15 November 2010
A Customer Relationship Manager is vital for a Business that plans to grow - and what business doesn't? If you already have a CRM in place then you're already aware that it can drastically streamline the service that you give to customers and those who haven't are missing out on a tool that could increase their profit.

A Customer Relationship Manager or CRM system is a piece of software that has a variety of functions aimed at streamlining your business processes and increasing your profit through collecting and collating information about your customers - effectively giving you a better picture of your customer and helping you deal with them faster and more efficiently.

While the Software can be all you need for Customer Relationship Management there are more challenges than simply obtaining the software, and even then there are many things to consider when purchasing or indeed using a free CRM system.

Benefits of a CRM

It largely depends on the CRM system that you are going to implement, but every CRM usually offer the same key benefits;

Increased Profit

Increased Customer Satisfaction, Retention and Loyalty

Reduced Costs

Increased efficiency

Improved ability to target customers more effectively

Many of these benefits link together - if you've lowered your cost by reducing the amount of time it takes to follow through sales and customer service, then you've increased your profit by that amount. In turn, the more effective customer service makes your customers more satisfied with your service, increasing their loyalty and therefore likelihood that they will tell their friends about your business, drawing in more customers.

The final point illustrates the ability of a CRM to capture data about your target audience. Most businesses have a sales team and this is where a CRM can really show it's capability. After collecting data about your customers you can use it more effectively to target those customers with other products, or perhaps identify areas that your business' service or product isn't very popular. With careful analysis of this data you can help to identify best selling products and services and cut costs in areas where you could be losing money.

CRM's can be expensive.

Every Business is concerned with cost and want to see a return on investment, or ROI. That's understandable and a CRM can certainly give good ROI if implemented correctly but the challenges are quite numerous. There's many different costs to think about when utilising a CRM such as;

The Software or Service

There are two distinct types of CRM - Software based, where you purchase the package and install it on your own hardware and Software as a Service (SaaS) where you purchase a type of subscription, likely paying per month but do not have to have any hardware other than a computer and an internet connection. Many CRM's have a cost per user and if so you will have to think carefully about how many employees you will have that will use the CRM - others still have an unlimited amount of users, but will have a fixed fee payable at fixed intervals such as every month.

Hardware

These systems rely on technology to work - usually on a computer on an internet connection, or a network. If you don't already have these things, then it's likely something that you're going to have to pay to acquire to use the CRM effectively.

Training

If your staff haven't used the CRM before, then they're going to need to know how. If you have a large number of employees this can really be a large cost both in time and money, especially if you have to hire an outside consultant to train your employees in the CRMs use.

CRM's can be difficult to implement

It's a challenge to implement a CRM across a business, whether it's only a small business or a massive corporation. The CRM will have to be carefully chosen to meet the needs of the business and the way that it works and if the package that you choose isn't bespokely made to your business, you may have to carefully tune some business processes to match with the way that the CRM works. Here's a small number of problems you could face;

Determining your Business Processes

A new business will likely have a clear idea about how it wants to work, and older businesses will already have processes to deal with their customers. A CRM will have a specific way of dealing with data as well, although this is less of a problem should the package be bespoke - but even then, you will have to define and lay out exactly how you want your data to flow even with a completely bespoke CRM package. This can be tricky to get right and some serious thought needs to go into exactly how you want your CRM to interact with your business processes and choose a package that's right for you or have one made.

Lack of Interest or Enthusiasm

It's clear from the beginning that a CRM is going to succeed or fail based on how well it's used by your employees. The larger the business the more this problem can really hit home. It's important that the leaders of the business are the leaders in any CRM initiative and use it to it's full potential. This is the most common reason for a CRM failing, either because the system has been ignored or it's only been half implemented, resulting in confused communications and incomplete data.

This problem can also rear it's head if you are only implementing a CRM across only part of your business - perhaps resulting in having parts of your business siloed off. If the sections of the business hardly communicate then there's little problem, but if they've got to regularly communicate you will need to ensure that the systems in place are compatible with one another and don't cause more problems than they solve.

CRMs won't give immediate ROI - or work overnight.

It's important to have a clearly defined strategy for implementing your CRM across your business, both to ensure that you avoid any potential pitfalls but also so you see a steady increase in the efficiency of your business. While it might take some time to get going, a good CRM system with a decent philosophy behind it should begin paying it's way within months of implementation.

Full effectiveness requires data.

It's a common trend across nearly every CRM that they can give you reports on aspects of your business such as graphs and statistics and on what specifically is something that you have to decide. Many off the shelf packages have standardised reports that you can view and probably the ability to create your own custom ones. Deciding what to track and how it affects your business is something that you should take some time to consider, although it can be extremely powerful should you use it correctly - for example, if you know that many customers who buy one product also buy another, it's a likely candidate for your sales team to try and upsell.

Training takes time

This is also covered in the costs section, but it's worth mentioning that it can take a small amount of time as well. The adoption of a CRM philosophy by your staff can take an amount of time as well but with effective and consistent leadership the time should be minimal, especially if the people who will be directly using the CRM have been consulted beforehand.

In conclusion...
A CRM can be a worthwhile investment for a company, but it has to be carefully planned and thought out especially when it comes down to choosing the software that you will eventually rely on. Will it be able to grow with your business? Will it give you the functionality and the data acquisition that you need? Is it cost effective?

Ultimately, if you've enacted a CRM throughout your business you should be in a prime position to co-ordinate your business activities more effectively and make the most of every opportunity that comes your way, as long as you've researched your options carefully.