CRM must meet the bottom line

30 Aug 2006

Every business understands the importance of its customers but not every business understands customer relationship management (CRM).

It’s a paradox that is hard to fathom, given all the hype around the topic, but some basic misconceptions have plagued its progress, according to industry insiders.

“The first thing to understand is that CRM has nothing to do with software; it’s about an approach to your business,” says David Larkin, general manager of Sage CRM. “The best way to implement that approach is to use a piece of software.”

According to Larkin, the problem is the mindset of small firms, where owner-managers operate on instincts that sometimes get in the way of creating a culture where an organised CRM system could make a difference.

“They hire someone in and wonder why that person doesn’t work in the same way they do. In order to get it done their way they have to take time to stop and train the person. Typically they try to do this when they have too much to do, so by implication the training never gets done,” he explains. “The next best thing would be to put a CRM system in that they could educate as the business goes along. Then when they bring in somebody new, there’s a structure in place that that person can work around.”

One basic obstacle to CRM is that it’s still not perceived as a must-have, according to Datapac managing director David Laird. “You don’t have to have a CRM system, whereas you do have to have enterprise resource planning (ERP),” he says. “In our experience it’s still a very slow market, where the benefits are realised in the long rather than the short term.”

He believes, however, that CRM will prove to be like other software solutions. “It has been slow to get moving but when it does start to take off it will move fairly quickly. We’re still at the slow uptake stage.”

Fiona Walsh, business development manager at SAP Ireland, has a different view, arguing that CRM has been in the radar of small to medium-sized enterprises (SMEs) for some time. “It is probably more important to them than some larger companies because they often have very personal relationships with their customers,” she says. “Customer churn would have a much bigger impact on an SME than it would on a larger company.”

She believes that small firms understand what CRM is about but do not necessarily have as advanced an understanding of its impact as large enterprises. She thinks it’s up to business influencers like the chambers of commerce and the Small Firms Association to spread the message. “There is still more work to be done because it is not translating across the board into technology adoption. There are exceptions and a lot of organisations have fairly good contact management at some level, but what they do with the information is the next step. How they use it for reporting is obviously crucial.”

Neil Tanner, Microsoft’s small and medium-sized business director, says it’s important not to oversell the products. “If you start to talk to SMEs about business intelligence you’ll put them off. But if you show that they can input sales, customer and contact information and then analyse trends, they will see it as something they need in terms of baseline functionality. You have to take it one step at a time, presenting it as contact management with some sales analysis.”

He says there is a general lack of understanding among SMEs about exactly what CRM means. Businesses that are trying to grow in an increasingly competitive environment might not have the time to explore the solutions properly. He says all the main players still have a job to do, working with their channel partners, to show customers the benefits of the technology in a straightforward way.

Tanner argues that the Microsoft products are particularly well suited to the task. “We’ve been trying to anchor CRM to various business issues that companies face and we use Outlook as the core interface for it. It builds on the training and knowledge they already have.”

He agrees that the fact the market is proving very slow to take off is an indication of the glass being half full. “It’s very early days. You’re not seeing levels of sales compared to ERP so there is plenty of potential. In the SME space most investments come from the bottom line so CRM has to be anchored in an understanding of what the return on investment is likely to be.”

Larkin believes the economic climate will ultimately help drive its uptake, however. “As things are getting tighter and as it’s getting more and more difficult to hire people, companies are having to look at smarter ways of running the business. It’s a key driver.”

His main advice for firms thinking about CRM is to strip down their processes. “They should simplify what they have, put in one of our solutions and then see if they need customisation, because customisation is expensive.”

The debate about methods of CRM delivery may be untimely in such an immature market but some argue that a hosted on-demand option is the natural fit for small firms.

The BT proposition is an on-demand model already used by the likes of O2 and Vodafone. Business development manager Tom O’Neill thinks its perfect for smaller companies. “SMEs do not have the investment in terms of time or money for IT departments. We used Siebel CRM, which is a very specialised tool that requires an expensive skillset. BT provides the product and management as an end-to-end service.”

O’Neill accepts that BT might not be an obvious port of call for CRM but argues that its approach suits the changing business landscape. “We’re not taking on Microsoft or Sage directly in trying to sell on-premise systems. We’re selling a network-centric hosted solution that takes the pain out of capital expenditure as well as integration and management complexities. We sell it as a service on top of BT connectivity.”

By Ian Campbell