Tuesday, May 26, 2009

Gartner: Adopt CRM Systems Now, Or Lose a 1-Year Head Start

Companies that use the economic downturn as an opportunity to invest in CRM systems and other business intelligence tools will enjoy the same long term benefits as getting a one year head start. That's according to a recent Gartner report on CRM applications, focused on the impact of reducing costs and preparing for the end of a financial slump.

The Gartner report highlights the impact of launching new CRM systems during periodic business declines. Learning how to use CRM systems effectively during slow times is a great way to prevent service bottlenecks when call centers get busy. Training on CRM applications during downtime can help team members feel productive, efficient, and ready to take on bigger challenges once customers start buying again.

Tightening up business processes always feels necessary during a recession, since boom times can often mask the effects of inefficient tools and systems. It's easy to write off a problematic software tool when the opportunity cost to fix or replace it is such a low percentage of a company's gross revenues. As revenues shrink, problems like outdated CRM software become more apparent.

However, the Gartner report reminds business owners not to expect sales to snap back to their former levels right away. In some companies, sales may never reach their previous volume for a number of reasons:

  • Customers have changed buying habits.
  • "Temporary" discounts or price cuts have become permanent, reducing revenues.
  • Competitors have leveraged their own strategies to steal market share.

Therefore, investing in CRM systems is just one of the important tactics that companies can use to ride out the recession. Strengthening training, development, and marketing programs are still necessary steps to make sure that customers return once the economy improves.

Friday, May 22, 2009

CRM Software Identifies Which Customers to Lay Off

Despite recent recovery in the global stock markets, many company leaders still worry that they may have to cut expenses and overhead to stay ahead of earnings expectations. Call centers and customer service operations often seem like low hanging fruit for budget-minded managers eager to automate the customer experience and eliminate extra headcount. Fortunately, many savvy companies have turned their call centers and sales operations into sacred cows, especially when CRM software can help streamline operations and steer more revenue into an organization.

Laying off employees may not be the answer, but there are other people that might find themselves getting the ax this year -- customers. Instead of recommending staff reductions, some customer relationship management experts urge company leaders to consider using CRM software to discover which clients they should fire. CRM systems can analyze whether certain clients demand more than their fair share of company resources. For instance, one customer might demand sever discounts on goods or services while spending a significant amount of time with sales or support teams. Consultant Fred Wiersema recommends using CRM systems to the distinction between "stretch customers" and "lagging customers":

  • "Stretch customers" challenge teams to identify and serve upcoming markets. They represent the leading edge of a trend and offer opportunities to test new techniques. By definition, they require more time to cultivate, but pay off in the long run.
  • "Lagging customers" take up staff time but provide little meaningful revenue and no strategic advantage. Using CRM systems to separate lagging customers from stretch customers can save companies a significant portion of their marketing and support budgets each year.

While company leaders at Best Buy aggravated consumers by attempting a similar strategy at retail, inside sales professionals can use more subtle tactics to gather the data necessary to determine whether a client's worth keeping. CRM software that can assess a customer's strategic value can pay for itself this way, usually within a few sales cycles.

Monday, May 11, 2009

Gen Y's Impact Felt Through Hosted CRM and Smartphones

If you see fewer sales professionals unboxing their laptops in airport security lines, you're not alone. Thanks to hosted CRM applications and a new wave of sophisticated smartphones, more field agents prefer to leave their laptops at the office. The shift has a little to do with technology and a lot to do with the changing demographic of the mobile workforce.

For the past ten to fifteen years, the most serious sales professionals hit the road with ThinkPads and other business laptops. In addition to PowerPoint slides and sales projections, those portable computers often contained sophisticated desktop CRM applications. Long before Wi-Fi became ubiquitous, sales professionals would keep notes and add new customers on their laptops, synchronizing information with the rest of their office by connecting devices to servers upon their return.

However, tales of lost and damaged laptops pervade the IT service space. Without wireless backup, desktop CRM applications are still at the mercy of dropped hard drives, cracked screens, and misplaced laptop bags. Hosted CRM systems solved the problems of lost data after a laptop failure, but replacing equipment can put a strain on company budgets during tight economic times.

Enter the smartphone. Though hard-core IT junkies note that today's fastest smartphone processors only rival laptop chips from a few years ago, today's phones have just enough power to handle many hosted CRM applications. Furthermore, as Generation Y workers join companies in droves, a new wave of sales professionals already comfortable with sleek phones sees no problems using them for CRM as well as for calls and texting.

This shift is good news for CIOs, who have discovered that they can replace many of their field laptops with less expensive and more durable smartphones. Many carriers subsidize the cost of new smartphones, making them even more appealing. Their learning curve tends to be offset by the convenience of having one less bulky item to carry in the field.

Granted, some CRM systems still don't play nice with all smartphones. Internal company systems often fare far worse than hosted CRM applications, since they require middleware or server licenses that can negate other cost savings. Nonetheless, with more companies adopting hosted CRM applications, the transition to smartphone-based CRM should do great things for company budgets, not to mention sales professionals' shoulders.

Positioning Hosted CRM Software as a Network

Software as a Service (SaaN) offerings have grown in popularity among small business owners, especially since web-based services often cost far less per month to maintain than typical boxed small business CRM packages. For instance, a popular accounting and invoicing solution that costs $199 per year to keep current results in a monthly spend of over $16 for a single user. Competing web services that cost $12 or less per seat per month enjoy an advantage, both from a cash flow standpoint as well as from the perspective of delivering overall value to a growing business.

Mike McDerment, the CEO of Toronto-based FreshBooks, has even bigger ideas for his small business CRM suite. In a recent video and blog post, McDerment challenged customers to ask for more from their small business CRM software by integrating more of their business operations into networked web applications. Using FreshBooks as an example, McDerment illustrated how users can enjoy the convenience of invoicing on a hosted CRM platform while receiving invoices and tracking tasks from contractors or vendors from within the same system.

For small business CRM users, the power to integrate accounts payable into the same systems can unlock many of the same benefits as enterprise-level business intelligence software. Users can make more accurate cost projections, while enjoying more visibility into contractors' task progress. Integrated credit card processing improves cash flow, since users who rebill subcontractor work can connect invoices to specific tasks and jobs. A networked small business CRM solution can also evolve into a job referral platform, since users become more likely to select vendors already using the same hosted CRM tools.

McDerment calls this new way of thinking about hosted CRM a move toward "Software as a Network." Instead of viewing CRM applications and other web tools as silos, he uses Facebook as a model for what can happen when multiple software tools within the same shared destination site. While comments at TechCrunch and other blogs suggest that SaaN may not replace SaaS as a buzzword anytime soon, users of competing hosted CRM applications may find themselves craving the same kind of streamlined functionality as FreshBooks integrated business management suite.