1 Customer Relationship Management and how you can use CRM technology to manage and grow your business.
2 What is Customer Relationship Management? Customer Relationship Management (CRM) is undoubtedly one of the business "buzz phrases" of the 21st century. The fundamentally simple idea of businesses keeping customers and getting them to buy more has generated a wealth of technology whose purpose is to help businesses achieve these goals. At GoSmallBiz.com, we believe that any technology that helps you grow your business is a good thing and a little later, we ll discuss what you should look for when choosing a CRM solution for your small business. However, before we discuss CRM technology and what it can do for your business, it s important that we fully define what CRM actually is so you can better assess the role that CRM technology can play in your business. Let s start by saying that discussions on CRM shouldn t solely revolve around a discussion of CRM technology. CRM is not just about technology. Technology certainly plays a role in a successful CRM program but that s not what CRM is. CRM has been defined in a number of ways, but in simplest terms, CRM is actually a term that describes the processes that a business implements to manage interactions between its various departments, its customers, and prospects. Simply put, business owners determine and define the nature of these processes - CRM technology supports the processes and makes it easier to implement them and create a successful outcome. The exact nature of that successful outcome will vary from company to company, but for most businesses a successful CRM program will help you both add new customers and do a better job keeping the ones you have. What can CRM technology do for your business? You may think that your business is too small to implement CRM processes and technology. You might also think that you haven t been in business long enough or that your customer base isn t large enough to warrant an investment of time and money in implementing a CRM program. However, regardless of the size or age of your business, there are several good reasons why your business should consider implementing some form of a customer relationship management process: Reason #1 You Can Improve Customer Retention Rates It s a well accepted principle in business that it s cheaper to keep the customers you have than acquire new ones. A well thought out and executed CRM program will help you increase customer retention rates. Reason #2 You Can Increase Revenues In addition to it being cheaper to keep existing customers than acquire new ones, consider the following - existing customers tend to spend more than new customers. This means that not only are you keeping costs down by retaining your customers, you re helping to increase revenues. Reason #3 You Can Control the Cost of Sales The cost of sales is frequently one of the larger line items on any company s P&L. As such, you need to be able to both identify the components of your cost of sales while ensuring you re receiving an appropriate return on that expense. Reason #4 You Can Improve your Business Implementing CRM processes helps you to learn more about your business. Not only that, the information you gather about what s working and what s not working in your company will help you to make improvements that yield positive results. These improvements may come in the form of a more streamlined customer service process or perhaps might lead to the introduction of a new product or an improvement to an old one. Either way, the knowledge you gain can help you make changes within your business that will have a positive impact.
3 Should You Implement CRM Technology & Processes in Your Business? Since you re reading this white paper, adding CRM technology to your business is obviously something you re considering. You might have read an article on CRM and it caught your interest, or perhaps you saw an advertisement in a business magazine or online while surfing the net. Either way, you re looking at CRM systems and are wondering if the time is right for your business to implement a CRM solution. To help you make the initial decision, we ve developed a short list of questions. Review each of the questions and mark the response that best fits your particular situation by placing a check mark in either the Yes box or the No box. At the end of the quiz, we ll use your answers to provide you with some feedback that we believe will be helpful. 1. Do you employ at least one sales person? Yes No 2. Do you or another person in your business spend a lot of their time compiling customer reports or other types of management reporting? 3. Has a salesperson or other key employee ever left your employment? 4. Have you ever missed a customer appointment, missed a proposal deadline or forgotten to respond to a customer ? 5. When asked a question about a customer, do you have to sort through stacks of paper on your desk to find an answer? 6. Do you wish you had a better handle on the types and causes of customer service issues? 7. Are you currently using more than one software program to keep your calendar and track your company s sales and marketing activities? 8. Do you know who your most profitable customers are? 9. Do you know all the projects that your employees are working on? 10. Do you know the value of all the proposals in your sales pipeline? Do you know what a sales pipeline is? 11. Do you know if there are customer service issues that are common to more than one of your products or services? 12. Do you have a process for tracking customer issues? 13. Are you able to easily track the return on your sales and marketing programs?
4 Now that you ve completed the quiz, we can use your answers to help you with your decision. This part of the process is very simple: If you checked the Yes box for at least one of the questions numbered 1-7, then your business could benefit from implementing CRM technology. If you checked the No box for at least one of the questions numbered 8-13, then your business could similarly benefit from implementing CRM technology. This may seem overly simplistic, but CRM technology can help you manage your business more effectively in the following ways: Maintain all your customer and prospect data for use by your sales teams (Q. 1) Quickly generate a range of management reports thus reducing the need to add support staff (Q. 2) Store complete customer data and a history of customer activity that otherwise might be difficult to find in the event an employee leaves your business (Q. 3) Includes calendar functionality that lets you schedule meetings, track sales and marketing campaigns, and alerts you to approaching tasks and proposal deadlines. (Q. 4) Gives you electronic access to customer data 24 x 7 from anywhere you have a computer and internet connection (Q. 5) Lets you prioritize and track issues and problems that impact your customers (Q. 6) Provides you with a single location to store contact data and generate reports. Also allows you to import contact and transaction data from other applications. (Q. 7) Offers reporting capabilities that help you to analyze sales and marketing data (Q. 8) Allows you to assign customer and prospect-related tasks to your employees and gives you the ability to generate task reports by customer or by employee (Q. 9) Lets you assign revenue value and probability of closing each pending deal. This data can then be used to develop reporting that shows the value of deals in your sales pipeline (Q. 10) Gives you tools to filter your customer service issues by product or service type (Q. 11) Provides customer issue tracking tools that are accessible 24x7 through a web-based interface (Q. 12) Includes sales and marketing campaign tracking that provides revenue and expense information that can be used to generate ROI for each campaign (Q. 13) How is CRM technology different from standalone programs such as Outlook and Excel? The capabilities of and spreadsheet software have advanced considerably over the last 5-10 years and each type of application has been enhanced to carry out a number of additional tasks. For example, Outlook not only allows you to send and receive s, it also lets you store contact information, keep a task list and manage your time. Similarly, Excel not only offers advanced spreadsheet functionality, it also allows users to build databases, analyze financial data and create reports. However, even though each of these applications gives you tools to manage some aspects of your customer relationships, neither of them gives you a complete, 360 view of your customers and prospects. What do we mean by 360 view? The best way to explain this concept is to demonstrate graphically. Consider how data flows in the following diagrams:
5 The first diagram shows how data flows between your business and your customers when there is no CRM system or technology in place. There is little or no information exchange between the program you use to communicate with your customers and any other programs you may use to measure your business. Conversely, the second diagram shows how information and data flows between your business and customer when CRM technology is in place. The technology records and tracks all of the activity that occurs between you and your customer and allows you to generate meaningful information you can use to more effectively manage your business.
6 What Are Your CRM Technology Options? There are 3 fundamental CRM technology options available to your small business: PC-Based Software Software that resides on a network Web-based applications Each type of technology has its merit, but for smaller businesses, we feel that a web-based CRM application is the best choice. The reasons for this are as much to do with the downside of software as they are to do with the upside of web-based systems. Specifically: PC-Based Software What happens if your PC goes down? Difficult to share data between multiple users No real-time updates of information means you may be slow to respond to your customer s needs Need to purchase a copy/user license for every user - this can be an expensive option Need to purchase periodic upgrades to ensure you have the latest version Networked Software Needs technical staff to install/implement and maintain the network Requires investment in back-end hosting equipment Can be difficult to access if you or your staff are frequently on the move Need to purchase periodic upgrades to ensure you have the latest version Conversely: Web-Based Applications Offer a lower cost of entry and lower total cost of ownership Systems are often available via a monthly subscription Are quick to implement and allow for rapid transmission of information across your entire organization regardless of location Easily accessible so you and your staff can use your CRM solution anywhere provided you have a computer and Internet access Doesn t require you to purchase costly hardware Software is automatically upgraded and/or debugged
7 What kind of business questions can a CRM system help you address? CRM systems, such as the ToolBox CRM, allow you to store a great deal of customer and prospect information in one location that otherwise might have lived in different programs. (The range and type of data you can store using the ToolBox CRM is listed in Appendix A.) While the ability to store large quantities of data is useful, combining it to produce reports that give you insight into your business is where CRM systems truly come into their own. The ToolBox CRM is no exception and with just a few clicks of your mouse, you can quickly generate a wide range of reports that will help you address key questions your business is facing such as: Which of my products and services are my customers purchasing? You can use the answer to this question to help you: Identify products that aren t selling which may indicate that there s an underlying issue with the product that you need to address Create cross-selling and up-selling opportunities by identifying customers that are not taking advantage of products that may complement their existing purchases How often are they making those purchases? This answer will help you: Identify patterns in customer purchase behavior which may indicate that there are seasonal influences of demand for your products Adjust your marketing plan to address seasonality in demand Who s buying my products and where are my customers located? Answering this question has a number of benefits and means that you can: Identify parts of your sales territory that may need additional sales or customer service support Determine areas where demand for your products is weak and create focused sales and marketing campaigns to spur demand Couple this data with your marketing campaign data to assess the success or failure of previously executed marketing campaigns What issues or problems are my customers experiencing with my products and services? Being able to identify customer service issues with individual products and services will help your business in a number of ways: You ll be able to identify recurring problems with your products which in turn will help you to implement appropriate product fixes in a timely manner You can use the information to drive improvements to future product releases You can build a knowledgebase of issues and create a library of fixes to help guide your existing customers
8 How long does it take a member of my team to respond to a customer request? Customer service response time is a key element in your customer retention strategy. Determining response times to your customer s issues will help you to: Identify bottlenecks in your existing processes which may be slowing down your customer service response time Improve customer service by highlighting and prioritizing critical customer issues In Conclusion The ToolBox CRM offers a wide range of reporting options that will help you address the questions above and provide you with invaluable insight that you can use to grow your business. A full list of available reports is contained in Appendix B but to provide some examples, available ToolBox CRM reporting includes: Marketing Summary Report Includes information you use to calculate ROI on your marketing campaigns. Marketing Programs Status Provides a snapshot of marketing programs, their status and the beginning and end dates. Marketing Programs Tasks Shows the status of all the tasks related to each different type of marketing campaign. Revenue Potential Report Lists open proposals along with the associated revenue potential and probability of close. This report can be used to forecast cash flow and allocate your company s internal resources. Sales by Customer Report Provides a complete list of transactions by customer and gives you valuable insight into who your best customers are. You can use this information to allocate internal sales and support resources and determine the mix of products purchased by each of your customers. Sales by Account Executive Allows you to quickly determine who your best performing sales representative is and what their average revenue per item is. Event Summary Report Gives you a snapshot of your calendar and allows you to view your schedule by status, location, event, purpose, and date. Regardless of the size or maturity of your business, if you re not currently employing some form of CRM technology in your business, you likely could benefit from implementing a CRM system. If the process of entering and tracking all of your customer data seems overwhelming to you, don t worry. You can start by using a CRM to store your contact data and schedule appointments (with the ToolBox CRM, you can import contact data from a number of popular programs such as Outlook and Excel). Beyond system complexity, most of the common objections that were made when CRM technology was in its infancy are no longer valid. There was an initial concern about costs especially for small businesses with limited budgets - but this really shouldn t be a concern any longer. Today, the costs associated with implementing a CRM solution have steadily fallen - largely due to the wide variety of available options and the increased popularity of web-based applications means that you don t need to make additional investments in hardware or people to implement a CRM solution. If you couple the low cost of entry with the value of the information you derive from the customer data, your business should be able to cover these minimal start-up costs through more efficient resource planning and increased customer retention. We trust this has given you the information you need to begin using CRM technology.
9 GoSmallBiz.com ToolBox - a suite of web-based applications designed to help smaller companies more effectively manage and grow their business. Appendix A ToolBox CRM Data Fields Contact and Lead Data Name Business address Residence address Business and cell phone numbers Multiple addresses Company website information IM addresses Contact type (i.e. customer, prospect, vendor, competitor, employee, etc.) Account executive Source of contact (i.e. cold call, campaign, direct mail, etc.) Nick name Spouses name Birthday and anniversary dates Calendar Events Due dates for tasks and proposals Appointments Marketing campaign dates Task Information Subject and due date Contact the task is related to Employee responsible for completing the task Type of task (i.e. follow-up or general task) Notes related to the task Proposal Information Subject and due date Contact the proposal is related to Employee responsible for completing the proposal Type of proposal (i.e. new business or add-on to existing business) Revenue potential and probability of closing the deal Notes related to the proposal
10 Marketing Program Information Status of campaign Campaign type (i.e. , direct mail, tradeshow, conference, etc.) Start and end date of campaign Total distribution (i.e. number of s, etc.) Expected and actual response Budgeted and actual cost Expected and actual revenue Tasks related to the campaign Notes related to the campaign Events and Appointments Event/appointment status (i.e. cancelled, completed, planning, etc.) Event/appointment purpose (i.e. client relations, etc.) Event/appointment location Start and end date and time Invitees Notes related to the event/appointment Transaction Information Transaction ID Transaction date Account executive Customer information Product/Service sold Revenue from the transaction
11 Appendix B ToolBox CRM Reports Contact Reports The contact reports can be filtered by contact type, rating, status, owner, source and group and include: Contact summary Contact list Contact address list Contact classification Contact personal information Event Reports The Event reports can be filtered by event location, purpose, start date, end date and status and include: Event status Event summary Marketing Program Reports The Marketing Program reports can be filtered by status, start date, end date and type and include: Marketing program summary Marketing program status Marketing program tasks Proposal Reports The Proposal reports can be filtered by status, expected close date, type and probability % and include: Revenue potential Proposal status Proposal summary Task Reports The Task reports can be filtered by subject, task priority, status and due date and include: Task summary Task status Transaction Reports The Transaction reports can be filtered by customer name, product or service, account executive and due date and include: Transaction Summary Daily transaction by customer Sales by customer Sales by account executive
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