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August 2000

 

Ten Common Mistakes To Avoid When Purchasing CRM Software

BY PAT NESTIUK, SARATOGA SYSTEMS

Your company is losing market share. Your sales force is inefficient. Your marketing is antiquated. Your customers are noticing. You know that an all-inclusive view of your customers' buying patterns would enable your company to make better business decisions, react quickly to market changes and, ultimately, increase revenue. You know your best option is a top-of-the-line CRM software purchase. What you may not know is how to choose from the hundreds of solutions that exist today.

The best CRM solutions are based not only on facilitating the coordination of sales, marketing, customer service and support, but also on the customers' preferred channels of interaction -- a salesperson, call center or the Web. To avoid costly oversights and set a more lucrative direction for your CRM software, get your company on the right track by learning from some of the most common mistakes made during the CRM purchase.

Mistake #1: Unclear Goals
Setting clear goals is the first step in choosing the right CRM solution. If your goals are multifaceted, you may never get out of the starting gate. Typically, the more complex the goal, the more complex the CRM system.

Are you looking to increase sales, have more effective support resolutions, obtain higher customer satisfaction ratings -- or all of the above? Be specific and clear, then think about the tactical questions. If you automate sales with a SFA (sales force automation) solution, what impact should your firm expect to add to the bottom line? How long will it take to realize the ROI? Should you look for a flexible solution that can be adapted to your specific and future requirements? How far and wide might this solution be deployed -- departmentally, regionally, internationally?

Once these ideas are thought through, your senior management needs to put a stake in the ground and establish clear business goals, objectives and timelines expected from the CRM implementation.

Mistake #2: Weak Sponsorship
Your executive team needs to position the CRM implementation as the strategic cornerstone of your company, as a business-led initiative with justifiable benefits. As such, it requires sponsorship or buy-in across the company. It won't be successful if the CRM initiative is confined to marketing or sales channels because customers interact with all touch points of the organization, including distribution and shipping, customer service and the Web. Your initiative simply will not succeed unless sponsors at the highest levels across the company embrace its day-to-day requirements.

Mistake #3: Poor Communication
One of the main reasons CRM proj-ects fail is that participants don't fully understand the purpose of these projects, nor the companywide benefits that could result from them. The lesson here is to develop a plan that communicates the specific benefits to each department, and then follow-up with training across disciplines to reinforce communications.

Successful CRM is founded on excelling in two areas: understanding your customers and focusing your operations to serve them through all points of contact. Beginning from the vision statement and strategy formulation, the customer should be the focus of the company's communications activity. Every employee in your organization needs to be intimately aware of his or her critical role in serving that customer and should be rewarded accordingly.

Assemble a team to explore the companywide processes that are going to be impacted by the CRM implementation. Survey customers for their input and make them members of the team. Communicate the goals throughout the company, along with benefit statements as to why this was a major focus for the company. Distribute throughout the company internal marketing materials that state the benefits and progress of the effort.

Mistake #4: Misunderstood Customer Needs
At which points do your customers make contact with the company? How are the interactions really working? How can you improve the way you are responding to customers? If these answers are quantifiable, the findings of this planning, research and analysis should flow smoothly into the design and development of the system.

If your answers are vague, your internal person might analyze the affected processes, only to understand toward the end that they didn't realize the customer wanted something else. For example, instead of requiring the customer to go through multiple screens from a Web-based solution to make changes themselves (which is what the company thought was desired), the customer wanted to have the choice of calling, sending e-mail or contacting the company directly. Customers made mistakes, incomplete forms resulted and the system failed.

Mistake #5: Blurry Workflow
To avoid this and get the most bang for your CRM buck, you will need to study the way different groups capture and use information gathered from a CRM solution. Having a clearly outlined workflow that shows how information is captured, stored, updated and accessed will keep your business operating. Having a clear understanding of your partners' processes will keep your business flourishing.

Did you analyze the business process desired by your customers and partners? Have you considered providing incentives to the data gatherers, amidst the changes to their processes? Today, sales, marketing and customer service departments work as separate entities in many organizations and are faced with divisional boundaries to focus on customers in a coordinated fashion. CRM provides a common platform for customer communication and interaction in such cases.

Mistake #6: Confused Priorities
If the technology does not have the flexibility to grow with your changing needs, and if it does not optimize your communications with customers and partners, then what was the point? Different CRM solutions have varying functionalities, capabilities, strengths and pricing structures and are better suited for certain organizations, industries and user requirements. Your business drivers and market sector requirements, as well as your company's deployment needs, customer size and employment levels will ultimately dictate the CRM solution and service providers your company should evaluate.

Here are some priorities to consider. When choosing a CRM vendor and solution, take into account how the flexibility and scalability of the technology match your unique needs and adapt to a variety of departmental processes and requirements. Choose the system that optimizes your interactions with customers and business partners to achieve your goals. Don't overlook the expertise that analysts and public reports can provide. Evaluate the cost structure for the software and services, and consider the deployment time and cost for adapting the solution to your needs. Talk with your peers at other companies using the vendor's CRM system to learn their experiences firsthand.

Mistake #7: Mismatched Partners
The GartnerGroup advises companies to be as diligent in the search for a well-matched partner as they are in the hunt for the ultimate software. If you don't understand the vendor's CRM solution in its entirety, nor do you know the vendor's partners, you might wind up with no solution at all. By choosing a vendor that has in-depth experience in your industry and solutions that match your requirements, your firm will be better positioned to tailor the solution for a wide variety of uses.

Mistake #8: Lack Of Awareness Of Human Tendencies
Keep your eyes open to the world inside your company. If you don't convey the CRM benefits and reinforce them with incentives, sales support representatives won't use the system, data won't be input properly and sales opportunities will be lost.

The right hand needs to know what the left is doing; otherwise, the customer is fumbled. Take the situation of the caller who notifies your sales support department that he or she is the new customer contact. Sales support uses its own database and doesn't update the companywide, customer-centric marketing database. So when the marketing manager sends an upgrade promotion to the wrong individual at the customer firm because marketing does not have the new contact name, the result will be a missed opportunity. It's important that functionality be built into the system so that each group using the system benefits, making their jobs simpler and more streamlined. If everyone in the company uses the CRM system, the system will serve as an incentive to keep the data current and facilitate data sharing between departments.

One way to avoid this mistake is through incentives that are available through the system, allowing the sales person to see exactly what commissions they could make on a particular approach. Make it simple, clear and easy to use. Reinforce CRM by keeping the message in front of every department, every day, for every customer of your company. Make it your company mantra.

Allow dedicated time for training on new CRM software and for addressing the cultural change related to buying in to a customer-focused strategy. Change should be introduced in a well-managed and supportive environment, like training and educational sessions, as well as workshops that demonstrate how the CRM system will work. Plan for training and acceptance workshops before the system is ready to be deployed. This needs to be a forethought, not an afterthought. Consider using a professional organization to help effect the change and deliver the training.

Mistake #9: Inadequate Resources
Now that you have set achievable CRM goals and recruited the right proj-ect team to manage its selection and implementation, don't make the mistake of not setting aside adequate funding to support the effort. CRM is time-consuming and requires a significant commitment across the organization. The GartnerGroup says that through 2003, 65 percent of enterprises will underfund the vendor evaluation process, resulting in inappropriate choices or project delays.

Don't be fooled into thinking that the system can be administered on a part-time basis by an administrative person with little or no background in systems administration. Pick a strong individual with a solid technical background who will be an advocate for your CRM system. The system administrator should proactively support users and continually look for ways to improve the system and incorporate changes needed by the evolving business requirements.

Mistake #10: Lack Of Quantitative Measurements
If your department is measuring the success of its CRM activities based on one criterion, and another division is gauging on another, inconsistent reporting will result, and you will have no true sense of its success or failure. Agree to measure the same areas at designated milestones. You might look at response rates, data capture rates, increases in orders, the number of contacts used to close a sale, or at a higher level, the increased revenue, increased market share or improved customer satisfaction ratings. Your business needs to set the parameters and then adjust them as the company develops new business goals and objectives.

Ensuring The Best Scenario
When it becomes apparent that your company needs to purchase a CRM solution, and you've confirmed that your company is ready to focus on improving individual interactions with your customers, then you can begin the planning process. Just try to avoid the mistakes of your predecessors and the bottom line will show immediate positive reactions. Your company will share more timely and better information flawlessly across the company, employ a more efficient sales team and serve more satisfied, loyal customers.

Learning from your own mistakes is good. Learning from others' mistakes is even better.

Pat Nestiuk is VP of Technical Services at Saratoga Systems, overseeing all technical services, including hot line support, customer education, consulting and customization services.

[ return to the August 2000 table of contents ]


Purchasing CRM Software: A Guide For Small And Medium-Sized Businesses

BY DAREN NELSON, GWI SOFTWARE

Now that customer relationship management (CRM) solutions are available to all companies and not just large organizations, small and medium-sized business owners are clamoring for the new technologies involved and the promise they bring. However, buying CRM solutions can be extremely tricky, as anyone who has implemented these types of systems will tell you.

The most common mistake companies make is the assumption that CRM is a technology that can be purchased at your local software reseller (CRM applications are commonly referred to as front-office solutions). However, CRM began as a management philosophy and, despite the best efforts of software manufacturers touting solutions, it is still a management philosophy. Simply put, CRM is about building loyalty and value with your customers while streamlining your ability to do so. Individuals in all departments must understand that quality of service and quality of product contribute to the goal of building valuable customer relationships. Each employee should relate to this common goal, understanding its benefits and how he or she can help achieve it. Without a basic commitment to changing your organization to become more customer-facing, you will never achieve the benefits properly implemented CRM can offer.

To build loyalty and value, all departments must be able to respond to customers quickly and effectively. Employees must be able to rapidly identify customers and their specific problems and questions and, more important, be able to anticipate the customers' product needs. An integrated application can streamline this process, allowing all departments to access and exchange valuable customer data, and translate them into useful sales and support information.

When I look at the examples I have seen of companies looking to implement effective CRM, I see one common need emerge: the need for a system that will grow with the customer. There is no question that you require a system with scalability, but how much scalability is right for you? Many "scalable" systems are also very rigid and constrain the way your company can do business. The most important thing to remember when buying a CRM solution is that you need software that complements your company's methods of doing business. If you are finding you need to change your business processes to suit your CRM system, you probably chose the wrong vendor.

Look carefully when choosing a vendor. At last count, there were over 100 providers of CRM solutions. Be sure to find a vendor that offers what you need, is willing to work closely with you during implementation and will accept input on product direction.

Another point to consider when searching for a CRM solution is what foundation you may already have laid. Most companies today have some level of sales and customer service automation in place, but there are still many that do not. Smaller organizations that have very little existing automation tend to experience a lower level of success going from no automation to full-blown CRM. I recommend to any company getting started that you first examine stand-alone solutions for sales and support before jumping head-first into CRM.

Another trend that has become evident is companies' desire to buy CRM solutions but implement only a portion of them. You cannot experience all the benefits of CRM if you do not automate the three biggest elements: sales, marketing and customer service. Be sure that you are choosing a system that is well rounded in all three areas.

A common misconception about CRM is that it is only about automating internal processes and helping your employees become more productive. The best CRM solutions certainly accomplish this goal, but they also go a step further and bring your customers closer to you. This is where the Internet becomes very important. Using the Internet and your CRM system, you can extend your enterprise directly into a customer site. Self-service tools that allow your customers to place orders, check order status, interact with customer support and update their contact information can help make your customers feel like they are part of your business and not just a "number."

Additionally, you can leverage the Internet for the benefit of your own employees. Be sure that if you have workers on the road, your CRM vendor has ways to provide them with secure access to data when and where they require it. Many vendors allow access via the Internet using standard Web browsers, but some systems allow remote employees to take a portion of the data with them on a portable computer for access anywhere.

Keep in mind that undertaking a complete CRM solution is a major decision for your company. Take time to research and determine which solution is best for you. The right system, implemented properly, will enable you to continue to do the things that made you successful in the first place.

Daren Nelson is the founder and chief executive officer of GWI Software, a provider of client/server and Web-based e-business customer relationship management (eCRM) solutions. In this role, he is responsible for the strategic management of the company, building relationships with alliance partners and overall product direction for GWI's eCRM solutions

[ return to the August 2000 table of contents ]







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