Every business should have the ability to view its customers through the duration of their relationship with the company.

In summary:

  • In the right implementation, customer relationship management (CRM) software can help minimize the conflicts between the sales, marketing, and customer service departments. Also, it helps better coordinate activities and data-sharing among them.
  • CRM can help your organization understand the linkages between the three areas as well—for instance, how well a marketing campaign affected sales. Paying attention to deployment best practices, your sales culture, and current and future integration needs will help deliver the best value from a CRM implementation.

It’s a well-known axiom that it costs five times more to get a new customer through advertising and marketing than it is to keep a current customer happy with good old-fashioned customer service. But how do you know whether you’re doing either part of that equation correctly—that is, both the getting and keeping? That’s where customer relationship management (CRM) software comes in.

CRM Software

At its core, CRM software corresponds to three of any organization’s core departments: marketing, sales, and service. But that really oversimplifies what it can do for you and how you should consider deploying it so that it can serve your current needs and accommodate ways you might want to use it in the future. As a further complication, the three primary modules of CRM came from different kinds of software applications. As a result, serving three departments can sometimes work at cross-purposes, and getting them to work together can be a challenge.

“I see a lot of disconnect between marketing, sales, and service,” laments Rob Bois, research director for AMR Research’s CRM practice. “The marketing department may be creating promotions without conferring with sales, so the salespeople don’t even know that they’re coming.” At the same time, there may not be enough product available to meet demand, which will cause the customer service lines to start ringing. Customers won’t understand communication breakdowns within what they perceive as a single entity. “Companies will buy CRM to coordinate all that, so that they can have one system of record,” Bois says.

But it’s not so easy to create that single view.

Following the three tenets of CRM, you want to know:

1. How you acquired your customers—what advertising campaign brought them to you in the first place, how many, and through which channels (Web, phone, e-mail, store).

2. Sales history—what customers bought, who sold it to them and how, when it was promised, when it was delivered, and if there were any problems with the order.

3. What service you provided—why they contacted customer service, whether the problem was covered by their warranty or service contract, whether a truck had to be dispatched, and what was the resolution.

You also want to know how these pieces link together:

  • Did advertisements in a particular magazine bring you fewer customers, but did they spend more per person?
  • Does customer contact by e-mail bring the same level of customer satisfaction as a contact center?
  • Do the customers that traditionally call the contact center spend less money and yet take more of a customer service agent’s time than customers who spend more?

This is the challenge of CRM. Not only do you have to start with the basics, but you have to consider how you’re going to expand incrementally in each of the three key areas. Experts such as Long Duong, CRM practice principal for Interlink, a Microsoft Gold Certified partner with several offices in the western United States and also just outside Mumbai, recommend against deploying all the modules of CRM at the same time, due to the numerous failures that can usually be traced to this “big bang” theory of deployment.

Top considerations for success

Deploy cautiously– How do you decide what to do first and when to upgrade to the others? As with any software deployment, there’s a business problem you want to solve. Are you most concerned about your customer service budget? If so, tackle that module first. “Pick discrete, quantitative activities that are relatively easy to measure,” Bois says. “Those will prove the success of the project.” If you deploy too much at once, it will not only be hard to measure success, but you won’t know what made the biggest difference and what still needs attention.

Help employees understand the value of working differently– The challenge is intensified by the fact that not all of the changes that CRM brings are technological. Sometimes they’re cultural. For instance, it can be difficult to convince independent-minded salespeople to take their contacts out of Microsoft Outlook or Excel and put them into the CRM software, and manage them from there.

Another cultural shift that may require more work from your sales staff is tracking every contact they have with the customer, whether it’s phone calls, e-mails, letters, or even instant messages. “The real added value of a CRM system comes from the data within it,” says Rob Bakkers, senior associate consultant in CRM, based in the Amsterdam, Netherlands, office of Microsoft Gold Certified partner Avanade. If users do not record every activity or if they withhold information, any analysis conducted using the data could lead to incorrect conclusions. “The more information you add to the CRM system, the more valuable it becomes,” he says. Educate your sales and marketing staff about the benefits of using CRM to its full potential, since ultimately it will bring them greater insight about customers and their needs.

Integration with other systems is where CRM really pays off– As if that weren’t enough, there’s one final aspect of CRM that you should keep in mind, and that’s how it is evolving as an application. Like most applications, CRM’s evolution is toward greater integration with other applications, whether it is your enterprise resource planning (ERP) system (for billing or inventory) or your supply chain system (for manufacturing or delivery).

The new version of Microsoft Dynamics CRM 3.0 makes integration easier in a number of ways, particularly through its WSDL (Web Service Definition Language) compatibility. WSDL creates Web services that communicate with other systems more easily. For more on the technical issues of deploying CRM, see “Make the Most of CRM.”

In this final phase, CRM resembles a well-oiled machine, one that can take advantage of aggregated information and give you insights into your customers and their behavior. “Now can you see trends and identify who among your customers is profitable and who isn’t?” asks Interlink’s Duong. “That’s the heart of strategic CRM.”