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"For the last 30 years we have been the leading player in supplying mid-market manufacturers and distributors with enterprise business applications. On a daily basis SYSPRO empowers thousands of users at over 14,000 installations in more than 60 countries."
Source : Syspro
How to Embrace CRM and Make it Succeed in Your Organization
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Giving small and midsize manufacturers and distributors the visibility required to compete in a highly competitive business climate.
Table of Contents
- What is CRM?
- Ownership of Data
- What Makes CRM Work?
- A Successful CRM Solution
- Integration is Key
- Importance of Real-Time Integration
- A Typical Case Scenario
- Glossary of Terms
The concept of Customer Relationship Management (CRM) is not a new one. Slogans, such as "The customer is always right," and "The customer is king," have long permeated the culture of many companies cognizant of the importance of their customer base as sources of future business. Today, however, as competitive pressures multiply, the concept of Customer Relationship Management is enjoying renewed emphasis as a way to add to revenues and gain market share. Customer Relationship Management is also gaining in sophistication. Sending a bottle of Champagne after each deal might have been thought of as the best approach to customer relations several years ago, but in today's highly competitive marketplace, more sophisticated methods are warranted. Now, companies see the advantage of drilling down into their own customer databases to ascertain buying patterns, product preferences, the potential for add on sales, and so on.
Specifically, what is causing this renewed interest in CRM?
- Customers are becoming more sophisticated with increased emphasis on their experiences with suppliers. Fundamental economic changes that started in the 80's have put the customer in charge of the buy-sell relationship, i.e., either a company does business "their way," or they go "their own way."
- The growing use of the Internet makes competitor information readily available, facilitating the switch to new suppliers and creating a shrinking market window for vendors.
- The product life cycle has been accelerated. Increased pressures on innovation and demands to bring products to market faster give an abundance of options for the buyer. Lead times between initial production and product obsolescence present a much smaller window of opportunity for the seller.
- There is a need for greater visibility and access to customer information as the competitive landscape is getting tougher.
- Management is forced to find new ways to give employees better access to customer and supplier information.
- Companies are being challenged to find additional sources of revenue from potential and existing customers.
- There is a need for all business units to identify and react more quickly to opportunities, issues, patterns and trends.
"Today, however, as competitive pressures multiply, the concept of Customer Relationship Management is enjoying renewed emphasis as a way to add to revenues and gain market share."
What is CRM?
The concept of CRM is simple, but just what is CRM? If you ask technology gurus for a definition of CRM, you will probably get many different answers. Today, CRM systems typically refer to comprehensive software solutions that, in effect, make the customer the epicenter of the business. CRM software systems not only empower companies to manage effective relationships, but they do much more. A CRM software solution enables companies to collect, maintain and manipulate customer-related data by leveraging customer relationships to increase revenue and profitability.
A working CRM model is one that is driven by a customer centric business strategy. As such, several steps are involved to make this effective:
- Define the strategy
- Define the business processes that enable the strategy to be implemented across the enterprise
- Define the organizational changes required to support the strategy
- Document all of the above steps
- Apply the enabling technology to play out the strategy
With this is mind, CRM can be defined as a multi-faceted customer centric approach encompassing a Strategy and a Vehicle:
"Today, CRM systems typically refer to comprehensive software solutions that, in effect, make the customer the epicenter of the business."
"Customer Relationship Management is a Customer Centric Business strategy to select, manage and capitalize on valuable business (customer) relationships."
"CRM applications facilitate the management of Marketing, Sales and Service to compound sales and profits through a customer focused strategy."
Scott Nelson, Gartner Group analyst, notes: "CRM is not about technology. It is about the interplay of strategy, tactics, processes, skills and the technology&8230; CRM can be done without technology&8230; but it cannot scale without technology&8230;"
In essence, CRM is a practical philosophy that can transform a company by providing much greater visibility over all individual touch points and communication with customers, vendors, suppliers and prospects.
When embracing a CRM system, companies must take into account certain issues that can impact the effectiveness of the CRM solution:
"When embracing a CRM system, companies must take into account certain issues that can impact the effectiveness of the CRM solution."
Ownership of Data
Who owns a company's data and information? The obvious answer would be "the company." What seems to be obvious, however, is not always accurate. When a company's top salesperson or a key employee leaves to join a competitor, all the data that the individual has collected over the years could be lost. Such data might encompass companies visited; contacts made; notes on people and personalities; a history of inter-company relationships; milestones, issues, problems; resolutions, praises and potential sales.
In a brief entitled, "The Customer Conversation," influential e-business forecaster Forrester Research, Inc., implied that Wall Street analysts should look to retention rates of key customers "as a leading indicator of earnings." Under such a scenario, the ownership of customer records takes on an even greater urgency.
How can such information be "lost."? Historically, customer information has been stored in: private rolodexes; personal palm pilots or PDAs; notebooks; and spreadsheet or word documents.
CRM gives a business continuity by providing the technology and techniques to take ownership of data and make the data visible and accessible to the entire enterprise.
A company puts its cash in the bank, its inventory in secure storage and so must it protect its critical and very valuable customer and relationship information.
"CRM gives a business continuity by providing the technology and techniques to take ownership of data and make the data visible and accessible to the entire enterprise."
What Makes CRM Work?
In a dynamic business environment, companies are constantly looking for ways to gain competitive advantages and leverage technology to increase profitability. CRM is now at the forefront as a valuable competitive tool. Driven by the entrepreneurial spirit, companies are employing CRM to harness data in an effort to:
- Increase revenues through optimal customer management that enables up selling and cross selling of existing customers.
- Reduce costs through automated sales, administration, service and marketing activities
- Increase service levels and efficiencies through automation of repetitive marketing, selling and service processes
- Optimize the effectiveness of sales, marketing and service efforts
- Increase customer satisfaction through seamless order and service execution
- Improve overall corporate strategic management by leveraging information and using metrics to achieve a more fully integrated supply chain solution
- Avoid duplicate manual data entry and eliminate non-integration nightmares
- Reduce costly errors that arise from duplicate data entry in CRM, ERP and other databases used
- Better manage relationships with individual suppliers, customers and company employees
"CRM is now at the forefront as a valuable competitive tool."
A Successful CRM Solution
A Successful CRM Solution Starts with the Implementation The success or failure of a CRM solution starts with system implementation. It is unrealistic to believe that any CRM system can just be layered on top of existing business processes and achieve results. Roles must be re-designed and processes re-engineered to reap the rewards of a CRM solution. It is essential that the CRM system be implemented around particular business objectives rather than the arbitrary implementation of prescribed systems. The following are typical of the steps in implementing a CRM system:
- Prioritize the business areas and objectives that need to be addressed (Marketing, Sales, Service)
- Establish strategies, procedures, metrics and enforcement to achieve the objectives
- Re-engineer the business processes for these business areas
- Model the processes to ensure operational effectiveness
- Regulate and monitor the implementation strategy
- Train people
- Deploy the application
- Review the implementation
While most CRM implementation methodologies concentrate on how to make the technology work, they often lose focus on what makes a CRM solution a success ' the individuals using it.
The "back office" accounting departments usually have clear well defined business processes, steeped in history with a tried and tested track record. There aren't many ways to process an invoice, a debit is a debit, and a credit is a credit.
However, sales and marketing environments are historically individualistic. Individuals may have rules and be organized, but the environment is shrouded in poetic freedom, artistic license and a "close the deal whatever" attitude.
"The success or failure of a CRM solution starts with system implementation."
Very simply, CRM systems are designed to change the work environment for the better:
- CRM creates structure in an unstructured environment
- CRM ensures accountability
- CRM provides visibility
- CRM creates and maintains history
- CRM forces inter-departmental collaboration, coordination and accountability
- CRM helps to identify unwanted or unprofitable customers
- CRM enforces action
Any CRM implementation needs to be evolutionary and not revolutionary. A key success factor is to manage the system's impact on the people who live it and make it work on a daily basis. People resist change, so the goal is to manage the paradigm shift to have them confront the change head on. They must fully understand why the change is happening and why it is in their personal self-interest to adopt the changes. People generally don't let go until they know they are getting something better.
"A key success factor is to manage the system's impact on the people who live it and make it work on a daily basis."
Change has an effect on a company. To make the effect positive, the following are required:
- The firm backing of management is critical as apathy can set in with change, unless all staff see that there is a positive commitment from the top.
- The company must have the desired leadership, culture and ethos to fulfill its CRM objectives in a timely manner.
- The impact of the change on people must be fully thought through. It is important to identify the individuals and global impact that the system will have on the entire enterprise and build a case to promote the change based on measurable benefits, e.g., happy customers will result in more sales leading to more commissions being earned for each salesperson, and increased efficiencies will result in more effective delivery with reduced costs resulting in greater profitability.
- The strategy must be explained, feedback taken seriously and people kept informed and involved. The implementation process must be "democratized."
- Change is uncomfortable and people must be given the opportunity to adjust and progress through the change process
- Changes must be reviewed, monitored and issues addressed, as necessary, with an open mind.
CRM implementations fail because too much is focused on the system and too little on the human element. Too much emphasis is placed on managing the change in the technology, but not the change in the people using the system.
"Too much emphasis is placed on managing the change in the technology, but not the change in the people using the system."
Integration is Key
In a 2003 AMR Research Report, AMR states that, on the average, businesses can have between five and twenty-five different systems in place containing relevant customer information. Account managers and/or customer support agents often integrate these systems on- the- fly by toggling to and from multiple applications to pull relevant customer data. The disadvantage of compiling information in this manner is the time and effort required to log-in, navigate and gain access to each application's "island of information," not to mention the danger of working with outdated data.
According to award-winning journalist, Jean V. Murphy, CRM is increasingly being viewed as an enterprise-wide solution ' one whose applications and processes need to integrate with other systems at all customer touch points. The purpose, she says, is to create a single profile and understanding of the customer throughout the company and a consistent and satisfying experience for the customer, whether dealing with a sales representative, questioning an invoice or arranging a product shipment.
Research shows that over 60% of CRM implementations fail due to:
- Lack of integration with other systems
- Lack of user acceptance
- Inability to quickly customize
- Failure of management to quickly take the necessary actions
What these points really tell us is that most CRM solutions do not offer the level of database integration that companies require to effectively obtain critical decision-making data, plan and win competitive battles. It is possible that many CRM offerings are merely outgrowths of contact management systems and offer little more than raw sales related data.
"In a 2003 AMR Research Report, AMR states that, on the average, businesses can have between five and twenty-five different systems in place containing relevant customer information."
According to a survey of 250 senior executives at Global 2000 companies, YouCentric and survey company WebSurveyor found that 36 percent cited the ability to integrate with existing applications as the single most important factor when evaluating a CRM offering. This is typically not any different for a small or medium size company.
Many mid-market CRM solutions are built around a modular architecture in which each department of a company ' administration, marketing, sales and service ' uses different software modules to track the same customer. Often these modules are developed by different companies, do not seamlessly share information and must be purchased and implemented separately. This piecemeal approach makes most CRM systems too expensive and complex for midsized companies. In addition, implementation is a lengthy and costly process.
In an ideal world, a company's "back office" and "front office" systems should "communicate" in real time so that current data across the enterprise is available to all authorized system users. New generation CRM systems also facilitate information interchange. For example, they make easy supplier collaboration as an extension to supply change management.
- Account information when a prospect becomes an active customer
- Account changes in Front Office CRM and Back Office databases
- Re-enter Sales Orders information for each account
- Return Merchandise Authorization information
- Accounts payable, accounts receivable and inventory information
Without CRM and ERP integration, the CRM implementation is doomed from the start. Manual synchronization tasks are costly and fraught with problems and mistakes.
"In an ideal world, a company's "back office" and "front office" systems should "communicate" in real time so that current data across the enterprise is available to all authorized system users."
Importance of Real-Time Integration
Most CRM products offer only batch integration in which data entered into the CRM system must be copied after-the-fact or offline into the incumbent ERP system. This is a weakness of these systems and precludes the assurance that users are always working with the most current data.
SYSPRO CRM is an excellent example of a fully-integrated CRM solution. SYSPRO CRM integrates "front office" and "back office" data in real-time. When data is entered anywhere in the system, it immediately updates the relevant files, including customer, vendor, inventory, order entry, accounts receivable and accounts payable files. In fact SYSPRO users can create quotes, process sales orders, check shipments, inspect customer account receivables, verify inventory levels, process returns and service billings and perform other critical functions directly from one screen and one database. These functions can be accomplished without having to exit systems or navigate through complex menus of a second application.
For example, this sophisticated data integration makes it entirely possible for a salesperson using SYSPRO software to spend an entire day in one screen ' such as a daily "to do" list. From this list, the user can inspect the details of any appointment. If the appointment is linked to an account, one click opens the account record. If the account has a deal in the pipeline, one mouse click displays the details of the opportunity, the competition, decision makers and everything else needed to track and help close the sale.
Since SYSPRO CRM fully integrates with other areas of SYSPRO software, the company gains the power of an extended enterprise solution, delivering a dynamic 360° view of each customer, supplier and partner relationship. Patterns of change can easily be discerned from the marketing, sales and service arenas and leveraged to build sales. By adopting an integrated approach, real-time information becomes a powerful tool. Data can even be "mined" to gain detailed metrics to enhance decision-making' delivering a tangible, competitive advantage.
"When data is entered anywhere in the system, it immediately updates the relevant files, including customer, vendor, inventory, order entry, accounts receivable and accounts payable files."
A Typical Case Scenario
A company is buckling from the strain of maintaining different databases.
The Sales Department uses a separate contact management system, which also holds selected administration and customer service information. However, the Administration Department keeps accounting information in its own separate ERP system. Furthermore, the company's Customer Service Department uses Microsoft Access for tracking and metrics, while the Technical Support Department uses a home-grown legacy support system to track technical-related issues. All departments also maintain miscellaneous ad hoc Microsoft Excel and Word documents.
The overhead of maintaining these multiple, disparate databases are complex and costly. Moreover, there is the impracticality of having to "read" thousands of records in order to extrapolate required data or do regular monthly runs.
The advantages of an integrated solution and single system are apparent here. Such a solution can help the company to achieve greater efficiencies and a profitable return on investment by identifying and reacting faster to opportunities that may present themselves.
Implementing an integrated ERP/CRM solution will result in more timely and concise information that reflects on a coordinated effort from all departments within the company. With all company personnel working with the same current data, errors will be reduced and customer service facilitated. With access to pertinent customer data, including service issues, sales persons will be more productive. Customer buying patterns and preferences will be easy to isolate and leverage. Sales increases will be the norm, rather than the exception.
"The Sales Department uses a separate contact management system, which also holds selected administration and customer service information..."
CRM is growing in importance as a valuable competitive tool. However, a successful CRM solution must take many factors into consideration, including a well-defined implementation strategy, the people factor and the need for integration with the incumbent ERP solution.
In embracing CRM, the following are critical guidelines:
- CRM should be embraced as a competitive tool
- CRM needs to be driven by a customer-centric business strategy and philosophy
- A business needs to take ownership of its customer-centric information
- Successful CRM requires an evolutionary approach that focuses on people
- CRM must be looked on as an enterprise-wide solution since an integrated approach is a must for CRM to extend beyond the customer into the entire enterprise
- Employees and suppliers must be incorporated as part of a holistic approach to Relationship Management throughout the Enterprise and Supply Chain
- True 360° visibility starts from within and extends externally across customers, vendors and distribution network
If these guidelines are adhered to, the chances of gaining substantial benefits of CRM can be readily realized. The result is a dramatic impact on the business, especially with regard to internal processes, customer satisfaction and company profitability. CRM can provide the 360° visibility necessary to win in this challenging, highly competitive business environment.
"A successful CRM solution must take many factors into consideration, including a well-defined implementation strategy, the people factor and the need for integration with the incumbent ERP solution."
Glossary of Terms
An application designed to help with the management of customer facing activities such as sales, marketing, service and support.
An application that facilitates and automates the back-office activities such as accounting, human resources, distribution and manufacturing.
ERP (Enterprise Resource Planning) is a business management system that integrates all aspects of the business, including accounting, manufacturing and distribution.