Achieving Success With CRM in the Midmarket Organization
For any midsize businesses (MBs) entertaining thoughts of implementing CRM, the most important question they can ask themselves is Who am I? This may seem very far off from the issue of a technology selection but it is the most fundamental question MBs can ask and answer about themselves. It is from this question that the goals of the organization, its priorities and its strategy will flow. While it may seem like a lot of work to ask such a deep question to merely select a CRM application, it is precisely the difficult task that must be undertaken if an organization wants to spend its money wisely and achieve success.
Related to this, there are two very important truths regarding CRM that must be understood: 1) CRM is a technology and 2) CRM is a business strategy. These two truths are in effect at the same time. The CRM strategy is the organizations go-to-market strategy. How the organization handles its customers, how it targets new prospects and how it sells are all part of its CRM strategy, which is then manifested and encapsulated in business processes within an application. Understanding who the company is and thus its goals will help put the CRM strategy in line with the overall corporate mission. It is possible to install a CRM application, whether it is a single-function solution such as a contact management product or a broader solution set, without ever thinking through these issues, but that installation will never realize the potential strength of the CRM implementation, nor the success achieved by other midsize organizations that have worked through three core steps in implementing CRM. The three core steps to achieving success with CRM are:
- Understanding the organization and its priorities;
- Selecting the right partner; and
- Making the commitment and organizational changes required.
The goals MBs identify, the business partner they select and the organizational changes that occur all have a big impact on the deployments success. From these basic steps, companies will be poised to take advantage of the next layer of CRM moving beyond the transactional nature of CRM to understand their customers and to anticipate behavior and influence it.
DEFINING YOUR ORGANIZATION AND ITS GOALS
The landscape has changed dramatically in the last few years in terms of technology
availability for midsize businesses. Though technology may have evolved and
price points have come within the range of midmarket companies, the essential
nature of the midmarket organization has not altered. It is within the very
specific scope of needs and limitations that midmarket organizations must strive
to adopt appropriate solutions for them while pursuing their corporate goals.
The question of what CRM product to select is almost immaterial next to the more important issue of the organizations goals. There are products now that allow even the smallest of businesses access to business process automation tools that a decade ago would only have been available in highly complex products. From that standpoint, MBs today have a decided advantage.
The answer to Who am I? will obviously differ between companies. More commonality will emerge in the next steps of what needs to be done to support Who am I? and Where do I want to take this company?
IDC regularly studies small and medium-sized businesses from an enduser perspective. In a survey conducted in 2005, IDC sought to understand the business concerns of U.S-based organizations with less than 1,000 employees. This study showed that small and medium-sized businesses have a wide range of business concerns and worries that they often seek to address through technology investments. While not all problems have a technology solution, there are a number of pain points that can be addressed through the application of advanced technology products and services.
As Figure 1 shows, small businesses (SBs) and medium-sized businesses have a high level of agreement on their business priorities. Basic business operations, both business growth and efficiency, are the most widely cited concerns. While small businesses are much more likely to cite revenue growth than efficiency as key business priorities, medium-sized businesses cite the two concerns as equally important. (In fact, improving efficiency/ productivity is cited by a larger percentage of medium-sized businesses, although the difference, 60.2 percent compared to 57.8 percent, is not statistically significant.) Unlike fast-growing small businesses, medium-sized businesses are more likely to be mature and have greater past investment in infrastructure and staff. As a result, there may be as much incremental profit to be found by squeezing out costs as by adding new customers.
Diverse concerns are typical of both groups. The internal nature of midmarket concerns is the greatest difference, from worker support to staff training and retention, to greater efficiency. Many mediumsized businesses are clearly positioning themselves to become larger enterprises. MBs are a bit further away from keeping the wolf from the door than SBs, but are trying to handle a more complex range of business concerns simultaneously. However, for both groups, gaining new customers outweighs nearly all other categories.
There is a relatively low percentage of CRM installed in MBs (see Figure 2). On average, less than approximately 30 percent of the medium-sized businesses surveyed had a CRM application installed. It was slightly higher at just over 35 percent in the larger MB category. While having a CRM solution wont ensure that a company lands a new customer, it will help in the understanding of what customers the sales team is pursuing, and what occurs over time with those prospects/customers. In answering Who am I? and focusing on the company goals, prioritization for the execution of tasks to support those goals can be generated. Medium-sized businesses need to decide: Is a CRM system the essential component required to achieve the goals of knowing who my customers are and what occurs in a sales cycle?
CHOOSING THE APPROPRIATE PARTNER CRM
is both a technology and a strategy. CRM is a line of business application that
includes the requirement for infrastructure, but it is a mistake to regard it
solely as such. The choice of the appropriate business partner, however, must
be based on matching the skills and resources of the implementing organization
and the capabilities of the partner. For MBs, selecting the appropriate business
partner is key to successful implementation. It is the partner with whom the
most intimate work will be conducted. It is the partners responsibility to
be the bridge between the end customer and the supplier. The implementing organizations
are benefiting from the expertise the partner has gleaned across other customers,
and the advantage of the partner acting as an advocate for them with the supplier.
With CRM, functional expertise is as important, if not more so, than technical expertise; specifically, partners need an in-depth knowledge of the business processes to be automated, and in particular within the CRM process that is being automated. Partners cant be technology companies that claim to do some business consulting; they need to go to the next level and be sales companies that help SMBs with their sales process, if that is the goal of the implementation.
Small organizations in particular almost never have a dedicated IT person. There may be an individual upon whom the responsibility falls as a result of their once demonstrating capability. In medium-sized organizations it is becoming increasingly more common to find one or two dedicated IT resources even in the smallest size classification (100 to 249 employees). But, due to the far-ranging technology needs of an organization, it may not be reasonable to expect them to take on added complexity inherent in a CRM implementation. Selecting a partner that understands the goals of the implementation, the business environment and the limits will enable a true partnership. It may be that the partner will engage with another partner to provide the full scope of expertise required, but there should be a single point of contact for the engagement.
MAKING THE ORGANIZATIONAL COMMITMENT
The most successful CRM implementations studied by IDC have been those where
a commitment was made at the management level, and enforced at that level on
an ongoing basis. Any organization can point to multiple systems that have been
implemented to support some piece of the CRM puzzle. However, these islands
of automation that support single departments or groups are never effectively
leveraged to deliver the insight to top management and to provide a cohesive
view of the organization. To achieve this, top management must lend their support
and be willing to make corporate changes for noncompliance. This is easier said
than done.
Many examples of failed sales automation implementations exist because of the renegade salesperson, perhaps the top performer, who refuses to put their information in the system. When the bottom line is at stake, who wants to risk the business by firing the salesperson? But this is exactly what needs to happen. Without accurate pipeline data, accurate forecasting cannot be done. In several successful implementations analyzed by this author, the management did fire noncomplying sales personnel, and in other instances refused to pay commissions on deals that were not present in the CRM system. It only takes one to two of these instances in any organization to make the point. While a simple concept, many organizations have been unwilling to take this one last all-important step.
Willingness to make business process changes is also part of the organizational commitment. Some organizations even prefer to adopt business processes baked into prepackaged products. Others wish to maintain their own, as the processes represent competitive differentiation. The reality is there will be some change in both cases. Through the activity of capturing the process and including more inputs, the process begins to be influenced. Appropriate business partners can also provide input through their expertise.
GETTING TO THE NEXT LEVEL
Through research conducted over years with organizations
that have implemented CRM, a reality has evolved that is important to understand
and appreciate: An organizations CRM implementation is never done. Unlike most
other technology areas, CRM continues to evolve. Not only does the technology
continue to evolve and improve through advancements, the organizations CRM
strategy evolves as well. As earlier noted, CRM is a strategy as well as a technology.
As economic conditions shift, so does an organizations response, whether by
increasing or lowering prices. It may shift inventory or focus on another geography
or implement rebates on certain products.
Once an organization has successfully traversed the first three steps outlined above, it is poised to continue to evolve its CRM strategy and implementation by looking at what the data is saying. While it would be enticing to want to skip ahead to this step as Stage 1 of the implementation, the rationalization of the corporate data and the institutionalization of the business processes are mandatory first steps in building a sound foundation for the ongoing evolution of the CRM strategy. IDC has found that organizations with the highest ROI and with successful CRM implementations are those that have continued to refine their internal process and application infrastructure. The lessons learned by organizations through the process should not be considered failings of the implementation, but key inputs to the system that are instructive to make the system tuned to the needs of the organization. It has been IDCs experience that companies cannot skip steps and implement the next stages capabilities, such as CRM analytics, without doing the basic work.
With this basic work in place, it is time to plan the key performance indicators that are needed to make informed actionable decisions and to alter business processes if required. Organizations of every size can benefit from the implementation of CRM analytics, but MBs stand to realize more benefit. MBs have the advantages both of size and in some cases, a less formal environment. They can be both nimble and responsive to information. Historically, this has been an Achilles heel to MBs. While they can react quickly, they may not have always reacted to accurate information nor have reacted correctly.
MBs have the opportunity to transform their businesses through the use of technology, precisely because of their size. While business processes may not always represent best practices, they are often more easily identifiable in MBs than in larger and more complex organizations. The implementation of a CRM system can be successful in such organizations, because the proprietor, president or owner can dictate compliance. But this brings its own burdens, as the individual( s) in charge must be involved. By identifying the essential goals of the organization, selecting the right partners with whom to work collaboratively and demonstrating an ongoing commitment, MBs can be successful with almost any application they choose to deploy.
