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Choosing the right CRM, selecting the best Customer Relationship Management tool

May 17, 2008
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Like any technology, CRM solutions have their strengths and potential weaknesses. Use this primer to understand the components of CRM and develop a strategy for selecting an optimal CRM solution.


What is Customer Relationship Management?

CRM is a strategy—not simply an application, technology, or suite of products. The central idea behind CRM strategy is that it makes the customer the center of all business operations. It ties together the information, systems, policies, processes, and employees of an enterprise with a view to attract and retain profitable customers. CRM applications and technologies are not ends in themselves, but rather the means used to implement a customer-centric business strategy.

defines CRM as follows:

… a term that encompasses how an organization manages its interactions with its customers. The end goal is to eliminate disparate departmental information systems, and have a 360-degree profile of each customer…in order to hone and personalize each customer interaction in the future. CRM allows companies to make more meaningful contact with their customers, giving the customer access to the products and information they need when they need it.”

An effective CRM strategy requires a fundamental shift in the culture of the enterprise so that the enterprise, its employees, and its systems are aligned toward customers and away from traditional product- or process-centric models. Instead of the traditional four Ps—product, price, promotion, and place—it requires you to think of the marketing mix in terms of the four Cs—customer, cost, communication, and convenience.

  • Instead of thinking in terms of product, think in terms of customer. Ask what your customers need rather than what products you already have.

  • Instead of thinking in terms of price, think in terms of cost. Think about the cost of your customers in terms of time you have invested in them, social and environmental impact, as well as dollars.

  • Instead of thinking in terms of promotion, think in terms of communication. Communicate collaboratively with your customers on the best way to address their needs, don’t just promote.

  • Instead of place, think in terms of convenience. Look at what means you have to deliver to your customers what they need and where they want it, rather than your current place of distribution.

The most successful CRM implementations are those that automate and make consistent sales, service, and marketing business processes throughout the entire enterprise. They merge the so-called front-office and back-office operations, giving employees a complete view of the organization’s relationship with its customers, and they open up internal systems to customers so they can service and sell themselves.

In an age where technology has reduced time and distance to almost zero, and where instant access to companies and information has shifted the balance of power in the buyer-seller relationship in favor of customers, the only sustainable competitive advantage that a company has is the quality of its customer relationships. Organizing the company around the customer is a competitive mandate, not an option.

Benefits of Customer Relationship Management

The benefits of CRM fall into three categories: cost savings, revenue enhancement, and strategic impact. If you implement CRM successfully, you should expect the following benefits:

  • Increased sales revenues. An increase of 10 percent per annum per representative during the first three years of the project is reasonable. Increased sales are primarily a result of less time being spent chasing needed information. This increase in productivity allows more time to be spent with customers, resulting in increased sales revenues.

  • Increased win rates. An increase of 5 percent per annum during the first three years of the project is reasonable. Win rates improve since you withdraw from unlikely or bad deals earlier on in the sales process.

  • Increased margins. An increase of 1 percent per deal during the first three years of the project is reasonable. Increased margins result from knowing your customers better, providing a value-sell, and more discretionary discounting.

  • Improved customer satisfaction ratings. An increase of 3 percent per year during the first three years of the project is reasonable. This increase occurs since customers find your company to be more responsive and more in touch with their specific needs.

  • Decreased general sales and marketing administrative costs. A decrease of 10 percent per year during the first three years of the project is reasonable. This decrease occurs because you have specified your target segment customers, you know their needs better, and thus you are not wasting money and time. For example, you can mail out marketing material to a very specific target demographic rather than to all customers in the database


A comprehensive CRM system provides you with the tools necessary to automatically and dynamically manage all of the channels through which customers communicate with you. The following are the most essential components of a CRM system. Your CRM system will initially consist of one or more of these components; over time other components can be added from this list to bring additional functionality to your CRM system.

Contact and Account Management. This component includes:

  • Contact Management Profile and Activity History

  • Order Entry, History, and Tracking

  • Proposal and Sales Contract Generation

  • Internet Account Management

Customer Service. This component includes:

  • Incident Analysis, Incident Tracking, and Incident Assignment

  • Order Tracking

  • Self-Service

  • Warranty and Contract Management

Data Synchronization. This component includes:

  • Mobile Synchronization with Multiple Field Services

  • Enterprise Synchronization with Multiple Databases/Application Servers

E-Commerce. This component includes:

  • B2B and B2C Applications

  • Shopping Cart

  • Online Order Placement

  • Email Order Confirmation

Employee Relationship Management. This component includes:

  • Job Postings/Application Qualifications

  • Employee Performance

  • Employee Training

  • Equipment Management

  • Psychometric Analysis

ERP Integration. This component includes integration of:

  • Legacy Systems

  • The Web

  • Third-Party External Information

Field Service Support. This component includes:

  • Work Orders

  • Dispatching

  • Real Time Information Transfer to Field Personnel via Mobile Technologies

Marketing. This component includes:

  • Campaign Planning and Budgeting

  • Campaign ROI Analysis

  • Marketing Encyclopedia

  • Customer Retention

Sales Management. This component includes:

  • Forecasting

  • Sales Cycle Analysis

  • Sales Metrics

  • Activity Reporting

Telemarketing/Telesales. This component includes:

  • Call Planning and Call List Assembly

  • Call History and Statistics

  • Auto-Dialing

  • Productivity and Performance Analysis


The CRM marketplace is becoming increasingly crowded as vendors from every sector attempt to gain market share in the SME space. With myriad choices available to SMEs looking for a CRM solution, the most daunting task is often where to begin.

Large vendors such as Oracle and Siebel, are offering products geared specifically to the mid-market, and going head to head with traditional leaders in this space, such as Best Software, Onyx, and Pivotal.

Microsoft’s recent market entrance has also made waves in this space, as Microsoft-centric businesses that would normally not have considered CRM are licensing the new offering.

Many vendors are offering their solutions in more than one service architecture. While traditional client-server implementations abound, vendor- and client-hosted on-demand services delivered via Web browser are gaining in popularity. In many cases vendors are offering multi-modal implementations of all three architectures, which may help to buoy their viability over vendors with only a single architecture offering.

SXN believes that there is great untapped potential in the CRM market, especially among SMEs. Until recently, small- and mid-sized organizations have been hesitant to embrace CRM due to the implementation horror stories and huge price tags associated with many large profile projects of the past. Increasing competition and more sophisticated customer management needs have driven mid-sized organizations to begin adopting CRM, and the market has responded with a flood of CRM vendors looking to find a niche in the space. Despite smaller budgets, tighter resources, and less complexity, SMEs require most of the same functionality as their larger brethren, but need it packaged in a simple, scalable format that does not require months of extensive customization and integration.

Buyers looking for CRM solutions should carefully weigh the pros and cons of buying from a major global player versus smaller vendors that may be more specialized and attuned to the unique needs of SME clients. The high degree of competition offers buyers an opportunity to ensure they receive a competitive price, rich feature set, and strong customer service from their vendor of choice. Decision makers must have a deep understanding of their environment and needs before undertaking a selection and acquisition process. They must have a clear view of the CRM market to make competitive tradeoffs that result in a best-fit solution.

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