Deciding whether to invest in customer relationship management (CRM) software can be a difficult process. Not only do CRM programs tend to resist standard ROI calculations, there’s not exactly a shortage of vendors out there. Moreover, prospective purchasers can choose a best-of-breed product that’s geared toward a particular segment of the customer life cycle (marketing, sales, or service), or they can shell out on a software suite that provides less robust applications but that works across several corporate functions.
To simplify matters, Kevin Scott, an analyst at AMR Research, recommends that potential buyers focus on the specific business problems they’re trying to fix. “Ask yourself, ‘What are my pain points, and how can I best overcome them,’ ” advises Scott.
A full-blown CRM implementation, however, extends across all communications channels and touches marketing, sales, and service departments. Sheryl Kingstone, an analyst with the Yankee Group, a market research firm, advises corporate managers to develop an overall strategy before buying any CRM software. Kingstone also says that, in many cases, it’s easier to implement a CRM initiative in smaller increments. Such an approach enables managers to constantly validate the rollout, foster employee buy-in, and measure payback along the way.
Once managers have settled on a deployment strategy, they need to examine the merits of different applications. Rob Desisto, an analyst at Gartner, believes campaign management is key when it comes to choosing a marketing application. Says Desisto, “When a piece of direct mail or E-mail is sent, you want to be able to code it, figure out what the hit rates are, and follow up with call center support. Tracking direct marketing calls, following up and managing those relationships, is very important,” he comments. Effective applications should also allow companies to track the success of their marketing campaigns and determine the revenues generated vis-à-vis the costs.
Buyers should also seek out applications that allow them to better craft marketing efforts to satisfy individual customers’ demands, says Desisto. “You want to be able to personalize pieces of direct mail or E-mails more closely to fit the customers specific needs across all customer touch points,” he notes.
Furthermore, marketing applications, as well as sales and service applications, should include strong analytics, data extraction, and data cleansing tools. Such features make it fairly painless to extract data from different warehouses, purge it of errors and redundancies, and ultimately compare it across multiple dimensions. “You want to be able to analyze the effect of price on a particular product, for a particular type of customer, in a particular demographical location, for example,” Desisto explains. As Web sites have added new and often faster ways to interact with customers, the opportunity — and the pressure — to turn data into useful information has grown.
Sales applications, says Scott, should be able to take leads generated from marketing and transfer those directly into a company’s sales force automation system. “If someone has responded to a direct mail, it should be able to take that lead and make sure that a sales rep or a reseller contacts that customer,” he comments. It should also make it simple for users to determine which sales rep is best suited to follow up on a particular lead — something often decided purely based on a rep’s geographical proximity to the potential customer.
Sales force automation and opportunity management are also critical features, notes Scott. Applications should help salespeople better administer their pipelines, manage contact information, and forecast future sales. “It can allow you to model the steps of the sales process and track a sales opportunity across its life cycle, so that at any point in time, a sales rep or manager can assess the likelihood of a deal’s closure,” comments Scott. Many sales applications also include guided or interactive selling capabilities, which allow customers to configure products to meet their particular needs.
Managing relationships with channel partners is a nice bonus of a CRM app, says Desisto. When a customer logs onto a Web site and places an order, for instance, the system will generate a lead and send it to a channel partner if necessary.
Some sales applications can also help managers calculate commissions and formulate effective variable-compensation schemes. “It allows sales managers to take into account diverse factors such as geography, market presence, and saturation when coming up with a plan, says Scott. “It can help sales reps determine what their compensation will be if they achieve certain goals, which can be a good way to motivate your people,” he adds.
Scott claims this function also helps companies better manage cash flow. In many cases, in-house systems are not accurate, and managers are forced to allocate money and take care of adjustments after the quarter is done. “These applications take direct feeds like bookings, for example, and spit out the appropriate allocations of compensation, which then gets fed into a payment system,” he adds.
Finally, applications that focus on customer service should provide call center management capabilities — allowing customer service reps, for instance, to route and prioritize customer phone calls as they move through the queue. “When you get profitable customers on the line, you can route them to your best trained service reps, or service them more quickly,” says Scott.
Managing E-service is also an important component of these applications, notes Desisto. “When customers send you E-mails, the system should be able to process it and automatically respond, given the rules that have been entered into the system, with a personalized E- mail reply, or route it to the appropriate person,” he comments. Scott maintains that it’s important to be able to provide and manage content, such as frequently asked questions, properly to help customers online before they have to contact the company. “The customer should also be able to log into a site and track the status of an order,” he adds. Scott points out that applications that can track customers that require on-site service, dispatch the appropriate employee to take care of the problem, and record if and when the service was carried out, are also very useful.
While all these are helpful and attractive features, the success of any CRM rollout still comes down to keeping great expectations to a minimum. Managers who map out a realistic plan for a CRM software implementation — and set realistic goals — will save themselves a lot of aggravations. Cautions Scott: “It’s important for managers to realize that this is something that is going to span many different departments and will require significant sign on, so that when it is implemented, it really matches what the company set out to accomplish.”