CRM unmasked

We didn’t really know anything about our customers,” recalls Tony Barber of garden products supplier Promoseeds.

“Once we packaged orders and sent them off, all the details were lost.” Founded more than 20 years ago, Promoseeds sells seeds and plants direct to the public through ‘special promotions’ in magazines and regional and national newspapers. It’s a well established business and, until 2003, its working practices could be described as traditional. Responses to the company’s ads were posted back on coupons which not only contained details of the order but also, naturally enough, the customer’s name and address. The orders were then processed manually, with the coupon being reused as the label for the packaging. It was simple and it worked but when the parcels went out the door, so did every scrap of customer information. In other words, despite a trading history spanning two decades, Promoseeds had no way of knowing who its best customers were or even which promotions had been the most successful.

All that changed when the company’s order books spiked from 25,000 transactions a year in 2002 to 50,000 in 2003. At that point Promoseeds ditched its manual processes in favour of an electronic system built on the widely used GoldMine contact management software package. Under the new regime, information held on the coupons was keyed into the company’s computers on arrival, labels were printed accordingly and the information stored on a database where it could be analysed. As a result Promoseeds has become much more proactive in its marketing while establishing a competitive edge over its rivals. “In the gardening industry, promotions tend to be on a national basis, but we can now be much more targeted than that,” says Barber. “For instance, we can match postcodes with soil types and contact customers with advice on the most suitable plants.”

As the Promoseeds experience illustrates – knowledge is power. The more you know about your customers – existing or potential – the better placed you are to target your marketing effectively, raise sales and answer customer inquiries. It is this relatively simple concept that has encouraged the world’s software companies to pour millions of pounds of research cash into the development of customer relationship management (CRM) software. And while CRM was once thought of as the plaything of the big corporates, there are now packages designed for businesses of all sizes and types. So what exactly is CRM and what can it do for your company?

WHAT IS CRM?

If such a thing as a CRM supermarket existed, then the shelves would be stacked with shiny, shrink-wrapped products all promising to transform your sales and customer care operations. And therein lies a problem. While it’s possible to speak in general terms about CRM enabling better management of customer contact or providing a means to establish a 360 degree view of the client, beneath that broad umbrella there are a bewildering number of products, some of them doing very different things. Having said that, you can break CRM down into a number of distinct flavours.

First there are the contact management tools – such as ACT and GoldMine – originally designed to store client details (names, addresses and phone numbers) but now capable of capturing and processing a much wider range of data. These overlap with sales-force automation tools, providing front line staff with customer data while helping to manage workflow.

Then there are holistic CRM packages that enable you to gather client information from other office systems, such as accounts and order processing. For instance, when a client rings to query a bill or check on the status of an order, any member of the customer support team will have the relevant details at his or her fingertips.

Typically, CRM applications will also manage inbound and outbound communications across a wide range of contact channels, including telephone, the internet, fax and email. Most include analytics software that will take your data, slice and dice it and then provide you with useful, sales-oriented reports on your client base.And if you have an online presence, CRM embraces ‘self service’ applications, designed to provide customers with both product information and after-sales support via the web. Equally, you could arm your sales staff with ‘helpdesk’ software configured to serve up answers to technical questions.

And finally, there are the call- and contact-centre enabling packages, providing facilities such as call routing (to appropriate staff) and automated menus.

SO WHERE DO YOU START?

Regardless of the size of business, start with clear goals, choose software accordingly and build from there. “Begin with the pain points within your company,” says Annette Giardina, business director of CRM consultancy Aspective. “What must you fix and what do you need to get there?”

A common starting point for relatively small but growing companies is the need to rationalise the lines of communication between the front line staff and the customer. As David Marks, managing director of security company SectorGuard points out, as the sales force grows, administration becomes more complex. “If you have a single person sales force, you can keep all the records manually,” he says. “As the team grows, it becomes more difficult if everyone is working from separate and uncoordinated diaries and emails.”

SectorGuard has grown rapidly since 1998 and last year it saw turnover rise 72% to £12.7m with the payroll topping 700. According to Marks, the key to expansion is constant monitoring of the sales pipeline. In the security industry many clients only review their arrangements annually. That means that if a salesperson is going to secure a contract, he needs to know exactly when to ring. In the early days, the company used a hanging file for every day of the year. If it was known that a prospect was reviewing their security from, say, May 1, a note would be put in the file to that effect. It was an opaque, creaky system and in 2003 SectorGuard replaced it with a bespoke customer contact system based on an Access database. “It meant we could monitor the whole pipeline, including details of calls, prospects and conversions,” says Marks. “It gives us a real competitive edge over rivals who don’t have this kind facility.”

TOUCH POINTS

But that is only part of the CRM story. Think of the many levels at which a customer is likely to interact with your company. In addition to the regular stream of calls to sales, there will also be contacts with accounts and possibly ad-hoc encounters with other parts of the business, such as dispatch, order processing, or the receptionist who fields inquiries when everyone else has gone home. Add to that internet inquiries, letters and faxes and it quickly becomes clear just about every business addresses its market through multiple channels these days. As Kaizad Tarapore, project director at CRM solutions companies Navigator Customer Management points out: “You have to manage contacts with the clients across all the customer touch points, ensure all the contacts are logged and that promises to the customer are acted upon and visible on the system.”

And, as the well of data grows, you can apply sophisticated analytics to the data – not just establishing who buys what and when – but also gleaning insights into why they are purchasing, whether they are happy or dissatisfied, the amount of effort required to make a sale, and the likelihood of them responding to marketing messages offering upgrades or a different product range. You can even use your analytics to segment your customers into most and least profitable categories, allowing you to make an educated choice as to where to focus your sales efforts. And in the case of prospects who will clearly never buy, you can just delete them from your database.

If that sounds seductive, you have to remember that you can’t really achieve any of this without integrating your CRM package with other back-office systems. “This is not a technology you can use out of the box,” says Michala Alexander, CRM product manager at Microsoft. “We recommend our customers work with a partner on integration.”

Alexander adds that CRM buyers should consider compatibility with other systems before writing a cheque to the software supplier or solutions provider. “Organisations should consider what they might be buying in the future. For instance, if you buy a new ERP (enterprise report planning), will it be compatible with your CRM? Similarly, if you have a mobile sales force, you should ask whether the system you’re buying will work well with devices such as PDAs and smart phones.”

These days, even contact management packages such as ACT and GoldMine are designed to integrate but if your requirements and business processes are complex, you should consider a range of suppliers – Microsoft, IBM, Sage CRM, Front Range and BT Ignite are among the leading players – and work with a partner to assess what they can offer. And at what price. But remember that the cost of the CRM software is only part of the deal. For instance, Microsoft will sell you a 10-user licence of its CRM product – aimed at businesses like yours rather than corporates – for around £4,500, but you have to add the cost of systems integration through both consultants and your own IT staff. Remember also that you will have to spend time working on the business processes that are facilitated by the software, and staff training is essential.

THE BUSINESS CASE

All of which makes it vital to come up with a business case where you can assess the total cost of ownership and demonstrate some kind of return on the investment. According to Andrew Boyd, director of integration technology at Sage CRM, the drivers tend to be lower costs (through more efficient administration of order processing and customer contact) and higher revenues fuelled by better use of the salesman’s time and targeted sales campaigns. “Secondary motives include improved customer satisfaction, better visibility of customer information and – last but not least – the comfort factor of knowing that if key sales personnel walk out, they don’t take the client information with them,” adds Boyd.

DO IT YOURSELF HOSTING?

Implementation costs can be reduced dramatically by buying your CRM software as an online service rather than loading it onto your office systems. It works like this: You supply your CRM provider with your existing customer information. Numbers are crunched, data analysed and the results fed back to your staff via the web. Provided you are already online, you don’t have to invest in any new technology or infrastructure, and because you are using someone else’s system you benefit from economies of scale. Suppliers of this kind of service include IBM and BT Ignite. Costs depend on the nature of the service, and suppliers will work with you to arrive at a price that makes sense in terms of your objectives.

Microsoft also offers its CRM solution both as an online service and CDs to load onto your workplace system. “At first the ASP (online) model is attractive,” says Michala Alexander, “but over time, ongoing costs can make it less so.” She adds that integration can be difficult if you opt for a hosted solution and some companies may worry about data security issues.