Myths sorrounding CRM

Unlike ERP, suceess rate of CRM implementation is very low The scope of CRM is not limited to salesforce automation only as is widely perceived. CRM covers entire gamut of activities including market research, market segmentation, SWOT analysis for product positioning and marketing strategy, distribution network for fast and efficient delivery of products, services and after sales service, reorientation of organization culture to make it more customer centric, faster and consistent response to customer enquires and complaints. If the company is in the business of marketing of consumer products say fashion garments, it has to constantly keep itself abreast of fast changing lifestyle of customers so as to align the products and services in tune with customer’s taste.. Attrition rate of customers in this business segment is very high. More than the product, which has attained a certain level of maturity as of now, it is the quality of service which differentiates an organization from the rest. How does the company respond to the customer enquiries/complaints. Who attends to the enquiry. Are all enquiries channellised through a common database?. How much time is elapsed in responding to enquiry. Is the delay acceptable to the customer?. Is the customer satisfied with the response. Are company’s business matrics in place which can measure company’s performance in terms of level of service provided. These are the challenges companies must address before rushing in to bring CRM software. CRM software can at best maintain customer and product databases with pricing, can keep track of enquires received, tasks performed at the backoffice and can channellise the correspondences between the company and the customer. But it cannot bring about radical changes at the grass root level in the organization as discussed earlier.

Reason why CRM implementation fails is due the lack of CRM Vision and strategy, faulty evaluation of CRM software, lack of ownership of project sponsor and project leader in driving the project. While trying to implement Saleslogix CRM in Garware Wallropes Ltd, Pune, I noticed that sales people of one division were simply not interested in feeding opportunity details in CRM. The CEO of the company was not involved in the discussions with marketing team. His contention was that it is the consultant who should take the ownership of implementation. This did not work out with the result CRM implementation failed.

It is being debated whether CRM should be implemented before ERP or after ERP. CRM is a frontend application and therefore does not include Sales order processing module. It is not possible for CRM to give order execution status without a backend system in place It is not necessary that the backend system has to be ERP. It could be any system with Oracle or SQL server as the database. CRM can be integrated with the backend system. In an integrated environment, as and when, an opportunity is converted into order, it is pushed to the backend system for further processing. Conversely, after the invoice is generated in the backend system on delivery of goods, it is pulled back in CRM again. Payment details are entered in CRM system which are ultimately pushed to the financial accounting module at the backend. Most of CRM systems are web based. That means CRM can be accessed from anywhere through browser by connecting laptop or PDA to the internet. Even if there is no connectivity available, details can be entered then and there and later on validated and synchronized with server. CRM should be used in online mode and not in batch processing mode. Suppose, if the sales rep meets a customer and if customer needs some details, the same should be entered online. If there is internet connectivity available, the details can be given otherwise the details required can be captured in the system in offline mode and later on provided on returning back to office. If CRM is used in batch processing mode, the sales rep would not enter the details at site and most likely would forget it after sometime with the result details would not be captured in the system at all. Quite often, sales team does not even know what details should be entered in CRM and when. It is therefore very important to understand what activities each member of the sales team perform to provide customer service. These activities should be broken down further into tasks according to level of people who perform these tasks. What task should be performed by whom and when should be clearly defined. Unless the details of each and every task is entered by the people responsible for completion of the task. the sales person will not be in a position to know when the task is going to be completed and in turn will not be able to give correct information to the customer. Another significant point to note here is that in ERP, wherein if a transaction is not entered, it will have cascading effect in the subsequent operations resulting in disruption of business cycle. For example, if purchase order is not entered by purchase officer, material received in store against this P.O. will not be accepted by the system which will effect stock in hand and a stock out situation may result in. In CRM, barring few transactions, transaction entry does not impact business cycle although customer service gets effected. It is therefore , very difficult to keep track of transaction entries during implementation stage. Generally, implementation partners role is to install the software, map business process to the product functionality, provide training to key users, conduct conference room pilot run, handholding and finally project sign off to indicate that implementation is over.

Unfortunately, real benefit of CRM comes 6-12 months after project sign off when sizeable chunk of database is created by each and every member of marketing team. Generally, it is seen, unless strict control is exercised over day to day entry of transactions in CRM, users tend to revert back to old method of using excel sheet for day to day activities with the result, the entire investment and the efforts that go into implementing CRM goes down the drain.

The total investment required in CRM implementation varies depending on what brand of CRM you go for and how many licenses you take. Typically, Investment in CRM in SMB sector is Rs 30-40 Lacs assuming one goes for 15 user license. This cost will increase proportionately with more number of user licenses. Total cost of implementation of CRM includes. licensing cost, Hardware cost, Implementation cost, training cost but does not include customization cost which will vary depending on quantum of change required. All web based CRM softwares require a webserver which will be connected to another server at the backend in which CRM software will be installed. Since webserver can be accessed through public domain, it is always safe to install firewall between the web server and application server to protect the application server from unauthorized access.
You should go for software based firewall and not router based firewall as is normally the practice. Cost of firewall should also be included in TCO ( Total cost of ownership)

Computing ROI in CRM is often very difficult. ROI can be reasonably calculated if you can estimate the loss of sale on account of lost opportunities or customer attrition on account of unsatisfactory service level. Even 5% increase in sales on account of better service provided to customer can more than justify investment in CRM.

There is no recipe that can be given on how to evaluate CRM, because it depends on what business your company is engaged in, the internal and external challenges faced by your company in serving the customer etc. It is better to hire a consultant who can study your business, identify pain areas and suggest a suitable product that can address your pain area. Do not go by recommendations of your business associate or friend. Your business requirements are different from others.

In a nutshell, CRM is not a technological solution that will bring dramatic change in company productivity. CRM is about sweeping change of mindset across the company to make it more customer centric. That’s why before installing a CRM system, the company should understand what it wants to achieve. Does the company want to make selling process more efficient? Is it trying to target and acquire the right customer segment or the goal is to improve customer service?