2006 - Year of the Independant Small Business, Year of Customer Relationship Improvement

Posted on December 19, 2005

Well, the year is almost over, holiday time is upon us, and 2006 is rounding the corner in just a couple of weeks. I’m sure everyone in business wants to increase their income from their small business in the coming year. One thing I would like small businesses to at least consider in the coming year is to look into a CRM (Customer Relationship Management) software package or service that will help them to get handle on their business in ways that they never thought they could. For instance, depending on what you want or need is a CRM package, one could help you to get a handle on or improve, sales, accounting/bookkeeping, marketing, service, and knowing more about your customers at the click of your mouse.

Customers or clients are the key to your businesses growth and survival of your future. Customers have direct bearing on your company regardless of the size of your company or industry. Any business builds their reputation based on building a relationship (hopefully a long one) with satisfied clients and customers.

Customer Relationship Management is basically a philosophy of doing business going forward for you, versus the concept of buying a software package and mandating its use by your employees inside your business. CRM with some work, enables you to get a better understanding of your client’s needs, helps you to increase sales, and ultimately build better relationships. And better relationships mean customers who will come back to you more often as a trusted resource to spend their hard earned money with.

You should understand up front that the goal of CRM is to stay close to existing clients and acquire new customers employing a lower cost of acquisition. While this article might be a bit long I do not go into too many statistical points of view, and will try to remain as high level as possible, detailing the areas I feel are important to a small business. In essence the goal of this is to kick start your search for a CRM solution that reduces the costs involved in acquiring new customers and selling to existing ones. And we all know the adage repeated to us over and over again about how expensive it can be to get a new customer to hand their money over to our businesses.

CRM will allow you to solidify or build a sound customer relationship strategy. Choosing the right company to support your business can be more than just a benefit for you, it can become both a strategy and a way of doing business for you for the rest of your career as a small business owner or manager. It can and will open the door to volumes of information and strategies you never knew existed for you.

Customer Service… Are you fully aware of your customers service needs? Reacting to your clients customer service needs successfully is essential for both your survival and your client’s businesses. Effective use of your CRM solution will help you to understand and respond in a timely manner to your client’s customer service needs and issues. It can help whether you are a small one man organization or a 500 person organization fielding thousands of support calls a year.

CRM solutions for small and medium sized businesses vary by every company that provides them. It definitely is not a one size fits all product or service. Simply stated, they do not help you accomplish your goals unless you put them to use inside of your organization. There are literally thousands of business in the U.S. today utilizing CRM for service and support of their clients. They adhere to their own internal strict policies of use. Their CRM solutions are a set of tools that will allow you to communicate more effectively and more often with your customers and clients. That is not to say that you are required to have your own ‘strict’ policies, but you should commit yourself and your staff to working the CRM system to reap it’s benefits for your business.

When put to use correctly CRM can help you in the following areas:

• Customer Service – This is an area where many companies may implement a CRM solution first. If you have a service department; i.e. You are a computer company, home security, interconnect, etc., CRM may benefit you as many of them have comprehensive service features or modules which will allow you to track service tickets, service productivity, profitability, etc. Ultimately it helps to improve your customer service by improving how responsive you are to your existing client base. By being more responsive you also create improved customer loyalty and add additional “touch points” for additional sales qualification for future selling.
• Selling – Whether you are selling your solutions or products yourself, or have sale people beating the phones or street for you, CRM can (and if you apply it and stick with it) help you to market smarter, attract new customers and close more business quicker than you have in the past. It will help to create a more efficient sales team by making them faster to respond to incoming leads, as well as give them stricter sales guidelines to follow when pursuing the sale. It also gives you an abundance of client and potential client information at your fingertips. Depending upon the solution you choose, this will help with the collecting and administration of customer contact information, frequency of contact with the customer, notes of meetings with or about your contact, proposals, bills of sale, profiles and categories of your clients, etc…
• Marketing – With the above mentioned profiling and categorization of your contact lists your marketing efforts can be drastically be reduced. You can employ a demographic or geographic marketing campaign system that allows you to market specific products and services to those customers you know that will buy them from you locally, regionally, nationally, or globally. Basically, the abundance of data, profiling, and categorization of your clients will help you to market smarter, and more effectively because you will understand their needs more fully.
• Automation – CRM can help you to automate processes which you may handle manually now, such as billing, recurred billing, follow up surveys, recurring marketing, and more. This could be stand alone or integrated with your Website depending on the business you are in. It can help you manage inventory levels by automatically reordering a certain number of a particular product from your preferred vendor through supply chain features (more on this later).
• Reduce Your Internal Costs – Once you have a handle on your sales and service you will be able to pull reports from your CRM solution that can help you identify service issues and over runs, as well as sales costs, profit levels, project management reports (where applicable) giving you the quantifiable information you need to make important decisions about which rout to take your company. This can help reduce your costs dramatically. For instance, if this applies to your business type, if it costs you $50.00 - $100.00 to field a minor service call via the telephone, it may make sense to ad an FAQ’s section and “Place a Service Call” page to your web site. If tracked correctly you may see service level costs from your $50.00 – 100.00 per incident cost to $4.00 – $10.00 per incident cost.
• Quantification – As mentioned earlier, by receiving periodic detailed reports of your sales, service, and marketing efforts you will be able to quantify your decisions using your results based reporting as your guide.
• Communication – This one is simple, put all the pieces together, and you get better lines of communication from your new and existing client base giving you more solid footing in their minds. Ultimately all of this leads to additional revenue for your business.

Customer information, learn those two words and live by them. In your near future, customer information is the key to your businesses long term tactical success. In fact today, yesterday, and tomorrow, I personally use customer information in a CRM solution to manage well over 2 million dollars in annual sales and service for my own sales territory. Your customer information is the key to unlocking the secrets of higher levels of your company’s efficiency and profitability.
Now don’t get too excited yet. If you’re a VERY small organization with only a handful of customers then you may not necessarily need to run out and evaluate, test, and bargain for a good price on a new CRM solution. At least not yet… But, if you currently service a few handfuls to a large number of clients, have several to many products and services under your company’s management; develop single or multi service/product solutions for your clients, a CRM solution might just be the thing for you and your employees to justify.
So how do you know? So how do you know what you need or if you need a CRM solution? There are a couple different types of CRM solutions out there. I call them “Module Based” and “Integrated” solutions.

Integrated will be a fully functional toolset that handles Sales, Marketing, Service, and Reporting. This may be a bit much if you are a small organization. And the process of deciding you need a fully integrated solution can sometimes be a true undertaking, as you need to work at qualifying your whole organization, and what they might require. This impacts your entire business at once and might be a bit much if you are already a busy person or team.

As for the Module Based solution, well this may or may not be a suitable alternative. But it gives you the flexibility to implement your CRM solution in pieces so that you can focus tightly on issues on a specific area that you are trying eradicate or cut off before it even begins. Effectively you can implement sales or service first as opposed to a whole company solution. Then you can add marketing or automation, and so on.

A few questions you may want to ask yourself are (focuses on sales and service):

• How is my service department (if you have one) currently suffering?
• Are my clients or customers suffering in any way for service? If so, how and why?
• What specifically in my service department can be improved? Information to accounting internally? Speed to service from the customer request? Improved inventory supplies based on the types of service calls we have? What else?
• What is the Sales department doing now that could be improved?
• How do the sales people keep track of their prospects and customers?
• Do I have real insight into what sales are happening and when the business should come to fruition?
• Do I even know who my sales people are talking to, and why they are talking to them?
• How much business do I expect my sales people to realistically close this year, month, week?
• Do I know how much profit a sales person is really bringing in per deal, or over the course of a year?
• What kind of business reports do I have to day, and what king of business reporting would I like to see to make my life easier in the future?
• What do I do now to market and advertise to my clients? What are the associated costs involved?
• Do I really know my customers at all? Their likes, dislikes, business cycles, buying practices, etc…

These questions are just a starting point. There are a at least a dozen or more additional questions to ask to qualify out other areas of your business. When interviewing CRM organizations, take note of the questions they ask. Take note also of your answers so that you can review then later. Compare then to qualifying questions of those other CRM organizations you speak with as well. You will get a better idea of what you are looking for through your multiple interviews with these organizations.

Small Business or not, what you can do to prepare? Gather as much information you can about your customers. Get their likes dislikes, birthdays, products they like, dislike, what they have already purchased from you, number of employees, branch locations if they have them, and more. Get everything you can, their employees’ names, positions, etc. Gather email addresses, all of them. They are your customers. Tell them you are making some changes to help your customers lives and your become more efficient and streamlined. Make sure it’s accurate. You will use this to populate your prospect and customer database, and will be the basis for building new more profitable business.

You know you’ve thought about it, yes a Website. Get a great Website developed and published to the Internet. Make sure you take into consideration your sales and customer service programs. Here is why. Many CRM solutions today can integrate seamlessly with your Website. When you do this, or rather, when your Web developer does this for you your Website becomes more than a Website. It becomes a symbol of your business. It becomes an indispensable interactive tool for your company. In business today it is a critical tool for you to promote to your customers to help save them time and effort in accomplishing a particular goal with your company. It becomes a tool where your customers and prospects can now gather valuable information about your company and its products and services. It will be a tool to directly gather information about what the customer or prospect wants, and to send it directly to you or your sales people with little effort. Thus, this action speeds up the qualification and sales process bringing dollars to you faster. Oh, and it lowers the total overall cost of acquiring the customer, which is probably a hidden cost of doing business to you right now.

The purpose of all of this is to build better relationships with your clients and to give surgical precision on delivering excellent value propositions from beginning of the sales process through the entire lifecycle of your client or customer. The bonus factor for you is while doing this you get to compile and analyze invaluable information provided by not only your internal people, but by your most valued asset; your client or customer. This information will tell you where, when, why and how your customers buy.

Rolling out a CRM solution will enable you to see and hear about customer service improvements from your customers, offer new levels of self service to your clients or customers, understand what motivates them to buy or not buy, touch your customers more often to reinforce your company brand identity, respond more quickly to request of sales or service, and understand more about your own profitability based on those customer relationships.

CRM will help to improve your Supply Chain. We’ve talked a bit about sales service and marketing, but what the heck do I mean by supply chain? Let me elaborate. Wikipedia.org defines “supply chain” as ” A supply chain, logistics network, or supply network, consists of all suppliers, manufacturing facilities, distribution centers, warehouses, and customers, as well as all raw materials, work-in-process inventory, and finished goods, and all related information and resources involved in satisfying an end-customer’s requirements.” I couldn’t have put it better. Basically to sum it up, it’s everyone in the process of providing your product or service from the very beginning of its inception right down until the customer buys it.

So where does supply chain fit in? Depending on the type of CRM you employ, there may be modules or features which let you do the following:

• Connect your CRM system and Website (previously developed by your Web Developer) to an inventory control system or order entry system so that you may do a few things;
• Have insight into your vendor’s inventory and costs in real time.
• Present inventory options you may not have in stock (but your vendor does) via your web site, allowing you to offer products or services you normally couldn’t, empowering your customers to inquire or purchase from you what they once might not have been able to.
• Offer only certain customers certain products or services from certain vendors via a private or public Web based portal.
• Share critical end customer information with your vendors. This will help them to understand how your customers purchase so that they in turn can customize their products or services to be more customer centric. Thus helping you to offer better solutions to those customers.

Statistics are showing that organizations that look to their supply chain (which is a commonly overlooked area) can become much more profitable. Numbers by various organizations say that you can become 60 – 80 percent more profitable by automating supply chain tasks with vendors or manufacturers. Don’t take this avenue for granted. If you have responsive and tech savvy vendors, they should have universally accepted supply chain solutions in place for you to implement. Ask them (and your Web Developer) about EDI or XML technologies that are today commonly used in the transportation methods of supply chain CRM automation.

So what are the next steps? If you are serious about taking a next step in your business to another level, and committing to something that could help to transform your business from ordinary to extraordinary, there are a few things for you to do before just jumping in. As mentioned before, collect more of your customer’s information. I will mention this again before the end of this article. It is absolutely critical that you collect more of your customer’s information, data, etc.

• What are your goals? What would you like the CRM solution to help you to achieve? Better service, marketing, or sales, or all of the mentioned areas?
• Research solutions inside and outside your industry. Who do your vendors recommend using? Call your trade association if you have one? Go to your competitors and play “dumb like a fox?”
• Who are the CRM organizations in your vertical market? Who are not and service a more horizontal market? How do they compare to each other?
• Focus on the type of CRM that might fit you best. Examples are:
  • Vertical industry specific (specific to your industry)
  • Customizable solutions
  • Client (stand alone i.e. ACT!)
  • Generic (horizontal and serve a myriad of businesses across the board)
  • ASP (Internet Based fully managed solutions accessible from anywhere there is an internet connection)
  • LAN based (on a network in your office)

Your choice may dictate how flexible or scalable you can be or how flexible your staff can be. The choices are yours, but please make a rational decision based on where you want your business to be in five or 10 years. This can sometimes be tough to think about, but can help you make the right choice.

What’s it going to cost and beyond? This is another tough one… You will have to weigh the features and benefits of each solution. Pricing can go from $10.00 per month per user to easily $150,000.00 a year plus. So be aware of the level of solution you are looking into. Be aware of the revenue impact it will make on your business.

Provide yourself with an R.O.I. (Return - On - Investment) analysis. This will show you dollars earned over dollars spent on your new tool. And be Realistic! There is always a ramp – up period when you are learning a new software solution of any type. Your early information will be skewed as you are entering it. Give yourself six months to start showing real results, and a year to get solid quantifiable information from your reporting. This is an investment to help you transform and build your business into something great!

So what to analyze… Here is a short list:

• Cost per user (License fee if applicable)
• Base this on the number of licenses you might need. i.e. 5 sales people, 4 service people, one Operations manager, You the owner, and the Accounting person equal 12 licenses.
• Are there any annual or monthly maintenance fees?
• Setup Fees
• Training Fees
• Special fees like Internet Access, etc.

What is your expected sales increase, and what is your expected service level savings from implementing the CRM solution over X months or X years? Then do the math and see what you are making/saving over those periods and speculate on how to achieve that based on what you know about the systems you are looking at.

Now I’ll say it again… Collect your customer’s information. Don’t leave anything out. Once you have made the decision to go with a CRM solution make sure you can get it all into the CRM Company’s database. The CRM vendor you choose will help you if need be. But also be prepared if you are an established business for the real deal. By that I mean if implementing a customer service solution be prepared to handle the feedback and questions if you need to of your clients that adopt like crazy. You do not want to underestimate your service levels when trying to take steps in improving them. Simply, if you can’t respond to the customer in a timely manner it is just as bad as not providing the service for them at all. Food for thought…

Make sure the CRM Company has a good data protection and security protection system in place. If it is a hosted, managed solution, and you are handing your data to a host organization you will want it well protected. If you are really worried about your data integrity you should look into the following; ISO BS7799 or the Data Protection Act of 1984 which will give you a better grasp on your rights for data protection and integrity.

Demo, Demo, Demo! Get a 30 – 45 day free trial period with no obligation to purchase. Use it. Make sure you have good data to justify the means. I’ll say it again. Use it, and use it until you are blue in the face. Until you understand its strengths, weaknesses, and how it will impact your company do not make the purchase. This is not a rush decision. It is a business decision which should not be taken lightly. Do not demo more than one system in any 30 – 45 day period. You will only confuse yourself and your staff.

Talk to your suppliers and your customers. Ask them what features your vendor might integrate (remember our supply chain conversation) with and what features might benefit your customers most. The whole point of this is more profits and better relationships, right? Write everything down… Go over it and over it. Go over it with your customers, and go over it in detail with your venders to firm up any integration plans you may have in the future.

Well, that was a mouthful, and I probably could go back and write a lot more… In fact I know I could, but I don’t want to bore you and I wanted to give you a high level of what I thought might be prudent for a small business in 2006. To be honest this article was going to be about something completely different, but then I had a conversation with a friend of mine John at DELAWARE.NET. John develops a great CRM solution called Team Logic among a couple of other solutions, and automates the SMB / SME business with a highly customizable CRM solution. His solution is not only feature rich but fantastically affordable as well. So John, I dedicate this article to you, your team, and small businesses everywhere.

Please don’t be too critical. ;-)~