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Issue of August 2006 

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Choosing a CRM solution

With so many CRM solutions now available for the SMB segment, Sunil Kumar lists the factors that companies should scrutinise before making a decision.

Businesses need to stay competitive and examine different processes in order to optimise resources. Over the last few decades the focus has been on production and ways to optimise this part of the value chain with ERP. However, lately, the focus has shifted to other areas, and taking note of this analysts like AMR Research have introduced their Demand Driven Supply Network (DDSN) model.

CRM applications are being used to optimise the sales process, improve service and increase knowledge about customers. Now the CRM market has matured, and companies are considering how it can be used to optimise sales.

Differentiate by increasing channel sales
One area where CRM can result in significant benefits is channel sales. Today, indirect channels account for majority of sales in most industries. In industries such as high technology, consumer goods and discrete manufacturing, indirect sales partners represent more than 70 percent of the total revenue, according to Partner Relationship Management: Optimising the Demand Network, Gartner Group 2003.
In order to retain customers, businesses are pushing to provide better service. The high cost of acquiring new customers is apparent, at the same time, businesses put efforts to keep sales costs down. The direct sales force has a high fixed cost. Using channel partners reduces these costs but given inadequate control over the sales force can add another level of complexity in maximising sales. A robust solution to improve channel sales will enable the indirect sales model by tightly integrating companies with their partners—increasing profits, reducing time-to-market, minimising costs, and enabling response to market dynamics.

New-age CRM

Order Management and Partner Relationship Management systems can help companies improve the effectiveness of their sales process and sales execution via indirect channels. The penetration of Internet technologies as a business process enabler has allowed companies to develop efficient, scalable, multi-channel customer interactive systems that reduce the cost of contact and enhance service.

CRM solutions do help in meeting the challenges that some companies are facing in retaining customers and keeping sales costs under control, but they address only a part of the problem.

In the future, companies will be more capable in dealing with the competition in the global marketplace when deploying technologies that help:

  • Increase organisational effectiveness in aspects such as quoting, pricing, configuration, and quoting tools.
  • Increase collaboration between different departments, business partners, and customers alike.
  • Integrate enterprise solutions such as ERP, CRM, SCM, and PLM (Project Lifecycle Management).

CRM is now a mature market with enterprise vendors offering end-to-end integrated solutions. The main focus for a CRM offering is the customer and how to bring more value to the end-user. CRM comes in all shapes and sizes from extensions to Microsoft Office over a call centre to high-end opportunity management and selling tools for increasing effectiveness and efficiency.

Business Issue Considerations
Sales force automation ‘Failures’ of CRM can often be attributed to the fact that they were initiated by the management without considering how they would affect the individual sales person. SFA implementations need to have benefits for the management and sales people as well. Consider the effect the economy has on the relation between the sales person and the company. In a good economy, the company works for the sales person. In a not-so-good economy, the sales person has to work for the company. 
Sales tools for channels partners The first wave of CRM didn’t catch on with many SMBs and manufacturers for several reasons: focus on Business-to-Consumer (B2C) rather than Business-to-Business (B2B), focus on market/revenue growth rather than cost efficiencies, and focus on direct sales models rather than channel/indirect sales. Statistics say that over 70 percent of manufacturers’ revenue comes through channels and it’s increasing. The challenge for a manufacturer lies in attracting the attention of the channel. To become the channel master, you have to be ‘easier to do business with’ than competition. Is there a silver bullet? Maybe not, but providing the channel with advanced Web-based tools such as quotation management, order management, catalogues, configuration, pricing and ERP integration, have proven to become ‘easy to do business with’.  
Order management Web-based e-Commerce and related sell-side technologies that enable organisations to manage demand is what the Aberdeen Group referred to as “e-Commerce that works.” Easy to deploy, cheap and fast to implement, the fastest RoI is often in various forms of “order management systems.” Often used as supplements to other processes, order management applications are used in direct channels, indirect/partner channels, and in (aftermarket) service business processes. RoI is the result of eliminating inefficiencies and increasing smaller margins.
Product configuration Configurators have direct impact on key RoI indicators such as order accuracy, up and cross selling, shortening product introduction, reducing product training, and cost reduction. Examples are available where order accuracy has gone up from 12 percent to 100 percent. Configurators are also crucial as a competitive tool, in particular in Make-To-Order and Engineer-To-Order type of companies. One customer stated it as pre-emptive strikes: while already being the market leader, implement technologies that make it even harder to catch up with.
Service management After-sales/aftermarket replenishment is where companies still can make a difference and ensure a margin. This category includes order fulfilment, invoice reconciliation, warranty management, returns management/reverse logistics, field service, and aftermarket selling, and automated replenishment.
ERP integrations It’s not just about having ERP integrations. Companies have often specific requirements. Many a time it may not also be monetarily justifiable to replace legacy applications. As a result, vendors should be evaluated on their understanding of the industry as much as on their capability to integrate with legacy applications and fine-tune standard integrations to the requirements.

SMBs: where the growth is

Over the last year, the CRM market with regard to SMBs has matured, and smaller companies can now gain the same advantage as their larger competitors. Vendors now package and price this functionality for their specific requirements. For SMBs this means better products at a lower price.

For many verticals such as manufacturing, CRM technologies are no longer a rarity for SMBs, and these companies now require such investments to stay in competition. Many SMBs have implemented a CRM solution that reduced sales and service costs, increased sales productivity and improved levels of customer satisfaction.

Choose solutions with care; they should add value to your company. Go for a vendor as a business partner for the long run and who can offer the integrated end-to-end solutions that meet your budget.

What’s critical

To make sure you get the RoI you seek we’ve found the following four critical initiatives to be of value:

  • Streamlined quote-to-order process—CRM has to streamline the process to create proposals and quotes, order management, special pricing, and customised product specifications.
  • Increased revenues in a competitive market—CRM has to improve partner productivity, opportunity and funnel management, response rates, and the ability to realise greater profitability or “wallet share” with existing customers.
  • Reduced costs and higher customer retention rates—RM has to lower the costs to acquire customers, equip them with self-service opportunities, train and manage channel partners, boost the productivity of field sales and service, and promote cross-selling and up-selling.
  • Improved competitive advantage—CRM has to make a difference to your business. It has to drive maximum revenue from your markets, territories, and partners; control margins; identify your most profitable customers; and increase brand value.

The author is Principal Business Consultant, SSA Global India.

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