CRM Software Solutions
The Business Case For CRM
Yet for all the great CRM blogs and refocused effort on Client Relationship Management software, scores of major industries have not even begun to realize the value of perfecting the use of this tool.
Why? It is not an all-pervasive-tool for all businesses. One size does not fit all.
Think about it.
First and foremost, there are varied CRM software tools in today’s market which cover either the whole range of CRM or particular niches. For example, Sales Force Automation deals primarily with the automation of Sales and tends to cater well to small and mid-range businesses. The broader aspects of CRM, which also include marketing and customer service, have been better accommodated for larger organizations such as the Fortune 2000 or global 5000.
Not only are the CRM software offerings dissimilar, but methods of deployment run the gamut from a hosted environment with the system housed and maintained off site, to internally-serviced, leased, or purchased systems. Therein begins the most basic differences within the Client Relationship Management arena, and these morph into a Medusa’s head octopus as a company conducts a thorough analysis, while preparing a business case for implementing a CRM solution.
Take the most basic aspect of consumerism, sales.
Every single consumer organization sells. No two companies sell utilizing the exact same philosophy, or the same processes, or through the same distribution channels. Sometimes the disparity is marked, as between a retail organization like FTD, the world's oldest floral services organization which sells directly to consumers, and a wholesale entity such as Dole, which is the largest producer of fresh flowers in Latin America, and serves the entire florist industry. Both are in the same basic horizontal type of commerce, yet each has its own distinct, divergent client base. Neither would utilize a CRM system in the same manner.
An FTD independent retailer is apt to employ an informal approach to sales based upon experience and a retail, ‘one-off’, slant. Dole, on the other hand, may utilize a more defined approach to sales, such as solution selling or relationship selling, and either of these methods incorporates and defines each stage of a sale from lead to contract thereby requiring a more complex, flexible, and full-featured CRM software system. While a simple Sales Force Automation software system may easily handle the needs of the independent retailer, it would be woefully inadequate for a large corporation like Dole.
Extrapolate these basic differences to the variations that exist in today’s global marketplace; vertical organizations, cultural diversity ad infinitum, sales philosophies, disparate remote locations, and it immediately becomes apparent that the business case for CRM for almost every organization must be argued on its own merit. Taking that into consideration, building the business case can be separated into three dissimilar value propositions namely: costs, future value, and intangibles.
Costs are precisely that, the costs of either adopting or not adopting a CRM tool. Costs can be categorized into capital expenditures, one-time costs and recurring costs.
Future value involves predicting both measured revenues and indefinable gain areas, such as branding, up-selling advancements, cross-selling increases, customer satisfaction or greater customer-share.
Intangibles refer to both expenses and income, are difficult to discern, and are part and parcel of outlays and earnings.
Perhaps the first aspect in building the business case for CRM is - why is it necessary to do so? Are the competitors ahead? Will taking the plunge build a competitive advantage? Is the company losing market share? Has customer dissatisfaction skyrocketed?
The driving force behind building the business case for CRM is oftentimes the most significant measure in the argument for utilizing this vital tool.
Opposite, but of equal importance is future value. Is the company the market leader, or if not can it envision the merits of early adoption ahead of competitors? How is this measured? Perhaps in terms of increased market share? Or perhaps gaining a slice of the client base which proves currently elusive?
In many cases, the deciding factor to implement a CRM solution is based upon a variety of intangible business values, criteria nebulous, but crucial to the entity’s success. It seems intuitive to naturally migrate from marketing to selling to servicing a client. Therefore, on first approach, building the case for implementing a Client Relationship Management system appears inherently quantifiable. However, many aspects of the benefits of utilizing CRM defy computation.
Examining the most easily understood and encountered aspect of Client Relationship Management, service and support, exemplifies this to perfection. Each and every individual over the period of less than a day bumps into examples at both ends of the spectrum, from amazing to intolerable customer service, whether it is a surly gas station attendant or a waiter who anticipates every desire. Measuring the impact of ten of the former or the latter on the client base of Exxon or Ruths Chris Steakhouse is almost impossible. Narrow it to one individual gas station or one individual restaurant, and it becomes possible to numerically determine and analyze the effect of poor or excellent client service, and present a quantifiable Return on Investment (ROI) analysis. As results are inferred from one location to many, and then to all, assumptions become broader and so does the margin of error.
Using another example, the company Omaha Steaks relies on its branding of quality food, in particular beef, for a fair price. An image backed by their 100% satisfaction guarantee. Yet, as important as their branding through marketing is to increase revenues, service to support that claim must go hand in hand or it will result directly in lost sales. To a large extent, measuring the correlation between service response times and complaints can indicate a certain level of customer satisfaction. What impact does that have on return sales? What level of discontent in their database impacts enough on the bottom line to win the case for implementing a Client Relationship Management solution?
Each organization slants the reasoning behind their decision based upon several, general issues and others specific to industry, marketplace conditions, and the dynamism of communication methodologies. In making the business case for using a CRM solution, another aspect must be evaluated; proposed software fit to both current practices and corporate culture.
It will not do for example, to implement an inflexible system in a company which must adapt and evolve rapidly to retain and expand its client base. Internet companies like Fantasy Football and even the more traditional entities such as Omaha Steaks are prime examples of this. They need to respond real time to customer requests and adapt to changing conditions rapidly, and the nimbleness of the software may be an important selection criteria when selecting a CRM solution.