How CRM Systems and Contact Management Tools Differ

Andrew Boyd and Alex Jeffries make a compelling argument for a distinction between contact management software and customer relationship management software in their recent column for CRM Buyer. In short, they view contact management software as a productivity tool that can help solo sales professionals manage a stack of client records. Whereas, by their definition, CRM software is highly collaborative and suited to teams of sales or service professionals trying to share information.

Under these definitions, companies might try to maximize their ROI on software by selecting less expensive contact management solutions for individual sales agents. However, the authors point out that end users must still develop formal processes and reporting tools that live outside the contact management software. A seasoned sales expert might carry a lot of customer information in his or her head. However, the reality at most companies requires sales professionals to maintain order and focus while effortlessly reporting their actions and results.

CRM software takes contact management to the next level by internalizing the best practices and required processes of an organization. Even in the most simple CRM systems, you can define sets of action steps to take every time you generate a new lead or close a new sale. The real management of CRM software is in the automated prompts that a system can provide, reminding you to reach out to a customer or to a prospect with just the right information at just the right time.

Even for solo users, CRM applications can go much farther than simple contact management tools. They can prioritize tasks based on client value, they can effectively project how your daily tasks impact the bottom line, and they can even be tied to communication tools that speed up the profiling process.

The authors suggest that sales groups can use CRM software to create a rich organizational culture based on learning and knowledge. However, the right fit of an individual with an effective CRM software platform can net the same kind of personal reward.

Google Gears for Hosted CRM

If you've been following developments in the web application market, it's no surprise that CRM software enthusiasts are gasping at today's announcement of Google Gears for GMail.

For the uninitiated, Google Gears is a small software patch that allows a web browser to download specific pieces of software code to be run once the browser has disconnected from the network. This afternoon, Google's developers released a version of Gears that allows its highly popular e-mail service to operate more like a desktop e-mail client when access to the web has been interrupted.

Any sales professional who has endured the pain of a network disconnection while using a hosted CRM system can understand the promise of today's development. Users of desktop CRM applications may not feel like this is big news, especially if their systems synchronize with master databases. However, the growing popularity of browser-based CRM software has created demand for highly flexible tools that can be used in the field or during flight.

Google Gears also addresses another common concern of web-based application users: that a sudden communications or power failure can cause them to lose key information about a deal or a client. Hosted CRM applications with the ability to cache data like Google Gears can compete for customers against traditional, desktop-based CRM applications.

Already, developers for a number of hosted CRM applications are fielding questions from clients about whether an offline data cache styled after Google Gears might be included in their future releases. As developers find ways to extend the reach of web browsers, enhancements to hosted CRM applications can ultimately blur the line between what's on the web and what's on the desktop.

Will Oracle Updates Shift Hosted CRM Pricing?

According to Barney Beal, company leaders at Oracle used today's product announcement to challenge other hosted CRM vendors on pricing and on features. For "Release 16" of Oracle CRM On Demand, programmers focused on usability, reporting, and industry-specific customization. CRM software experts note that three of this releases most important updates are designed to give Oracle a strategic advantage over Salesforce.com and other cloud-based CRM systems.

No "Nickel and Diming." Company leaders told the press that hosted CRM clients have become tired of paying extra for simple add-ons. Instead, Release 16 now offers an unlimited number of "custom objects."

Single Tenancy with Benefits. Maintaining your own hardware and software installation appeals to companies that like the idea of hosted CRM applications, but don't want the risk of company data being stored at third party server farms. However, running a parallel installation of popular CRM applications often means waiting for new features, upgrades, and security fixes. Release 16 now features a coordinated updating tool that allows "single tenant" clients access to updates and patches at the same time as Oracle's other subscribers.

On Site Solutions. Now that updates and patches can be centrally coordinated, Oracle's site-specific deployment service appeals to privacy-sensitive firms more than ever. Although an on-site CRM application with dedicated servers doesn't fit the standard definition of "hosted CRM," end users and administrators enjoy many of the same benefits.

These three features can help get some CIOs revisiting the idea of hosted CRM, even if the "cloud" lives within one of their company's own buildings. As competition heats up for business in the hosted CRM arena, industry watchers can't wait to see what new pricing tiers and service innovations will emerge over the next year in response to Oracle's announcements.

Was Your CRM Software Killed, or Did He Jump?

David Sims has written a funny and fanciful murder mystery about a hapless CRM application that winds up dead one morning. Sims' own team of CSI-style investigators ponder the evidence and grill the suspects. I won't give away the solution to the mystery, but it's a crime that gets repeated again and again when businesses don't fully understand how to leverage the power of CRM applications.

Sims does an effective job of illustrating some of the most common challenges to implementing CRM applications. By following a few steps to ensure the success of a CRM software launch, you can make sure your most valuable tool doesn't meet a similar fate:

First, understand the potential resistance points in your organization. Are you replacing a comfortable tool or process with one that seems more rigid and less user friendly? Can you reframe the implementation to focus on the overall benefits?

Second, explore how employees perceive the difference between hosted CRM tools and desktop-based CRM applications. Helping your team understand your decisions may not get them on board immediately, but it gives you the chance to hear about their needs and preferences.

Finally, make sure that you're using CRM software to enhance your business processes. By putting customers ahead of policies or processes, you can develop a CRM system that employees won't be as willing to fight.

Can CRM Systems Change Our Government

The new presidential administration has been using a popular hosted CRM tool to collect information about Americans, and you probably didn't even know it.

When the Obama/Biden Transition Team unveiled the Change.gov website shortly after the 2008 presidential election, they invited citizens to create accounts and share ideas on how to change our government and our country. Site managers promised that the most popular ideas, as ranked by site members, would be printed and bound into a Citizens' Briefing Book to help new administrators understand the public's demands.

If it seems like the team was able to get the site launched and running very quickly, that's because they did it with the help of a hosted CRM application from Salesforce.com. Site managers made a few cosmetic customization to the "CRM Ideas" tool -- the same system used by Starbucks and Dell. This strategy allowed them to deploy quickly, and to scale rapidly -- especially as media coverage picked up when transition officials started responding to citizen questions and ideas.

Now that President Obama has been sworn in, it's time to wonder how this pre-inaugural experiment could affect the way that government agencies use hosted CRM applications in the future. With arguably the broadest collection of personal data at their disposal, can hosted CRM tools help agencies use that information more efficiently. Gathering real feedback from citizens using a proven tool shows promise for the next few years.

Mobile POS Brings Advanced CRM Applications to Restaurants and Retail

The last time you ate at an upscale chain restaurant, did the waiter or waitress bring a small computing device to your table instead of just the check?

Innovative mobile point of sale devices help build customer loyalty for restaurants in three ways. First, when customers see waitstaff capturing information in a handheld device, they perceive that orders will be handled faster and with higher accuracy.

Second, servers with access to CRM applications can gather information about patrons, such as dining preferences, favorite drinks, and even birthdays. When combined with trackable online reservations or frequent diner cards, servers can unobtrusively offer the recommendations most likely to build loyalty and profit.

Finally, mobile point of sale terminals with on-board credit card swipers emphasize a restaurant's data privacy and security position. Servers at take-out windows of one pizza chain in suburban Philadelphia were recently arrested for copying customers' credit card data while processing orders. Completing payment at tableside -- so a credit card never leaves a customer's hand -- makes customers more likely to make repeat reservations.

Mobile point of sale devices are unlocking the power of CRM applications in retail stores, as well. When TigerDirect, a direct marketer of electronics, purchased failing bricks-and-mortar retailer CompUSA, critics wondered what they might be able to do to rescusitate the chain's remaining locations. Shoppers at the stores can now access additional information about products or receive alternate product recommendations based on their purchase histories with both the online store and the physical storefront.

Mobile devices with built-in wireless networking and touch screen technology are becoming less expensive every year. Even using off-the-shelf CRM applications or hosted CRM tools, most retailers can find ways to enhance the customer experience.

How Will Platform Plays Affect Your Choice of CRM Software?

You probably have already heard a few of this decade's business buzzwords involving customer relationship management. "Cloud computing" is just one phrase that keeps analysts abuzz. "Software as a service" is another phrase that sends shivers up the spines of most venture capitalists.

"Platform play" is the latest phrase to hit the field notes of CRM software purchasers, and it can impact the decision over which CRM software vendors win lucrative contracts. With so many software developers staging data at remote server locations, it's easier than ever to build a platform around access to that data. The magic happens when multiple software tools gain access to core sets of data. For example, when a CRM software application and an order fulfillment system share the same platform, customer orders can be tracked, confirmed, paid, and shipped more efficiently.

Right now, experts suggest that we are witnessing a platform shakeout. As major players like Salesforce.com capture the attention of enterprise IT buyers, small startups hope that innovation in the platform space can buy them a seat at the table. According to many experts, the principle of first mover advantage helps out Salesforce, Facebook, and even MySpace. Web services with strong APIs and large user bases enjoy tremendous advantages over their competitors. After all, it's easier to build tools that extend a service that your customers already use than it is to replcate those tools in a vacuum.

For builders of CRM systems, Facebook, LinkedIn, and other social networks hold the key to successful platform plays. Force.com, the platform for Salesforce.com developers, holds promise for customers already committed to that platform. Empowering your CRM system to share data with popular networks and data streams helps you build stronger customer relationships faster.

Making Relationships the Focus of CRM Systems

Until recently, most CRM systems revolved around transactions. Pipelines lead to sales, sales lead to follow-up calls, and calls lead to more pipeline quotes. Under normal operating conditions, this cycle continues while it grows to accommodate even more new customers.

This works well for products and services with regular re-order cycles involving raving fans. However, for sales professionals who market to irregular purchasers on unusual timelines, CRM systems provide an essential boost by helping to cultivate new business.

Expert sales professionals carry intimate knowledge about their best customers in their heads. Interview some of the best salespeople in the world, and they can often rattle of personal details of their top ten accounts. Anniversaries, birthdays, favorite restaurants -- knowing tiny details about your customers' lives helps build rapport that can convert into sales.

In today's distributed society, CRM systems act as a collective brain for sales teams or for solo professionals with hundreds of clients. Instead of simply logging the events that lead to a sale, innovative new CRM systems actually recommend actions that can jump start business. For example, a CRM system can remind you to call a client for follow-up on a recent proposal. Even better, CRM systems can remind you about crucial dates in your prospects' lives, so you can send cards or other well wishes.

As more of us place personal information about ourselves online, CRM systems can become even more valuable. "Social" CRM systems scour public web pages, including some Facebook and MySpace profiles, for accessible information about your prospects. Understanding that your prospect is a Red Sox fan can help you decide how to dole out box seats and other corporate perks. Smart CRM systems can even use this information to predict the likelihood of a client completing a sale.

While customers can still see right through you if you're only pretending to care about their interests, social CRM systems can highlight prospects with whom you have the highest rapport. In a team setting CRM systems can match all of your customers with the best sales professionals to handle their accounts. While that might put an interesting spin on your compensation structure, it can also boost overall revenues.

Does Your CRM System Put Customers First? (Part III)

Last week, I wrote about my experience with a major appliance retailer and the way their archaic CRM system prevented any kind of meaningful communication with me or among team members.

Website designers often recommend making some sample purchases on a new e-commerce platform before releasing it to the public. This practice can help eliminate expensive errors or confusing pages. Experts recommend treating CRM software the same way, especially when end users aren't as technologically savvy as the designers who put together the system.

Smart companies review how CRM software improves or hampers the customer experience, making changes to keep the focus on service. For example, a senior leader at Royal Bank of Canada used a 2005 speaking appearance to talk about what her company learned from its CRM rollout. Looking to grow but prevented by government charter from merging, RBC sought ways to increase deposits through enhanced customer loyalty.

Like most banks, RBC used a CRM system that slotted customers into silos based on the kinds of accounts they maintained. It grew challenging to help customers move from one kind of account to another, because the software limited this kind of action. Instead of using CRM software simply to categorize customer preferences, RBC developed tools to analyze accounts for opportunities.

Realizing that shifting customers to less expensive accounts could net them long term loyalty, RBC reached out to its ideal customers and offered to help save them money. Over a five year time horizon, this painful short-term decision resulted in lower customer churn and more customers bringing requests for home and auto loans to the bank. By tying this learning back to their CRM software design, RBC's front-line staff could ask more insightful questions of customers. The counterintuitive step of placing customers into accounts that generated fewer fees has helped turn RBC into one of North America's most profitable financial institutions.

Does Your CRM System Put Customers First? (Part II)

Picking up from yesterday's post...

Back at the sales counter, the clerk has already had to create a new customer record for me, simply to make sure that my new refrigerator does not end up delivered to an address I have not lived at in seven years. Next, she must keystroke a set of byzantine codes to reference my order, and to coax the system into delivering on a Thursday. After a lot of data entry, we have a deal. She tells me to expect a call the night before delivery to confirm my drop-off window.

All is well, until about five days before delivery, when the clerk calls to ask how I like my new fridge. I remind her that my delivery isn't until Thursday. She tells me she knows that's what the original delivery date was set for, but she sees that I picked the item up from the loading dock over the weekend.

Uh, no.

As she runs off to investigate, I start to wonder if I'm going to become one of those statistics -- folks who don't receive their appliances without stalking a company CEO like Michael Moore. When the clerk returns to the phone, she tells me that she assumed that I had picked up the item, since there's no way her system tells her who picked up or signed for delivery. (That sounds like a pretty important piece of information lacking from a CRM system to me.)

Fortunately, all is well. The delivery drivers loaded my item onto their truck a day early to avoid potential damage. A large snowstorm threatened the area, and they wanted to make sure they were ready to roll. They just had no way of contacting me, or even contacting my clerk. They arrived during the drop-off window and had my new fridge up and running within ten minutes.

Not bad, overall. But certainly not the story their marketing folks want me to be telling. I would imagine that they would prefer I focus my energy describing the great price I got on a high quality appliance. Instead, I'm wondering what could have gone better about the way the CRM system amplified confusion about my order. Thankfully, many successful companies are looking at the customer experience and reviewing how new CRM systems can improve relationships instead of get in the way.

Next week, I'll follow up with some stories about companies that saw similar things happen to their customers, and what they decided to do about it.

Does Your CRM System Put Customers First? (Part I)

I recently purchased a large appliance from a reputable, national retailer. Little did I know that I would become a first-hand case study for what happens when CRM systems rule the customer experience, and not the other way around.

In fairness, the overall experience I had was quite good. I shopped at two locations, neither of which were very busy. The first location featured an old-school salesman who I felt was trying way too hard to upsell me. It seemed like he cared about his commission way more than getting me the right device for my kitchen. When I told him that I needed to call my wife to confirm my choice of features, he urged me to call her right away, while he stood within earshot.

I checked out a second location, where the staff were a little more low-key, and they were more focused on clearing out some floor samples. I felt comfortable doing business with these folks, and preferred to order from them than from their online store. Unable to resist a real bargain, I picked out the perfect model right on the sales floor. And that's when the CRM mayhem began.

Actually selling me the fridge required entering my data into a monochrome CRM system that looked like it escaped the Eastern Bloc before the Wall fell. Because I had shopped with this chain before, they had a previous address for me on file. I have since moved, but the clerk had to force an error to create a new customer record for me. Not only does this seem a little inconvenient, it actually made me realize that there's no way for them to understand or leverage my long term relationship with their company. But it gets better, and I will tell you more about my experience tomorrow.

How Auto Dealers Can Use CRM Software to Stay Afloat

With Americans growing more frugal by the week, it seems like rock solid relationships are the only tools that really make the difference between clearing your goals and clearing out your desk.

Auto industry analysts expect the current slump in car sales to extend through 2012, if not beyond. Crazy deals aren't enough to get shoppers in the door of car dealerships, and one expert told a CNBC reporter that about half of existing dealerships may merge or simply go out of business over the next two years.

CRM software can help your company stay in the pack that keeps their doors open during this economic turmoil. And it's not just because magic software will bring new customers to your door. The real effectiveness of CRM software is in the way that your sales team uses customer information to find the right pitch.

For instance, a review of customers with warranties near their expiration can result in a pitch that plays up the unexpected cost of car repairs. By focusing on keeping a monthly payment stable, effective sales professionals can encourage trade-ins.

Leveraging the service side of an auto dealership can also bring more money in the door while retaining jobs for repair technicians and support staff. Offering free or deeply discounted oil changes during slow repair periods not only brings customers in the door for additional service, it opens the possibility of having repeat buyers take test drives while they wait. Instead of using CRM software to send out yet another postcard or flyer, consider the real value of your customer data and personalize your pitch.

Making Hosted CRM Make Sense to Your CFO

Yesterday, I made a quick reference about CFOs and CIOs who battle each other over every scrap of a company's IT budget. As we inch our way into the new year, it's becoming obvious that budgets are under tight scrutiny at companies of all sizes.

Solo entrepreneurs are looking at every penny going into and going out of their enterprise. Startup companies once known for lavish parties and broad hiring are scaling back and laying off. In this environment, it might sound like a tough pitch to get CRM software approved in your organization.

Hosted CRM is a great solution, especially for smaller companies. There's no hardware to install, and it can automatically be used in the field with the help of wireless cards. Many hosted CRM vendors now offer limited trials or discounted startup costs for new clients.

Still, any new hosted CRM project must first past muster with the executive who signs the checks. You'll need to convince your CIO that your bottom line will improve when you implement hosted CRM. And, if you're the person who pays the bills in your company, you may even need to convince yourself.

White papers and case studies that profile the results of similar hosted CRM implentations in your industry can help you determine whether you're making the right investment. Thanks to competition and a gradual decrease in technology costs, hosted CRM services seem to become less expensive every day. Trying one out in a proof of concept on yourself or on a small team can help you decide which platform best suits your needs.

Is Your Prospective Hosted CRM Vendor Just Slapping Their Own Label on Open Source Tools?

Two of my favorite hot-button topics surfaced on Nathan Eddy's list of five trends to watch in 2009. Cloud computing has become a huge buzzword (or buzz phrase, really, over the past few years). It's breaking into the big time in a major way, getting a lot of coverage in the mainstream press. However, a simple hosted CRM application -- even one that has been running for years -- is still a form of cloud computing. If you're using a hosted CRM service, consider yourself ahead of the trend!

Another of Eddy's hot trends is open source software. Until recently, open source was the province of dedicated, savvy technicians committed to community development and common standards. As low-cost netbooks ship with flavors of Linux preinstalled, more business customers are becoming exposed to the benefits of community-maintained projects.

However, if you mash these trends up, you run into some potential problems that can cause havoc for prospective hosted CRM clients. Free software isn't always the right software for your business. For instance, the wildly popular OpenOffice still has a long way to go before it can unseat Microsoft Office in the enterprise. Thinking about cloud computing, a clever reseller may successfully rebrand open source CRM tools into their own hosted CRM service -- and still remain unable to integrate it fully into a client's workspace.

Low-cost hosting providers often bundle open source applications in their reseller platforms, making it easy to offer "free CRM" with web hosting packages. As with any hosted data provider, you should ask critical questions about the products and services being offered. Is the hosted CRM software homebrew, or a repackage of existing open source tools? Who supports the server or the software if either crashes. Will modifications made to the software be supported if the community development project updates the core package?

Finally, if the price point for your hosted CRM system seems too good to be true, it probably is. Remember that saving cash in exchange for uptime and productivity doesn't always make the best business sense.

CRM Software Converts Personal Analytics into Customer Retention

Throughout the winter, I've read countless articles following up on the idea that CRM software can help companies survive the recession. In the short term, companies can use CRM software to build stronger relationships with their best customers. That alone can help many sales professionals survive a recession.

However, customer relationship management is just one tool in a suite of systems known as business intelligence. BI tools, when used properly, can help leaders generating significant savings while boosting profits. In the wrong hands, according to critics, business intelligence becomes little more than fancy, automated reports.

Overall, business intelligence software focuses on both the big picture and the bottom line. CRM software allows customer service professionals to build relationships based on sales, service, and feedback. That information can then be crunched by larger BI systems and turned into projections and trends that can drive business decisions.

Business intelligence systems often come with a large price tag. Comprehensive, on-site systems require server installations and employee training. Web-based solutions require less setup, but still involve a learning curve. And, with CFOs and CIOs locked in battle over shrinking resources at many companies, leasing or buying BI tools can be a tough sell. Smaller companies may want to perfect their CRM systems for now, while medium-sized businesses may wish to consider the benefits of advanced business intelligence.