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What is CRM?
CRM stands for Customer Relationship Management. It is used to describe software that is helps you learn more about customers' needs and behaviours in order to develop stronger relationships with them. Good customer relationships are at the heart of all business success. There are many technology components to effective CRM, but selecting CRM primarily from a technology viewpoint is a mistake. The best way to think about CRM is as a strategic business process that will help you better understand your customers’ needs as well as how you can meet those needs and enhance your bottom line at the same time. This strategy depends on bringing together lots of pieces of information about customers and your interaction with them so that you can sell and market your products and services more effectively to them.
What are the key objectives of CRM?
The main goal of CRM is to link technology to your human resources so that you gain insight into the behavior of customers and the real value of those customers. With an effective CRM strategy, a business can increase revenues by:
- providing services and products that are exactly what your customers want
- offering better/faster/cheaper customer service
- cross and up-selling products more effectively
- helping sales staff close deals faster
- retaining existing customers and discovering new ones
How can we best achieve these goals with CRM Software?
It doesn't happen by simply buying software and installing it! For CRM software to be truly effective, an organisation must first look at who its customers are and what their value is over a lifetime. The company must then determine what the needs of its customers are and how best to meet those needs. Next, the organisation must look into all of the different ways information about customers comes into a business, where and how this data is stored and how it is currently used. One company, for instance, may interact with customers in a myriad of different ways including mail campaigns, Web sites, call centers, mobile sales force staff and marketing and advertising efforts. CRM systems link up each of these points. This collected data flows between operational systems and analytical systems that can help sort through these records for patterns. Company analysts can then use the data to obtain a holistic view of each customer and pinpoint areas where better services are needed.
Are there any indications of the need for a CRM project?
You need CRM when:
- you are losing customers to competitors
- you sell some products and services to some customers effectively but not to others
- your sales team are under-performing (and you don’t know why!)
- your sales team handle high volumes of sales calls
- your service staff need to know what your sales staff are doing and vice-versa
How long will it take to get CRM in place?
It depends. If you decide to go with a hosted CRM solution from an application service provider and you are planning to use the software for a specific department like sales, the deployment should be relatively quick – perhaps 20-40 days. However, if you are deploying either a hosted application or an installed package (involving the purchase of software licenses upfront) on an organisation-wide basis (which involves different departments like sales, marketing and operations), you might find the implementation and training could take months, if not years. The time it takes to put together a well-conceived CRM project depends on the complexity of the project and its components and how well you and your chosen partner manage the project.
How much does CRM cost?
Again it depends. A hosted sales automation application can cost between $10 and $150 a month per user (most are priced in US $s incidentally). If you want more sophisticated functionality and a greater level of support, you can pay a lot more. An in-house installed CRM package can cost anywhere between several thousand to tens of thousands of pounds, depending again on how many functions you purchase and how many users or “seats” have access to the software. For instance, one company or department might purchase an email marketing management application or a salesforce automation application, while a larger firm might want to purchase an integrated package that includes a database as well as applications for marketing, sales and customer service and support (via call centers and online). Obviously, the integrated software package is much more expensive.
What are advantages of hosted or on-demand CRM?
In the last few years, the market for on-demand or hosted CRM has soared, particularly among small and mid-sized companies, largely because of fears about the expense and complexity of large-scale in-house CRM implementations. And indeed, hosted CRM is perfect for companies that want to implement standard CRM processes, are able to use out-of-the-box data structures, with little or no internal IT support, and don’t require complex or real-time integration with back office systems.
Getting a hosted CRM system working shouldn’t take as long as a traditional software package, but larger and more complex rollouts can still take a year or more. In addition, some companies with particularly sensitive customer data, such as those in financial services and health care, may not want to relinquish control of their data to a hosted third party for security reasons. AMR Research predicts that by 2009, hosted CRM applications will account for 12 percent of the total U.S. CRM market. That’s still a lot of businesses online however (there are 26 million private enterprises in the USA…)
What are the keys to successful CRM implementation?
- Develop your customer-focused strategy first before considering what kind of technology you need.
- Break your CRM project down into manageable pieces by setting up pilot programs and short-term milestones, perhaps using a hosted CRM solution as a test. Start with a pilot project that incorporates all the necessary departments but is small enough and flexible enough to allow tinkering along the way.
- Make sure your CRM plans include a scalable architecture framework. Think carefully about what is best for your organization: a solution that ties together “best of breed” software from several vendors via Web Services or an integrated package of software from one vendor.
- Don't underestimate how much data you might collect (there will be LOTS) and make sure that if you need to expand systems you'll be able to.
- Be thoughtful about what data is collected and stored. The impulse will be to grab and then store EVERY piece of data you can, but there is often no reason to store data. Storing useless data wastes time and money.
Who should run the CRM project ideally?
The biggest returns come from aligning business, CRM and IT strategies across all departments and not just leaving it for one group to run. In fact, it’s best for the business departments who actually use the software to take ownership of the project, with IT playing an important advisory role only. CRM is NOT and IT project!
What causes CRM projects to fail?
Lack of communication between everyone in the customer relationship chain normally. Poor communication can lead to technology being implemented without proper support or buy-in from users. For example, if the sales force isn't completely sold on the system's benefits, they may not input the kind of demographic data that is essential to the program's success. In all cases, the systems don’t fail, it’s the user’s refusal to use the system (sometimes with real justification – systems may “work” but the logic behind them may be flawed) that causes the software to fail. Take the team with you or pay the price!
What industries are leading the way in CRM implementations?
As in most leading-edge technology implementations, the financial services and telecommunications industries have so far set the pace in CRM. Other industries are catching up fast including consumer goods makers, retailers and high tech firms. If you have customers you must look at a CRM strategy or risk being overtaken by your competitors: it’s a simple and stark as that.
Which industries are slowest adopters?
As a rule, the further an industry is away from the end customer, the less important CRM is. Heavy manufacturing for example are slow adopters about many new technology ideas. But that is also an opportunity for the more forward thinking manager: if you get there first and make it work you will give your organisation a huge competitive advantage.
Chic McSherry
CEO
iport4business
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