Two years after launching Toronto-based management consulting firm Manta Group Ltd., CEO Will O’Brien had a nagging feeling that some of his marketing strategies weren’t paying off the way they should. The trouble was, O’Brien had no way of knowing which strategies to drop and which to keep.
At the time, the firm was spending in excess of $100,000 per year on trade-show sponsorships, advertising campaigns and events in an effort to attract new clients. “We were spending more and more money on marketing, but we had no tool to track how effective it was,” says O’Brien. Knowing that others in his industry were using software to help them track customer relationships and responsiveness to marketing strategies, O’Brien started scouting for a customer relationship management (CRM) program.
CRM software made its debut in the 1990s, but most users — mainly big businesses — found it expensive, difficult to integrate and not particularly effective at improving customer satisfaction. But that changed in the early 2000s, when upstart firms such as Salesforce.com revolutionized CRM technology with Web-based services that virtually eliminated the need for costly computer platforms and third-party integrators. As a result, CRM use is spreading “like wildfire,” says Paul Greenberg, the Manassas, Va.-based author of CRM at the Speed of Light, not only because it’s cheaper and easier to use but because the cost of dissatisfied customers is skyrocketing. “They’re more empowered than ever before,” he explains. “They can blog about you, venting about your product to an audience of millions.”
Today, many companies have caught on to what CRM technology can do. CEOs say CRM has helped them centralize client data, automate customer service processes such as status reports or e-mail campaigns and alert them when they’re behind schedule — all of which improves customer relationships and bolsters sales. Still, CRM isn’t magical. Fall prey to common CRM pitfalls such as poorly chosen technology, inaccurate data and staff backlash, and CRM could damage the relationships it’s meant to enhance.
CRM is now a key asset at Manta Group, helping the firm produce advertising campaigns and choose marketing opportunities with higher ROI. Because Manta’s CRM program, from Salesforce.com, allows the firm to track leads and sales to individual marketing campaigns, O’Brien has been able not only to identify the most effective marketing strategy — trade shows — but also to track which trade shows are generating the most new business. For example, Manta Group recently dropped a sponsorship worth about $25,000 after its CRM program revealed the show led to lots of traffic at its booth but virtually no sales. CRM also helped the firm track interest in its executive seminars, which Manta offers monthly and free of charge to clients and prospects. After one particular topic — prioritizing projects — garnered unprecedented feedback from customers, Manta developed an extended, fee-based training workshop on the subject, which helped the company score nine new clients in the past year. “Things can happen very quickly if you have the right data,” says O’Brien.
Because all sales information — both potential and existing — is centrally accessible, a good CRM program can also help fast-growing firms predict more accurately how much work is coming, and when. Itergy International Inc., a Montreal-based IT consultancy, implemented Microsoft Dynamics CRM in 2006. At the time, the company was expanding its client base from a handful of large customers to more mid-market firms. “We didn’t want to drop any balls, and figured our old method of keeping track of clients on Excel spreadsheets wouldn’t cut it anymore,” says CEO Ralph Loewen. A customized workflow component, which prompts users on crucial next steps and project timelines, provides a constantly updated picture of workflow, based on initial entries from the sales department.
For a firm ramping up to meet rapid-fire demands from smaller, shorter-term accounts, Loewen says, the software has been invaluable. “It’s helped us plan our resources more efficiently,” he says. “We have more security knowing that we’re following up on clients when we should be. That’s really important in building good relationships.”
David Perry, co-president of Cogsdale Corp., installed CRM software three years ago merely as a database for contacts at the accounting-software developer. Within months, says Perry, the program was helping his Charlottetown-based firm maintain consistent and reliable service despite the attendant chaos of rapid growth. A customized “tickler” list alerts employees if a project is taking too long, and reminds them to follow up on specific tasks. And because all client data and correspondence are stored centrally, all 45 employees can access a complete, up-to-date picture of any customer relationship. Perry says this means project hand-offs between departments — say, sales to operations to accounting — are smoother. So is staff turnover: “New people have the information to help them start quicker and show the client they know their business and the status of the project.”
For all the upsides of CRM technology, the challenges are considerable. Without the discipline required to enter every lead and record all customer contacts, warns Loewen, your CRM investment will essentially be wasted: “It only takes one or two people not using it, and you’re back to Excel spreadsheets.”
The key is to implement the program gradually, one function at a time, advises Phil Dubois, CEO of CityXpress Corp., a Vancouver-based online auction firm that helps media companies attract advertising revenue. Consider hand-picking a couple of influential people within the sales department early on to help customize the software; this is likely to increase the chances of them championing it later on. Also be sure to pick software that either mirrors your firm’s operational processes or can be easily customized to do so, recomends Dubois, who has used CRM at CityXpress for eight years. For example, if your firm doesn’t generate price quotes, then don’t choose a program that bases its processes on quote generation. Dubois says he’s had little luck finding an off-the-shelf product that didn’t require significant customization. “Most products are too rigid,” he says. Be prepared either to customize the program in-house or to hire a third party to do it for you.
Dubois also warns of the dangers of placing too much trust in the application. “Don’t assume the information in your system is 100% accurate,” he says. CityXpress periodically verifies customer data with phone and online surveys. And because CRM software is so often used to predict workflow, Dubois says, it’s crucial for senior managers to “challenge” the sales funnel to ensure, for example, that the rolling sales opportunities aren’t entered as separate projects. At Vancouver-based CityXpress, senior operations managers review all sales leads on a regular basis to determine how firm they are and how much business the company can realistically expect.
But what if you’ve installed a CRM application and customer satisfaction isn’t improving? It could be because you’re using the technology in place of a solid customer retention strategy, rather than as a tool to support one, says Jim Barnes, a Canadian CRM specialist and author of Build Your Customer Strategy. Barnes says he’s seen many firms spend millions on CRM with little impact on customer loyalty and satisfaction. “I ask them, ‘What do you expect, when your customer strategy is being driven by IT?’” As helpful as CRM is, notes Barnes, don’t forget that relationships with clients are driven through an emotional connection: “It’s pretty hard to do that with software.”