Sales leaders agree on the value of CRM. A properly implemented CRM system can increase efficiency, promote cross-departmental contact, provide a wealth of customer data, increase accountability and - most crucially - enhance the customer experience. The ability to do this has become a major competitive advantage: 'In today’s ultra-competitive markets, the companies that manage customer relationships the best are more likely to win than those that don’t,' writes Patricio Robles of Econsultancy.
Robles goes on to enumerate the benefits of CRM: 'Customers are more easily and accurately segmented, their needs identified, and because the status of a company’s relationship with them is accurately tracked, companies can interact with them meaningfully at the right times, leading to more sales, faster sales and higher customer retention and satisfaction.'
In fact, as Emma Brudner of HubSpot points out, CRMs have led to a 27% increase in customer retention, mostly by improving customer experience and referrals. 70% of customers who have had a positive experience will refer that company to family, colleagues and friends, which is where the money really does start rolling in. Some CRM implementations claim they doubled revenue. The value prop seems solid.
So with these clear benefits in mind, why are some companies not benefiting from CRM? Or, to put it another way: Why are some companies still not getting CRM right?
The causes are many and varied, but the solutions are surprisingly simple. Let’s have a look at both now and see if we can’t help you sharpen up that misfiring CRM operation of yours.
CRM: A Problem By Definition
One of the major problems with CRM is that there are so many different - and often conflicting - ideas about what exactly it’s for.
For example, the definition of CRM success is sometimes different for reps than it is for managers. Sales leaders tend to think it’s there to help executives track performance in the sales team, to give them instant access to customer data, or simply to have data collected in one place rather than in a series of disparate documents.
'[W]hat would happen if we asked our end users, the sales reps, on a scale of 1-10 how high of a priority any of those definitions are for them?' asks Sergei Revzin, co-founder of Tascit, on Building The Sales Machine.
'I think pretty quickly we would start to understand the first reason why managers struggle to make CRM work for them: Too much focus on management vs. value for reps.'
Rezvin notes that a disconnect between the sales executive and the reps at the coalface often arises when a new vice-president of sales is appointed and seeks to remodel the CRM based on the configuration they were using at their previous company - despite the fact the business models and needs of the reps at the two companies couldn’t be further apart.
After spending 10s of thousands (if not more) of valuable development resources, or outside consultants on completely redesigning the CRM to include the most granular measurement of every metric imaginable that worked for big co,' Rezvin continues, 'they soon find out the hard way that this does nothing for adoption except slow it down, since it adds more work for reps.'
What’s his solution? Start with the sales, not the tool.
'Save your company a ton of time and money by simply calling up a half dozen or so successful VPs of sales at similar companies who have already been through what you’re going through, and you’ll learn more in a few hours of phone conversations than from months of working with consultants.'
Do this and you’ll have a happier sales team who understand that the CRM is there to help them - and will therefore readily embrace it.
Don’t Tie CRM Adoption To Sales Compensation
Many reps are naturally suspicious of the concept, feeling that they do all the input work and receive precious little in return except increased scrutiny from management. Consequently, sales leaders have tried many different tactics to encourage adoption. One of the most obvious is simply to tie desirable behavior to income: essentially pay reps to use the CRM. As intuitive as this seems at first glance, it doesn’t usually pan out well.
After struggling to encourage CRM compliance among his reps, Steve McKenzie, InsightSquared’s VP of Sales, was getting nowhere.
‘Reps still constantly forgot to change close dates on deals, were slow to update information after a call and had pipelines full of old opportunities.'
So McKenzie decided to see what would happen if he ‘tied sales compensation directly to CRM adoption.’ It did work initially: reps were more inclined to update CRM. But as McKenzie analyzed the data more closely, he found that reps’ general attitude to CRM - namely that it was a tiresome, irritating distraction to their 'real' work - hadn’t really changed.
'I saw that reps were doing the bare minimum in the CRM to get their full pay cheque, and nothing more,' he writes. 'The quality of their work continued to go downhill as time passed, and reps were often more frustrated than motivated by compensation.
'They began to resent the workload of the CRM even more than before we made the change. Tying CRM use to compensation further degraded the relationship between reps and management because reps felt punished, rather than rewarded for their work.'
Management saw the plan as a carrot: do the right thing, we’ll pay you for it. But reps experienced it as a stick: comply, or lose out.
This analysis led McKenzie to an important revelation.
'I realized that money is not a catch-all for improving sales rep behavior in every aspect of the sales process.'
Forget Financial Reward - Educate Reps On CRM Benefits
But if money doesn’t solve the problem, what does? McKenzie argues that simply clarifying the myriad benefits of CRM and showing the statistical difference is sufficient to change attitudes.
'Reps clearly see the hours spent inputting sales data, but they don’t see any improvements to their own sales results,' writes McKenzie. The result is reps who view CRM upkeep as drudge work forced on them by management.
The key is to helping them see the correlation between their data input and the effect it has on their future sales - and how data analysis can help them avoid repeating mistakes. Sales staff are already highly motivated. So does it work better when you show them how to realize their sales ambitions, instead of tying their paycheck to behaviors?
'Instead of relying on money alone as motivation to use CRM, you should trust that your team is smart enough to understand the true benefits of CRM,' suggests McKenzie.
Has it worked for him? At InsightSquared, ‘CRM use has become ingrained in the cultural fabric of my sales team, and is just a part of doing the job of sales well.’
'Most Sophisticated' Does Not Always Equal 'Best'
It’s tempting to get the most sophisticated tool on the market - after all, the more sophisticated a product becomes, the better it is, right?
Wrong. In the case of CRM, sophistication can too often mean complication - the direct result of which is apathy among reps. You can invest in the most super-duper, state-of-the-art CRM imaginable but if your reps can’t - or don’t want to - use it, then it’s completely pointless.
'[I]t sounds corny,' writes Ian Altman in Forbes. 'The bottom line is that the most sophisticated tools are useless if your team either (a) won’t use them; or (b) spends too much time feeding the system that it takes away from their customer-facing efforts.'
If we look at technology in general, the trend for the last few decade or so has been away from complicated design and towards easy functionality. The smartphone, with its minimal buttons and easy-to-use interface, and websites, which now feature as few lists and menus as possible on the page, are two examples of simplicity rewarding the user. Make sure your CRM system does so, too.
Beware The Industry-Specific CRM System
The 'verticalization' of CRM continues apace: companies are increasingly going for systems designed specifically for their industry or sector. And it’s a trend that seems to make sense: a business that sells a subscription product to SMBs for $200 and one that sells a big ticket purchase item with deal prices in the millions have different customers, sales cycles, buyer journeys, everything. So it’s rational to think that different CRMs will serve them better.
Plenty of folks agree - including Adam Honig, Spiro CEO and co-founder, who told CIO.com last year that verticalization was a positive for businesses.
'[C]ompanies are increasingly realizing that they could benefit from using industry-specific CRM solutions like Veeva, Vlocity and OpenGov,' he said. 'These vendors’ built-in best practices and processes provide a level of expertise that companies just don’t get with a generic CRM solution.'
On the face of it, this all seems eminently sensible. But if you think about some of the implications of 'going vertical,' there are a number of drawbacks that could actually damage your business in the long run.
Horizontal apps like Salesforce, Sugar or Sage are not specifically designed for one specific industry because they don’t need to be. They can be easily customized by the user.
'[R]egardless of your industry, the most critical thing is having a database of all the people who you’re doing (and to hope to do) business with - their demographic information, open tasks, closed activities, interests, opportunities, email correspondence, products they bought, products they would be interested in buying, services performed, etc,' writes Gene Marks, owner of Marks Group, on Inc.com.
The problem with vertical applications is they come from an opposite standpoint - instead of being generic with the capacity to be customized, they come from a point of specificity and therefore cannot be broadened to meet other needs should the user require that.
Added Cost, Less Reliability
There are other flaws, too. 'Because they’re geared towards a niche with lower volume, they tend to cost more - whether you buy them standalone or buy “add-ins” to your existing CRM system,' writes Marks. 'They are usually made by third-party companies with fewer technical and training resources, smaller communities and a higher risk of support problems if there’s integration involved.’
'They also add another layer of risk to the buyer - what happens to your system if the vertical software maker disappears from the scene?'
Aside from running the risk being lumbered with a poorly made and supported system, vertical CRMs can also stray into the aforementioned over-sophistication that really should be avoided at all costs.
'The biggest problem I see with these vertical applications is overkill,' Marks continues. 'Many of them come chock full of great features and functionality. Yet most of my clients never use more than 20% of these features. And the features can be easily added to any mainstream CRM by customizing a few fields, screens and reports.
'I’m not saying there aren’t uses for a good vertical CRM application. But for the great majority of small and medium-sized firms… it’s just not needed.'
Marks’ message is clear: forgo the tempting specification of a vertical system for a generic, horizontal CRM that can be customized to fit your needs - and one whose size and reputation give you peace of mind that you will be using a good, reliable product and provided adequate technical support.
Don’t Have Your Reps Gathering Information
A common mistake is allowing departments from all over the company to burden sales with their data demands. Everybody wants data from the ‘edge’ - the place where the company meets the client.
And each department has its list of essential data they require from the customer. Leave them to their own devices and they’ll ask sales to collect all of it.
'Do you want your salespeople to drive revenue, or perform data entry?' asks Altman.
'Top-performing salespeople are effective at planning and executing (or we hope at least one of these). Most are not wired to be stellar at data entry, collecting, and compliance.'
So make sure other departments aren’t passing the data-collection buck and that your reps are free to do what they do best - otherwise you’re going to have one very disgruntled sales department on your hands.
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About the Author
A serial entrepreneur and digital nomad, Geoffrey has been running his own marketing consultancy for the past year.More Content by Geoffrey Walters