What Is a CRM System?
CRM systems were originally developed to give a business a comprehensive view of its relationship with individual customers by pulling together data from a number of unconnected applications. They became especially popular in the banking industry in the 1980s as a way to better manage those commercial relationships that had loan, deposit and fee service accounts. This information in many cases was combined with cost accounting work to measure customer and account profitability.
The early CRMs were expensive and cumbersome to install. They ran on large computers – this was long before the internet – and required custom-mapping of proprietary systems using a wide variety of data base technologies. Ultimately the data had to be “scrubbed” by hand, meaning some poor soul manually looked through hundreds of records to finish the job once the computer had matched all it could.
As personal computers, local area networks and the internet evolved, CRM systems began to flourish and prices plummeted. While it is still possible to spend a large sum on an enterprise-level, customized CRM solution, most of today’s cloud-based offerings are well within reach of the smallest businesses. Some of those systems even offer free versions; most offer 30-day trials.
What Does a CRM System Do?
The original CRM systems were primarily designed to gather and report as well as to support customer communications, document control, sales tracking and calendar management. Over time, CRM systems evolved to handle customer service tracking and case management, as they enabled the customer service function to be centralized.
Expanding from the original concept, CRM systems have evolved to take on operational roles, including online interactions with customers. Some of the functions found in CRM systems are listed below. Systems may or may not offer all of these or similar functions or they may offer others.
- Contact management
- Calendar and appointment management
- Email origination and archival
- Document management and archival
- Product and service information
- Workflow and project management
- Contract presentation and e-signing
- Billing - invoicing and payments via online credit card connections
- Sales campaign management
- Sales activity tracking – customers and prospects
- Customer service case tracking
Things to Consider Before Installing a CRM
Regardless of how much it actually costs, installing a CRM will be expensive unless there is a clear reason as to why it is needed and a well-thought out plan as to how it will integrate with or replace existing processes. Before spending the time, energy and money to install a CRM system, consider these points:
1. What is it that you want to add to or replace in your existing workflows and activities? Answering this question will help to filter through the numerous systems that claim to be CRM solutions. (Not surprisingly, a Google search on “crm systems” produced 6.55 million results.) Some are more oriented to sales tracking while others offer comprehensive solutions oriented to specific industries. Most are good at project planning and management and almost all of them include email and calendar “synching”, which is mostly useful albeit sometimes confusing and duplicative.
2. What things will be duplicated? How will duplicate items be kept in synch?
By definition, a CRM solution that is installed on top of existing systems will require duplication of at least the customer demographic data. Otherwise, there is no CRM. If a so-called CRM system is used only for new business then it is not a CRM system – it is a sales tracking system. In that case, once the prospect becomes a customer there must be a hand-off to the operating system used to process the customer’s business and a removal from the CRM of the now-former prospect. The trick at that point is to save the accumulated notes and other information gathered during the sales process as often times the operating system has no facility for storing or managing that data.
Some things are easy to keep in synch, others not so much:
a. Calendars. You can usually click a box and the CRM system calendar synchs with your Google calendar or iCal. You can share calendars with others as needed. This isn’t duplicating anything but simply turning a switch on or off.
b. Email. CRM systems internally generate a cc or bcc email address for each project or opportunity (or other CRM entity) that can be used to archive important messages within the CRM system. Some CRM systems actually have their own email sub-systems, which is not ideal (“… now where did I send that email from?”) At least one CRM system seamlessly integrates with Gmail (Google Apps version), which is ideal as it minimizes the duplication of information and provides two-way interaction.
c. Billing. Some CRM systems do a good job of billing on their own while others integrate well with popular online billing and accounting systems. Most, unfortunately, do a very poor job of billing and payment processing. If this is one of the reasons for implementing a CRM then make sure you know what you are getting. Unless it is going to replace an existing billing system, a CRM should not duplicate any of the billing or the payment processing functions that you have currently. Doing so will make it harder to maintain good internal controls and will create increased work to reconcile the CRM transactions with existing systems that make accounting entries and handle money.
The goal when installing a CRM solution is to avoid as much duplication as possible. The following table lists the major CRM functions and indicates the extent to which duplication is possible across a typical systems environment. While avoiding all duplication may not be possible, a well-thought out plan can ensure that the time, effort and money spent on a CRM system produces the desired results with a minimum amount of effort.
The Ideal CRM System
The ideal CRM system is not about a particular brand; it’s about architecture, and it is not the same for everyone. Since CRM systems as a whole offer a very wide range of capabilities it is important to be sure that your desired functionality is well defined. Know what you are looking for. Use the list and the table above as a starting point.
As discussed above, duplication of some existing data and functionality is a necessary evil inherent in the design of any CRM system. Look for solutions that enable you to minimize duplication, especially with respect to invoicing and payment processing. If the CRM system offers a better solution than your existing process then consideration should be given to replacing current workflows. Otherwise, don’t create additional work where it isn’t needed and, as they say, don’t fix things that aren’t broken.
The ideal CRM system would have one core contact data base that is used for all applications required to run the business – customer order processing, billing and collections, purchasing and payables, sales and marketing campaigns, etc., thereby eliminating all duplication. This means that contact data would be entered one time and then accessed as needed by each application used by the business. It would provide consistency as to name and address information and a centralized repository for notes and other pertinent data related to that particular customer. It would also require significant effort to rewrite or extensively modify the systems currently used to process customer and accounting transactions, which would add cost and risk.
Summary
A CRM solution can be a good way to organize and manage all of the customer data that resides in disparate systems. It can add functionality where none exists today and improve or replace legacy workflows and processes. It is important to define the reason for installing a CRM solution as many systems claim to have CRM functionality, and avoid duplication wherever possible.