Tuesday, July 24, 2012

Managing Customer Relationships: What's Cheap vs. What Works

Summary of the paper by Aberdeen Group (download it here)

Many businesses feel the need to automate and streamline their customer interactions as their customer base grows and as their customer data gets more spread out across the organisation. Once a business has identified that they need to do things differently they typically start to look at ways they can organise their customer information more efficiently and develop more solid sales processes.

Businesses that are in this stage will typically come across three solutions that will help them manage their customer information...

1. Spreadsheets and Email
When businesses start up and invest in computers and software office productivity tools (such as Microsoft Outlook and Excel) are usually near the top of the list and hence become the foremost method of managing customer information. When a business is looking into better ways to manage customer information, they may start to look into how they can use these existing applications more effectively. However, using spreadsheets and email to manage customer information poses a number of issues for businesses:
  • Labour intensive: Staff will find they spend a large part of their day entering, re-entering, organising and searching for information. This can become frustrating and difficult for salespeople to respond to customers in a timely manner, and the organisation may begin to suffer from “information overload” as the number of contacts and complexity of information grows.
  • Not conducive to collaboration: When using email programs communication resides in one salespersons inbox (and in their head!) making it difficult to access and share. As a result staff will spend more time discussing and swapping customer information, and if a salesperson leaves most of the customer information will leave with them. This can become a huge time waster and can negatively impact customer relationships.
  • Limited functionality: Spreadsheets and Emails are not designed to support more complex sales and marketing tasks such as email marketing, opportunity management and customer analysis (reporting).

2. Freemium
“Freemium” software refers to any software that has a “free” version and a “paid” version - where the free version will offer limited features and functionality. One of the attractions to this solution, particularly for small businesses, is the ability to try before you buy. Freemium solutions offer a low-risk way to enter the contact management market without investing heavily in software and infrastructure required for a full-blown CRM. However the pitfalls of these solutions are often overlooked by decision makers including:
  • Who owns the data? Businesses should be careful to investigate how easy or complex it is to migrate the data to another system. Many solutions will enable you to export basic contact data to Excel, but extracting sales opportunities, notes and activity histories can be much more difficult.
  • Will it support scalability? At what cost? Most freemium solutions will have a cap on the functionality and/or the number of contacts a business can have. Once a business reaches these caps they will have to make a decision: do we invest in the paid version, revert back to the way we use to do things, or research alternative paid solutions? In each case the business must evaluate the cost vs. benefits taking into account the time investment that has already been invested in the freemium solution.
  • What about support and training? Business must also investigate whether the freemium solution will provide adequate resources to train staff and deal with support issues, or if this is provided at a cost. If they are provided for free the business must then evaluate the time investment required to learn and apply the correct techniques.

3. Fully functional contact management (CRM)
Compared to the other solutions fully functional Contact Management requires a higher investment (either initially or through ongoing costs). As such it is important that businesses spend the time researching and deciding on which solution to choose as the cost to change will be much higher. Despite this, Contact Management overcomes many of the barriers that spreadsheets, email and freemium solutions create. A good Contact Management solution will support collaboration, scalability and customization, and will typically come with a free trial period.

Overall the cost of a solution will often influence a business' decision when choosing to improve the way they manage their customer information - and many businesses choose freemium or lower cost solutions in order to reduce their investment risk. However, many businesses are not aware of the non-financial costs associated with their decisions such as time, productivity, resources, and impact on customer relationships. What is free now may become more costly later on.

Monday, July 9, 2012

6 Tell-tale signs you need CRM - Part 2

Continuing from our last post...
  1. Order takers not being advised when a customer is put on hold
    This is probably one of the biggest pet peeves for accountants (in addition to sales reps quoting with outdated pricing); a customer doesn’t pay an account and the sales person puts through another order.

    Whilst CRMs aren’t designed to manage accounts it is important that they work alongside your accounting system to ensure sales reps are up-to-date with customer account information and product availability (if required). This result is typically achieved through integration; but be warned, not all integration is the same.

    Integration between accounting and CRM needs to achieve the following:
    • Bring the right accounting information and tools to your sales staff as they need it. For most organisations, being able to see account summaries, a list of current sales documents and aged receivables is sufficient however others may require sales staff to be able to create sales documents and run accounting-based reports within the CRM too. Furthermore, most organisations will require real-time data which is achieved through a “live” connection rather than a synchronisation process.
    • Improve productivity. The key feature of any CRM/accounting integration will be to provide a connection between the corresponding contacts in either database. In doing so staff should be able to make changes in either program and see those changes reflected in the other. Doing this ensures that data only needs to be entered once - saving time, reducing the potential for human error and ensuring the data is up-to-date and accurate at all times.
    • Protect accounting functions. While it is important to give sales staff access to accounting functions you won’t want them to do such as edit product details or prices. Effective CRM/accounting integration should eliminate the need for salespeople to directly access accounting software and may also have access control built-in and therefore protect these accounting functions.
    • Cost savings. Following the above, if the integration is sufficient enough that salespeople do not need to access accounting software then organsiations can save significantly on licence costs. In situations where multiple salespeople “share” accounting licences organisations may not see a significant reduction in licence costs by are likely to experience an increase in productivity as staff do not need to “take turns” using the accounting software.
  2. Being unable to access real-time information when you are out of the office
    With more people working on the road and out of the office, the ability to access your customer information on the go is becoming increasingly important. Most CRM systems these days are accessible via mobile devices. If this is a requirement for you make sure that it is compatible with your mobile devices and that all the features you require on the go are available to you.
  3. Continually losing prospects/customers
    One of the key areas within a CRM is the sales opportunities area. This area helps you track potential sales and most importantly record why a sale was won or lost. This information can be vital to ensure the business is attracting the right kind of prospects and that these prospects don’t fall through the cracks.

    For example, if you find that the main reason behind lost opportunities is price and the main reason for won opportunities is customer service then you can make some assumptions and corresponding actions:
    • Your prospects are too price sensitive: Perhaps you should advertise elsewhere and/or create a questionnaire that helps you identify the prospects that are not worth pursuing.
    • Your prospects don’t see the value: Case studies, customer referrals and educational material might be useful here to help your prospects justify their purchase (i.e. they are paying for your great customer service).
    • Your pricing model needs adjusting: You may choose to modify your pricing model to accommodate your price sensitive prospects.

Important note
Remember, at the end of the day CRM software is not a mind reader and the value that an organisation can get out of a CRM is largely dependent on the quality of the information that goes into it. Continuous “tweaking” and training are required to ensure that the database and its users are up to the business’ standards.

Wednesday, July 4, 2012

6 Tell-tale signs you need CRM - Part 1

At some stage, many businesses will recognise that they need to improve the way that they manage their customers and contacts - this is when they typically begin to ask "Do I need CRM?".

If your business is at this stage then this blog might help you identify specific areas in which CRM can be useful. It also identifies some of the key criteria and features that CRM should have for it to be successful.
  1. Frustrated customers complain that your staff don’t know their specific requirements
    An effective CRM will enable you to store all the data you need to about a customer, typically in custom fields. This data usually includes demographic details and product interests which have been collected over time. Organisations that do not have a CRM are likely to find this information scattered in Excel/Word Documents, Outlook emails and brief notes jotted around the place.

    Having this valuable data centralised into one location that everyone can access provides the ability to be instantly informed about a customer. It also allows the organisation to provide more specialised offerings for different groups of customers based on location/product interest etc.
  2. Your sales team not knowing what issues your service team/accounting team is currently working on before calling the customer

    When data is not shared throughout the organisation you will find that each department may create its own ‘silo’ of information. The problem with this is often staff in different departments will have no idea of what is going on and have to request the information, wasting valuable time that could be better spent on other tasks.

    Whilst it is important for departments to share data, one of the complexities of introducing a CRM is to find one that can meet the needs of every user - keeping in mind that CRM is designed to manage contacts, not services or accounts. This is where integration and customization comes in - the CRM you choose should be capable of bringing together the important information about your customers to all the staff that need it.
  3. Not knowing whether valuable sales leads are being followed up
    When staff are dealing with multiple customers, suppliers and prospects every day it can be difficult to lose track of the potential sales. Without an effective system of storing the information (including products/services, value of the potential sale, what is happening now and what needs to happen next) sales opportunities can easily walk out the door.

    CRM is an effective way to manage potential sales. An effective CRM will enable you to create and manage your own sales process. It will enable you to:
    • See all of your upcoming sales opportunities then prioritise and manage them based on their potential value to the business or their probability of converting to a sale
    • Keep a record of all the notes, activities, products and people involved in the opportunity,
    • Assist you with sales budgets and revenue forecasting