Strategies for customer relationship management have been practiced ever since
a business first opened shop and worked toward a profit. Successful business
is based on working hard to service customers, treating them well and wooing
them into coming back to buy. Corporate history is replete with anecdotes about
how large corporations grew out of successful old-fashioned customer practices:
the department store that was founded by a friendly neighborhood grocer who
knew every member of his customers families and their likes and dislikes; or
the bookstore chain founded by a bookshop owner who kept a tab on his customers
favorite authors and informed them that a new book had arrived. Customer relationship
building is, in fact, a critical driver of profitability, competitive advantage,
and market share growth across all sizes of businesses, small and large alike.
While the management of customer relationship building activities has evolved
along with the infusion of new sales and marketing ideas, techniques and technologies,
the objective has remained the same: providing a memorable experience to the
customer. As small businesses grow, manual methods of delivering such experiences
don’t scale up well; they become impractical in terms of their cost and manageability.
The foundations for building scale in business are sensible, well-honed, and
clearly defined business practices that are widely adopted by a company’s employees,
efficiently executed using appropriate tools, and actively monitored by management.
This is where the role of CRM for the small- and mid-size business (SMB) comes
Small- and Mid-Size CRM
At this point, CRM is past its early adoption stage in the large enterprise.
The early adopters are at varying stages of business transformation in terms
of their attitudes, business processes, and IT infrastructure. CRM projects
undertaken so far have faced many problems that have been widely documented
as well. Some of these include unmanageable project scope and complexity, lack
of ROI due to piecemeal approaches to problem solving, sticker shock, excessive
costs of implementation, and high project failure rates. These problems have
kept CRM out of reach for growing companies and the small- and mid-size businesses
with employee sizes in the 50-to-1,000 range. For a while now, companies in
this segment have been waiting and watching for enterprise-like business functionality
to be made available specifically for their needs.
Enterprise CRM vendors have sought to meet some of the SMB demand with stripped
down versions of higher-end products, in the process sacrificing product functionality
and burdening customers with unnecessary future costs for upgrades and full
functionality. Other vendors claiming to target the CRM needs of the SMB have
struggled with the appropriate solution delivery model, and found it more lucrative
to migrate upward toward servicing the enterprise segment. What has been missing
is CRM vendor focus on designing and delivering a solution that meets the unique
needs of SMBs.
The good thing for emerging adopters of CRM, growing companies, and SMBs is
that more is known about what works and what does not. Early misconceptions
about what CRM is, what it can do, and whom it can benefit have cleared up,
and clear indications have emerged for what can make CRM successful for the
SMB. Emerging CRM adopters have the opportunity to pursue their CRM strategies
with the benefit of experience, hindsight, and better-designed products. A key
lesson for software vendors has been that CRM for the SMB needs a very different
approach. Ideal solution attributes for CRM in the SMB are:
- Simplicity — Easy installation, maintenance and upgrade, and simple
- Scalability — Start small, scale up users and functionality as the
- Completeness — Comprehensive CRM functionality
- Affordability — Low total cost of ownership (TCO)
Of course, mid-size CRM must also meet customer demands for increased efficiency,
streamlined processes, and enhanced productivity within their organizations.
It must provide a companywide shared database, a single view of the customer
and business intelligence to capture data at every step, analyze it and turn
it into useful information. It must allow intelligent automation of various
functions. Above all, mid-size CRM must allow for foolproof project execution
and deliver an acceptable ROI.
Simple, Web-Based CRM
Simplicity and a Web-based architecture go together. The impetus for Web-based
solution architectures came from the inexpensive, anytime, anywhere availability
of the Internet. Today, they are the preferred software architecture for CRM
that is used to support e-business strategies. Web-based solutions lend themselves
to the following benefits:
- No application needs to be implemented and maintained on user machines;
installation and customization on a central CRM server results in substantial
savings of IT staff time and expense.
- Upgraded functionality can be conveniently rolled out to users at zero cost,
as simple as emailing a URL to them.
- Integration with other applications is easier and completely managed at
the server end.
- Access to the application can be extended to anyone with Internet access,
such as employees on the road, and to external stakeholders like partners
or suppliers — a perfect way to support partner relationship management (PRM).
- Simpler user interfaces and ease-of-use; low training costs.
- Standards-based infrastructure.
Dot-com pioneers were the breeding ground for the early success of Web-based
business technologies. They took risks, albeit a lot of the failure too. Through
all of that, one clear fact emerged: that a mix of “brick-and-click” customer
channels in conventional businesses demonstrates the power of e-business and
Web-based CRM strategy in a much better way.
After the dot-com fallout, businesses of all types are now looking at ways
to integrate the Web into their businesses. Larger companies that took the cue
first with their Web investments are currently working on making sense of their
incongruous mix of legacy technologies and newly acquired Web-based systems.
Moving toward fully Web-based technologies is often a big leap for them, and
until they (and their vendors) can get there, many have to carry out expensive
and tedious integrations between applications. Smaller organizations, on the
other hand, are less burdened with legacy IT, can more readily reap the benefits
of Web-based CRM and make it a core component of their e-business infrastructure.
Figure 1 —
Complete CRM is cross-functional.
Scalability is always talked about, but often narrowly understood. It has two
major dimensions. The more commonly understood “user scalability” refers to
the number of users that can be supported simultaneously. Less referred to is
“functional scalability,” the ability of a solution to accommodate increasing
scope and complexity of CRM needs as an organization grows and matures over
time. User scalability is more easily solved by using suitable Web architecture
and standards-based technology on the server side. Functional scalability however
is an attribute where a lot of SMB solutions fall short. It is the ability of
a solution to evolve and continue to remain relevant for the company over a
long period of time, making it especially important for the SMB segment. Functional
scalability has the following aspects.
SMBs are a very heterogeneous segment, and a solution for SMBs may seldom meet
all of a company’s needs right out-of-the-box. Solutions need to have the flexibility
to accommodate many different company scenarios. They also need to be flexible
enough so that on the one hand they deliver the benefit of automation, and on
the other hand allow automated procedures to be modified readily in response
to changing business needs. Where and how a solution provides flexibility, and
how this is meshed into business processes, can make a big difference in the
kind of unique advantages CRM can bring for a company during customer interactions.
Components like CRM process modelers, workflow automation, and extensible data
structures provide the flexibility to accommodate the changing dynamics of a
A fundamental CRM requirement is the ability to consolidate all interaction
information into a single view of contact and account profiles. A multichannel
input stream should be able to take information from any of the recognized customer
interfaces — telephone, fax, letter, email, Web form, kiosk, TV, mobile phone,
PDA, and others — and use it to populate the customer view. Functional scalability
of this kind forms the basis for intelligent handling of subsequent customer
interactions, irrespective of channel, and enables the creation of personalized
A functionally scalable CRM product should also support an analytical role.
Data available in a CRM database can become a treasure trove that can be mined
and analyzed to yield valuable marketing information. Analytical functionality
in a CRM solution makes it possible to carry out trend analyses, predictive
analyses to support proactive marketing, and a high degree of customization
of products and services. Analytical CRM tools also allow measurements of the
impact of specific marketing initiatives on parameters like revenue and customer
Complete, Cross-Functional CRM
The typical activities impacted by a complete CRM implementation include front-office
and back-office functions in sales, marketing, and customer support. This cross-functional
CRM, which allows a total view of the customer, requires tight integration of
data and real-time database updates. The key lies in integrating cross-functional
activities in a seamless manner. A couple of examples of what can be achieved
through such completeness:
- A customer’s feedback about a missing feature could be documented in the
customer support database. When the company comes out with a new product with
that particular feature, this customer becomes a target for marketing because
the marketing function has access to data from the support database. If a
lead came in as a response to such marketing, the sales function knows about
it since they have access to the marketing database.
- Telephony features lets a salesperson trying to make a call know in advance
if that particular customer has reported a service issue in the past. He can
call up the history of the customer’s interactions with the organization.
Customers do not have to repeatedly answer standard questions for sales and
support people to access their customer record.
The pricing of mid-size CRM suites needs to go through the same evolution that
the hardware industry went through in the 1980s. The PC democratized powerful
computing and brought it within reach of small- and mid-size businesses. Proprietary
mainframe architectures gave way to standards-based PC architectures, which
made use of third-party components developed by a hundreds of technology development
firms. That’s the development roadmap for business applications as well. No
longer will companies be willing to pay $4,000 to $10,000 per user for business
applications. Comprehensive, enterprise-like CRM functionality will be driven
to $1,000 to $1,500 price points. These solutions have lower TCO because of
their standards-based infrastructure, Web-based architecture, reduced integration
requirements, and ease of use and training.
A Continuum of Evolving CRM Needs
The usual approach to building and evaluating business software functionality
assumes that functional needs are fewer for small- and mid-size companies and
more for larger enterprises. Distinct types of products are built to serve different
levels of functional need, and it is thought that determining what the immediate
needs are will lead a company to the solution it should have. However, savvy
businesses with an eye on the longer term look for CRM solutions that they can
grow into. From their experience with existing applications, they realize how
the rigid segmentation of needs has resulted in limitations in the capability
of products available in the market. These users are aware that functional needs
will be simple (and deliberately so) only in the very early stages of CRM use.
As early CRM benefits start to flow from initial mini-projects, benefits become
more apparent across the organization and the company grows in terms of CRM
maturity. Its need for CRM functionality evolves, and that’s how its CRM solution
should grow as well.
Where a company is in terms of its maturity and where it wants to be are essential
to how it should evaluate a CRM solution. CRM providers for SMBs should help
with assessing this readiness and also provide help in co-architecting a solution
for the transformation that CRM strategies entail. Most of the challenges that
arise in CRM project execution can be overcome with a clear plan at this stage.
Businesses may be at different points of readiness for CRM — organizationally,
technologically, and behaviorally — and various aspects come into play. These
include the customer orientation in roles across the company, definition and
flexibility of job roles, mutual trust for sharing and transparency of information
across processes, collaboration between departments, empowerment of decision-making,
accountability, process ownership, and interoperability of information systems.
Based on the stage of CRM maturity, business functionality requirements may
then be classified into three CRM need groups.
Early-Stage CRM Needs: Integration
There is a demand for integration and sharing of customer-related data. Customer
interactions need to be easily captured through multiple communications channels.
Data needs to be captured and stored as static items and transactions in the
Growth-Stage CRM Needs: Business Process Management
As the organization grows, there is need for structure and processes to manage
effectively. There is a demand for tools that allow managers to define, create,
automate, and measure business processes, and do macro level analysis of sales,
marketing, or service activities.
Mature-Stage CRM Needs: Optimization and Empowerment
There is a demand for tools to perform defined business tasks, such as quote
generators, proposal writers, and knowledge bases. Also needed are powerful
customer analytics that focus on employee empowerment, letting employees make
bigger and better decisions. Many solutions are available in the market across
each stage of CRM maturity, but where they will differ significantly are along
the basic SMB attributes of simplicity, scalability, completeness, and affordability.
Ease of Installation, Maintenance, and Upgrade
- Ease of use — user friendliness of solution, similarity of interface to
other IT applications that are used by customers.
- Ease of customization — how easy is it to customize the solution to meet
the exact requirements of a customer?
From a solution satisfying early-stage needs to scale to growth-stage needs
and then to a mature-stage solution by overlaying new functionality on existing
infrastructure. It would include:
- Architectural scalability ease of integration with a new server/solution
(for example back-end solutions).
- Ability to scale with the increase in the number of users using the solution.
Does a solution have the functionality to satisfy all the customer needs
at a particular stage of CRM? For example, a complete early-stage solution should:
- Enable capture of customer data from multiple touch points
- Enable integration and sharing of customer data across applications, across
functions, and across the company
The total cost of buying the solution, implementing it, and training the users
to use the solution. It would include:
- Purchase cost of solution — price/seat
- Cost of implementing the solution
- Cost of training the users
- Post-implementation costs, such as cost of maintenance and support
To be able to reap a comprehensive set of CRM benefits, a recommended solution
framework is shown in figure 3. It depicts a multitier Web-based architecture
of a target CRM solution and shows the conceptual layering within the system.
At a high level, the CRM system would have four major subsystems:
- Business Console for managing relationships — Simple to use, intuitive
and comprehensive enough to manage all customer interactions
- Analytics and Business Intelligence through business relationships and logic
— Focused on SMB dynamics, providing a powerful mechanism to get feedback/early
- Business Process Framework — Aimed at automating business flows and media
- Application Integration Framework through the use of open interfaces — Knowing
well that a CRM system cannot exist in isolation, and has to be integrated
with other applications, standard or home-grown
Figure 3 –
CRM Solution Technology Framework
Small- and mid-size businesses are very heterogeneous, and CRM solutions for
this segment must be designed and delivered with a different approach that recognizes
this characteristic. The key attributes that need to be present in a “right-sized”
SMB solution are simplicity, scalability, completeness, and affordability. The
solution architecture and functionality must allow a cogent integration of e-business
with conventional business practices, and be suitable for a wide range of SMB
requirements. Flexible, Web-based software architectures, integrated databases
with functionality that spans across business functions, and support for multiple
interaction channels are prerequisites for the right solution. Successful deployments
will also take cognizance of organizational readiness for CRM at the stage when
CRM strategy is being formulated and solutions are being evaluated. Finally,
vendors committed to developing for the SMB segment must demonstrate the capability
to support emerging CRM technology trends in the product roadmap and keep the
solution competitive for end-user organizations.