The 15 sales reps at Intellinet were skeptical -- and it was
easy to see why. Over the previous four years, executives at the
Atlanta consulting firm had introduced four customer
relationship management, or CRM, systems. Each time, the execs
promised that the new technology would revolutionize the sales
cycle by analyzing trends and providing road maps to bigger and
better sales results. Yet each initiative failed, costing
Intellinet tens of thousands of dollars and the sales reps hours
and hours of headaches.
Now it was new vice president Scott Ehmen's turn. He had joined
the company in early 2004 with a mandate to find and institute a
CRM system that works. Bear with me, he told the sales reps.
They did -- and they have no regrets for having done so. Almost
immediately after the latest system was introduced, new and
fascinating data began to appear, data that helped Intellinet
make some smart decisions -- including scaling back a Florida
office and opening a new outpost in New York City. Thanks to the
new CRM system, sales are up some 50%, Ehmen says. "When you can
measure and track sales," he says, "you can make smarter
business decisions." Even if it takes five tries.
Customer relationship management was one of the boom's big
disappointments. Now it's back -- and worth another look
To those who have experience with customer relationship
management technology, Intellinet's story may sound like a fairy
tale. CRM was sold as a foolproof way to spin everyday customer
interactions into strategic gold by sifting through mountains of
data, identifying hidden patterns, and delivering insights that
would help executives sharpen their sales plans. Instead, CRM
turned out to be one of the biggest disappointments of the
dot-com bubble. Many efforts -- as many as half, by some
estimates -- were failures, leaving companies with nothing to
show for their investments.
But today, with more firms emerging from periods of cost-cutting
and beginning to explore new growth prospects, many appear
willing to give CRM a second (or third or fourth or fifth)
chance. A recent study by the Gartner Group found 60% of midsize
businesses intend to adopt or expand their CRM usage over the
next two years. Only 2% of the companies surveyed had no plans
to tap the technology at all. Why the surge of interest? The CRM
industry has improved, offering more targeted solutions, a
greater range of price points, and more accountability for its
own performance. "Those without at least a loosely woven set of
CRM capabilities will be at a competitive disadvantage," says
Gartner analyst Wendy S. Closes.
There are dozens of CRM vendors out there, offering products at
dozens of prices, and sifting through them can be daunting. If
you're simply looking for software to help manage a database of
contacts, you might opt for something like Act!, which sells for
less than $500. Salesforce.com offers a system for businesses
with as few as five users for just $995 a year. Some of the
latest wares from SalesLogix, which promises to speed and
improve sales, marketing, and customer service functions, list
at just under $2,000 per user. And NetSuite offers a CRM
application as part of a comprehensive Web-based management
system for $399 a month for a single user and $99 a month for
each additional user.
From there, the prices -- and the capabilities -- go up fast. A
powerful system that can discern consumer patterns from years of
data -- such as some of the offerings from Siebel, Oracle, and
SAP -- can run six figures for an initial rollout. On the other
hand, many CRM price tags are determined by the number of users,
so a small company will pay less for the same product than a
major firm with numerous multinational call centers.
Vitale, Caturano & Co., a 250-person accounting firm in Boston,
recently launched a major sales initiative designed to win new
business from the region's 200 biggest employers. To pull it
off, executives knew that they would need new technology and
opted for InterAction, made by Interface Software, based in Oak
Brook, Ill. The software allows everyone in the office to share
contacts; and it also tracks and analyzes customer histories and
preferences. When it came time to pitch the 200 prospects, the
list was cross-referenced with the InterAction software and, in
a matter of minutes, a helpful web of relationships emerged.
That enabled individual sales pitches to be farmed out to
staffers who already knew the prospect.
The result: Twenty-three of the 200 companies became clients,
bringing in an additional $5 million in sales. Sure, the firm
could have figured it all out by scheduling a series of
face-to-face meetings. But Vitale's salespeople were stunned by
the technology's speed and sophistication. "Technology let us
make sophisticated use of our relationships," says Jill Hulsen,
the firm's marketing director.
Brandrud Furniture, a Seattle manufacturer of hospital
furniture, had a similar experience. Sales had been flat for
years. Then the company adopted Prophet, a sales-management
software package made by Avidian Technologies, based in
Bellevue, Wash., that operates within Microsoft Outlook.
Brandrud's goal was to do a better job of following up on sales
leads that came into the system when a potential customer
requested a price quote. By giving Brandrud's 50 sales reps a
structured system to record and track leads, the company was
able to boost its conversion rate from 20% to 40% in a year.
Owner Bobby Holt also made another discovery. Because the sales
team was now functioning in a more disciplined fashion, his reps
were able to get the attention of bigger clients. Of the 88
hospital architecture firms that Holt considered A-list, Brand-rud
was able to get business from 15% of them, up from zero in 2003.
"When you have a professional approach, you look like you have
your act together. Bigger firms are willing to do business with
you," he says. "That's a sales benefit we didn't plan for."
CRM is not without its pitfalls. For one thing, a three-year
wait for return on investment is still common.
Of course, even the new CRM applications are not without
pitfalls, especially for smaller firms. For one thing, a
three-year wait for return on investment is still common. And
for midsize firms, that investment averages some $4,000 per user
over three years, according to Gartner. What's more, many
companies fail the human test, targeting the wrong problems or
providing inadequate training. That results in the classic
failure scenario: a nifty new tech system that nobody uses.
"Positive impact only comes when you have executive commitment,
willingness to change behaviors, and people with the skills to
actually use the technologies the right way," says David Taber,
president of Taber Consulting, a marketing consulting firm in
Palo Alto, Calif.
Consider Intellinet's Scott Ehmen. His first step in the CRM
process didn't involve technology at all. The first thing he did
was involve his sales reps in a study that defined the sales
process, breaking it down into steps and segments. Then, when he
set about introducing changes, including the new CRM system --
Microsoft CRM -- he could relate it back to elements, goals, and
weaknesses outlined in the company's game plan. "You can't start
with the automation," he says. "You have to start with
understanding the process and then moving forward to change
behavior."
Source: Ellen Neuborne
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