The answers are a lot less complicated than you may think. First, assess CRM on your own terms. Recently, I attended the DCI and Ziff Davis Customer Relationship Management Shows in Chicago and Atlanta. At both, I saw a dizzying array of products, services and ideas.
Some looked crazy and others looked extremely practical. CRM technology is more advanced than the needs of most mid-sized (less than $100 million) businesses. Specifically, few organizations have the resources or needs to use the features and functionality of some of today’s hottest products.
For example, if your firm doesn’t have a 100+ outside sales force, or several integrated marketing campaigns, many products will be overkill. Many suppliers sell products by the seat or user. If a smaller company wants to equip its sales, marketing and customer service groups, only 10 seats may be needed. This is not a profitable deal for many vendors.
CRM suppliers may be assuming that their prospects have clear goals, a long time to implement changes and ample in-house resources to help employees learn the latest thing. For the average $1 to $100 million company selling to other businesses, I urge extreme caution and suggest five steps for CRM success:
Ensure you clearly understand and have developed a process for how your business best finds, keeps and grows its customers. If you don’t, you will end up with an automated version of your company’s status quo. Your best practices must guide the development of a CRM system.
Make sure your existing customer data is useful and used to make decisions. While new systems can use existing information more effectively, only users can create new information.
Clearly outgrow your system (manual or legacy). There is no penalty for waiting a little longer. Whatever you buy will become obsolete, too.
Have your staff agree on what it needs to do and build a plan to accomplish it. Then talk to a technology vendor or consultant. If you don’t assess your needs, you are likely to buy what they are selling and not what you need to achieve your plan.
Recognize technology is a means to your goal of growing customers and sales, not the other way around.
CRM systems can integrate the functions, activities, tactics and programs that comprise a firm’s sales, marketing and customer service departments. They are generally reliable and technically will perform.
Now, more than ever, it is the responsibility of the buyer’s senior management to define what its process for finding, keeping and growing customers is and assure that implementation goals are set and met. Your company’s success depends on it.
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© Copyrighted by Andrew J. Birol, President of Birol Growth Consulting, who helps owners grow their businesses by growing their Best and Highest Use ®. Andy can be reached at (412) 973-2080, by email at firstname.lastname@example.org, or on the web at www.andybirol.com.