It is difficult for an organisation to operate effectively without some form of customer relationship management in place. The trouble is that this could be anything from basic text files through to advanced enterprise software.
Software vendors have pushed ‘solutions’ at us ranging from the old style sales force automation tools aimed at the individual through to today’s integrated sales, marketing and fulfilment tools. What is really happening out there?
Taking Salesforce as an example of an integrated system, it has grown from its start in 1999 to have revenues in excess of $5b per annum and is on track to break $6b in financial year 2016 out of a total CRM market of around $26b (which includes Oracle, SAP, Microsoft, Infor and others). However, Salesforce has not turned a profit since 2011 – its cost of sale is pretty high (> 50% of revenues), which for a company built on customer relationship management, does seem to be a bit of a problem.
Given the potential strength of their technology, why is this the case? After all, Salesforce’s subscriptions start at $17 per month, with its ‘most popular’ customisable offering coming in at $85 per user per month – just over $1,000 per year: something that should be recoverable in a single sale for many organisations.
The challenges that face Salesforce, as well as other integrated CRM vendors, are based on multiple issues:
- Inertia. Many organisations are happy enough using their ‘free’ tools – whether these be Word, Excel or similar. Why pay for something extra when the users are happy enough?
- Perception of over complexity. Many organisations perceive the integrated solutions as being too much for them, and fail to see how they can recover sufficient value add from the systems.
- Stove-piped departments. Integrated solutions sound good, but if the departments concerned have few real-life touch points, then a software solution without a full change of working processes will fail.
- Lack of engagement with the interface. If the system takes more effort to put data in, than the value that the individual believes they get out, they will not use the system.
These last two are the major issues when it comes to organisations considering an integrated solution, and it is here where the likes of Salesforce struggle.
What’s required are additional capabilities to ensure that the received value exceeds the effort put in, and where the overall selling-to-cash process pulls together the individuals and groups involved in a way that makes it more compelling to use.
How can this be done? CRM has to automate steps where it can, but it also needs to empower the user where automation does not make as much sense. For example, a sales person needs to have a sense of individual empowerment in how they carry out a sale. If the software constrains them too much, then the sales person will perceive him or herself to be superfluous to the activity and will not perform well. Using a front-end system (a ‘system of engagement’) that provides a framework for the salesperson to work within while providing them with actionable advice throughout the process provides a much more effective system. While Salesforce has effectively shown sales people the ‘What to do’ of Sales, what has been missing is the ‘How to do’ of Sales.
Sales people need better insights into their prospects to enable a more effective sales closure, and of their existing customers to identify where up and cross-sell can be made. While traditional CRM systems hold this data (as a ‘system of record’), it is not easy for the average sales person to uncover this and make use of it. Information such as dynamic hierarchical reporting structures within their customers, what level of spend is available within a prospect or customer, how to help the first point of contact in an organisation to build their business case for the solution being offered to them, competitive analysis all help in making a CRM system far more attractive to the sales person. The information that they then put in place makes the system far more likely to be used by the rest of the organisation.
Ensuring that processes are no longer stove-piped needs knowledge of how departments work together, and how the tasks within the process need to be handed off from one group to another, while maintaining feedback loops. For example, the impact of an up-stream marketing campaign on the sales department needs to be flagged as early as possible, and the positive or negative impact feedback must be acted upon as swiftly as possible by the marketing team. Likewise, issues being raised by customers being logged through the helpdesk, and where a solution is available, need to be flagged back to sales, so that they can deal with the issue during site visits and the sales process.
Through the provision of additional value, the issues that an organisation faces with the procurement, implementation and usage of a CRM system can be addressed and make the adoption of the solution far more effective. In a competitive world, effective knowledge and management of prospects and customers is key. Some of the CRM products on the market fail to provide an engaging experience on their own, so the importance for businesses to bring in effective additional tools to enable this can only be a step in the right direction.