Welcome to part 2 of our introduction to CRM.
In part 1 I explained what CRM (customer relationship management) is and that a CRM system is a software system which helps businesses manage their customer/prospect relationships. I also talked about some of the common challenges that face smaller businesses and explained that a CRM system can help overcome them. There will be more about HOW they do that as we go through the series but this time I'm going to give an overview of the the typical elements of a CRM system.
There are a few things to bear in mind as we go through this:
- There are many systems out there and they all have their own take on the problem and their own solutions to it
- Different systems may be particularly strong in some areas and weaker in others
- Many systems have started with a core capability which is strong and added ever-increasing functionality. Sometimes this functionality would be considered poor compared to dedicated systems. A common example is email marketing. Many of the CRM systems include an email marketing capability but it is often less powerful than stand alone versions
OK, enough of the introduction lets get cracking.
Main Elements of a Typical CRM System
A typical CRM system supports three key areas of the business:
To do this effectively they have some core elements of functionality:
- Contact management
Let's look at briefly at each of these components.
Most CRM systems will help you define and record the results from marketing campaigns so that you can see which campaigns generated which enquiries, prospects and sales. They will allow you to see where leads/prospects/sales resulted from multiple contacts. They will help identify which activities generate what kind of business. They do all this in a clear and quantitative way - as long as you take the time to input the data.
Most have in-built email marketing capabilities with link-tracking so that if you send an email with a link back to your site, they will track which recipients clicked the link (i.e., demonstrated some interest in your offer). They will also allow you to tailor future offers to these people based on what they have shown an interest in previously. It has to be said that often the email marketing capability is not as fully featured as you would find in a stand alone system but the benefit of managing all the activity within one system is that you do not have to have multiple databases.
The upshot is that you will have clear and unambiguous data on the effectiveness of campaigns and be able to tailor campaigns to the known interests of your prospects.
Most businesses have an idea of their funnel. How people go from being part of the market, to becoming leads, then prospects, to clients. They may also have a set number of stages they may go through. Each sales process will be different but it might go something like:
- Initial discussion
All CRM systems will allow you to create leads, accounts, opportunities, sales. They will allow you to define your own sales process and record the number and value of leads/prospects at each stage. They will show which employees generated the lead/prospect/sale. This allows you to easily see what your pipeline looks like, how long your sales cycle is, who generates and converts which leads, etc., etc..
For each account you can see all the activity, the calls, emails, tasks etc associated with them and record quotes, invoices contracts in the system so that everything is there to be seen (and acted upon) by the sales team.
Many systems include the ability to use the system to help with forecasting and quoting making these activities simpler, quicker and more accurate.
Often an add-on to CRM systems, customer support modules extend the capability of the CRM to ensure that the good work in marketing and sales is carried on through into customer service.
The service capabilities will support problem/fault recording, service workflows and case histories. Where appropriate they can interface into the company's telephone system to route incoming calls to the right service people, and provide online fault reporting and management, saving service people's time.
Some have the capability to interface with social media channels to provide service via twitter and other social media channels. They can also interface with knowledge bases and support forums.
You can see from this description why the service modules are often a bolt on - they aren't appropriate to many smaller businesses. Even without these modules it's easier to manage service to customers using the contact management functionality of a CRM (see below).
A key part of the fundamental capability of CRM systems. This is the capability to store information on individual contacts, associate them with organisations, and record all interactions with them - calls, emails, meetings etc., as well as opportunities that arise. The information that can be recorded may range from discussions about an upcoming tender to the fact that it's her daughters birthday next week.
The contact management capability allows the user to set up calls, meetings, actions and reminders to ensure action and follow-up.
I've mentioned workflow a few times already but most CRM systems allow you to configure them to suit the way your business works. You can define the steps in the sales process that you use, you can define what should happen and who should respond when someone enquires and the system makes sure it happens. Sometimes processes can be automated completely. For example, let's assume that whenever a new client signs a deal he receives a welcome letter, the system can be automated to make this happen once an opportunity has been closed. 11 months after a deal has been closed the client could be sent an automated email to invite him to buy an extended warranty. Workflows can apply to any process from marketing to customer service.
CRM systems allow teams to collaborate effectively to ensure that things happen when the should. A lead captured by Sally can be assigned through the system to Julie because she has specialist knowledge about the prospect's industry for example. No sticky notes involved. Julie will receive notification to call or email the prospect to progress the lead and when she does she'll have all the details of the initial inquiry available to ensure that she does a professional job.
Your CRM systems might also offer mobile access to ensure that road warriors as well as desk jockeys can use the most up-to-date information. Additionally most systems will integrate with common email and calendar applications such as Outlook so that emails can be captured, meetings synchronised etc.
The in-built reporting engines of CRM systems give simple up-to-the-minute reporting on all the activities being managed. The business owner can see how much has been sold this month, what's in the pipeline and at what stage in the process. He can see which marketing campaigns have worked best, which sales people have sold most, how many complaints there have been and how many have been cleared. All with the click of a mouse.
I realise that much of the above sounds like a sales pitch for CRM systems, and speaking as a marketer I guess it is. There's really no substitute for having a good handle on how your business works when it comes to interfacing with customers. Where would you be without them?
Next time I'll look in a bit more detail about how all this functionality can be used by small businesses and how they can save time, effort and money.
I know some of you are using CRM systems already so if you think I've missed anything please leave a comment and share.
Jim Hunt is a professional marketer with many years experience in building businesses large and small. As a speaker, trainer and practitioner he aims to explain marketing theory clearly and show how it can be applied in practice to deliver better results from your marketing investment. You can connect with Jim on LinkedIn, Facebook, Twitter and Google+.