CRM for small and medium sized businesses
..........Is Customer Relationship Management like a cure for baldness?
....All hype with no foundation!
The press is full of customer relationship management (CRM) and how to boost your profits concentrating on profitable clients. There is also a buzz around the number of CRM installations that fail. How do you avoid being a CRM failure and make the most of this latest business phenomenon?
Firstly, what is CRM?
CRM is a strategy that seeks to engage an organisations culture, processes and technology in analysis and interaction activities that acquire, retain and develop customers businesses to secure long terms profitability for the organisation.
Certainly CRM is not just about technology, it is without doubt the final layer in achieving an effective overall CRM strategy for the business.
Without the type of culture that considers your customers an affordable long term investment, there will be little or no commitment from your employees. It is vital to invest time to ensure the right people and proper processes are formalised placing the customer at the heart of your organisation. Once the building blocks are in place, technology can be added to deliver the very real business benefits that can be achieved.
Based on this philosophy it is important to understand the roots of the small to medium sized business before investing in technology. Typically, an entrepreneur will start a business with an idea, a vision from which to build. In some cases they will conduct research to test market feasibility, and in others they will rely on gut feel.
Research into individuals thinking patterns has shown that people are either right or left brain dominant. For simplicity's sake the right side of the brain tends to drive emotions and vision, concentrating on the big picture for decision making, the left side of the brain will be more logical and drives analysis. It is therefore not unreasonable to assume that a high proportion of entrepreneurs are right brain dominant. Therefore, smaller organisations are principally driven by right brain dominant individuals whose attitude will be one of "just do it".
The business will be driven by passion for the vision and like minded employees will be recruited. At this stage in the business' life cycle there will be few processes and procedures in place, and those who are at ease in an ordered world would not be comfortable here. The business may well be growing quickly at this stage, and the entrepreneur does not yet appreciate a need for such "bureaucracy".
For I.T. to stand a chance at this stage it has to be, quick to deploy and cost effective. The solution must deliver rapid benefits and address some of the organisational issues that are arising including automated production of invoices, having a customer database, easier and quicker marketing, client history and task lists. These functions often operate as remote islands of information driven by personal productivity and gut feel.
Assuming the initial vision is sound and the company starts to grow there is more pressure to be organised and structured. Realisation will dawn that data is duplicated but not shared and the owner/manager has lost touch with the day to day running of the sales and service teams. While sales still may be rising, so is the level of customer dis-satisfaction. So the search for a software tool to solve the problems begins!
Entrepreneurs will by and large lead small business' of up to 50 people. Typically they look for a solution that can be deployed quickly, without disrupting the still fragile organisation but solving key operational problems. The solution will need to encompass basic reporting, activity analysis, workgroup contact management, sales forecasting and some basic service call logging. The focus will be on relatively short term goals with the customer relationship being focused on customer service rather than a longer term customer needs.
The type of individuals and managers that would take a longer term and more analytical approach to the CRM technology are by and large not yet present within the organisation. A solution that is too sophisticated and complex and that takes take too long to deploy would not be utilised effectively. The net result would be an overly complex system that users don't like and hence resist at all costs, perceived business benefits are not delivered due to low adoption contributing to another CRM failure!
As the organisation grows into a medium sized business with greater than 50 employees, it must start to change culturally to survive. If it does not start to embrace some of the necessary process and procedures and stricter financial management techniques, there will be low moral internally and customers and suppliers will not be satisfied with falling service levels.
Internally individual departments will demand management information which if not held centrally cannot be provided:
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Sales require an understanding of the sales methodologies employed and to understand the key sales metrics such as win/loss ratios, forecasting sales pipe-line accuracy, and overall sales effectiveness.
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Marketing needs to understand the effectiveness of their campaigns, lead source analysis and strengths in the customer base.
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The Service Department needs to measure service levels, escalations and service level agreements to ensure high level of customer satisfaction.
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Finance will move from a book keeping type exercise to a more pro-active role providing management information to aid business decisions. This requires an understanding of the company's cost centres and analysis of the customer base i.e. who are the most profitable customers and the costs associated with keeping them.
In essence there is now a transition from a business that is lead by entrepreneurial gut feel, to one inspired by entrepreneurial vision but executed through tactical operations. The entrepreneur becomes the business strategist, providing ideas and strategies that must stand the analytical tests of the operational team required to execute them.
For this organisation to continue it's growth it requires an IT solution is rapidly deployed at the outset but is sufficiently flexible to service the distinct needs that departments and integrate the various front and back office functions as the company grows.
To embrace a true CRM strategy there are few small businesses unlike their large cousins, will have the culture, skills or resource to adopt it. Whilst they will evolve and improve the interaction they have with their customers through better operations in the sales, service and logistics area, there will be little focus on customer analysis until the organisation matures and has the human and financial resource to allow for the investment in time and processes. The irony lies in that the entrepreneur who has a vision of a solution that will attract customers may be the initial barrier to implementation of a CRM strategy within his or her own business.
