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A Gartner Group study found that there are more than 500 companies claiming to make CRM software, while only about 200 of them actually do so. The proliferation of CRM vendors and the hype they generate have created confusion about what CRM is exactly and how a business should approach it. There are four prevalent myths that a midsize (annual sales between $10 million and $500 million) coatings manufacturer should not fall prey to in its search for the right CRM package.
Myth: CRM is just about technology.
RealityCRM is not just technology. CRM is a new way of looking at your business. A comprehensive definition of CRM is "the business strategy, process, culture and technology to enable organizations to optimize revenue and increase shareholder value by understanding and meeting customers' needs."
To be successful, a manufacturer should look at CRM as an opportunity to shift its focus from executing processes to serving customers. That requires a critical examination of all its business processes from the standpoint of optimizing the relationship with the customer, not just maximizing efficiency and quality. It requires a re-orientation of company culture based on the recognition of the fact that every employee -- from customer service representative to billing clerk to stock picker -- directly contributes to building the relationship with the customer. Management and personnel in all departments have to buy into the CRM initiative and learn to think in a customer-oriented way.
Myth: CRM is just about improving sales.
RealityCRM can also increase profitability and customer loyalty, gain competitive edge, decrease costs, and open new channels. If we think about CRM in this broader view, it becomes clear that it cuts across business processes. A CRM system might include any of the following functions.
- Contact and opportunity management
- Field service and dispatch
- Sales and price configuration
- Sales force automation
- Marketing campaign management
- Telephone call center management.
One thing CRM does require is a Web interface to enable a coatings maker to:
- Accurately identify potential sources for new business
- Cost-effectively deliver customized information to customers and prospects based on data accumulated in their profiles
- Quickly handle orders and inquiries
- Share information with suppliers.
Myth: You can just buy a CRM package and bolt it onto your existing systems.
RealityInstalling and integrating a CRM system is a major investment in time and money, and represents a significant risk for any midsize company. Bolting on a system can open a Pandora's box of systems integration troubles.
Without adequate planning and budgeting for integration, a coatings manufacturer could spend more on integration than it paid for the CRM software.
Myth: A midsize company's best bet is to use the same CRM package its larger competitors do.
RealityMidsize companies need many of the same capabilities that large companies do, but they don't have the money to spend on a complicated multi-component package from a CRM vendor that serves large corporations. Nor can they afford the time or the risk involved in installing large-company CRM software, which can take months with no guarantee of success. A prolonged installation can jeopardize a company's ability to operate over the short term: productivity drops as operations are disrupted, customer service deteriorates, operating costs increase, and morale suffers.
There are other alternatives, each with its own tradeoffs. At the lower end of the CRM spectrum are products geared for small business: simple, inexpensive canned applications that plug-and-play, but provide only basic features in a certain functional area, e.g., contact management. While inexpensive and easy to install and use, they don't give a midsize company the functionality or flexibility it needs to react rapidly to customers and marketplace developments.
One alternative is to look to vendors experienced in developing versatile multi-function enterprise applications. Because there are many overlaps between the functions performed by enterprise resource planning (ERP) and CRM systems, it makes sense to investigate what ERP software vendors have to offer in the way of CRM.
If you are operating an ERP system or an application from an ERP system vendor, that vendor should be the first place you call to look for CRM applications.
Many ERP system vendors are partnering with CRM developers to integrate CRM into their ERP packages. This approach has advantages over bolting a CRM package onto a company's existing system, because somebody else has already done the integration. The coatings producer will get a contemporary, comprehensive Web-enabled system, but no matter how much work was done to eliminate redundancies and synchronize data files, the two systems are likely to look and behave differently. The learning curve for this package may be longer than anticipated.
Other ERP system vendors are developing their own CRM modules. The buyer will get well-integrated components, CRM functionality that is consonant with the needs of the ERP vendor's market, and a consistent look and feel. This approach makes it possible to achieve the goal of making all a company's processes customer-centered. For many midsize companies, buying an ERP system with the CRM capabilities it needs is the least expensive option in both the short and long term.
If you haven't yet installed an integrated company-wide information management system, it might be the time to move to one that offers a CRM module with the functions you need. A system like this can be implemented one module at a time, starting with the modules most relevant to the company's business processes, to spread the cost over time.
The CRM marketplace is full of inflated claims and misconceptions, but one thing is certain: a good CRM system can help level the playing field for midsize companies that take the time to think about their markets and their customers.
For more information on CRM, contact Bill Owens, Indirect Channel Manager, Adonix, phone 724-933-1377; e-mail Bill.Owens @adonix.com; or Circle Number 140.
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