CRM and Lay''s Potato Chips: ''You Can''t Eat Just One''

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CSO Insights

As automation becomes more pervasive, and customers feel increasingly remote, preconfiguredsolutions are a means of bringing you back into their good graces.

As part of CSO Insights’ annual sales effectiveness research project, we recently surveyed more than 1,300 companies worldwide regarding the challenges their sales teams are facing, why those problems exist and most importantly, how they are leveraging people, process, technology and knowledge to address those issues. Having conducted this study for 13 years in a row, it is always interesting to see how trends have been changing over time. The 2007 survey yielded some especially interesting developments as related to customer relationship management (CRM) systems.

CRM is becoming a mainstay of sales. Figure 1 shows the percentage of the companies taking part in the 2007 study that report having implemented a core CRM system for sales. These include applications from such companies as Salesforce.com, Oracle, Microsoft, SAP, Sage Software, etc.

It should be noted that roughly one-third of the organizations that stated that they had not formally installed a CRM software system rely upon reps using computers installed with their own salesforce automation applications, such as Outlook, Goldmine, ACT!, etc.

The major capabilities provided by core CRM systems are contact management, opportunity management, marketing collateral management, task management, forecasting and more frequently, we are seeing some type of lead management included as well. Many companies go into these types of initiatives expecting that once they get their core system installed, their CRM journey is done. But our study findings show that in the majority of the cases, this is just the beginning of the journey.

What companies see as the result of their initial foray into using technology to support sales is that a core CRM system does address some of the key challenges that sales teams face, but clearly not all of them. As part of our study, we asked firms who had completed their CRM system rollout to identify the specific benefits they were achieving as a result of salespeople using these applications. Figure 2 summarizes their responses.

What we see here is a variety of ways that these core CRM applications are helping reps sell. But let’s take a more detailed look at these figures. Consider first the top three things companies see resulting from CRM system usage: an improvement in sales rep/sales manager communications, a streamlining of the forecasting process and a reduction of the administrative burden we are placing on sales. Successfully dealing with these challenges is always welcomed by sales reps, but are they really the core issues reps are facing? The answer is no!

One of the first questions we asked in the 2007 study was “What are the top three business objectives you have for sales for the coming year?” The No. 1 answer, cited by nearly two-thirds of the respondents, was, “increase revenues.” Figure 2, however, shows that only one in five firms is achieving that as a result of their core CRM system investments.

When we do project reviews, this type of finding is often a surprise to top sales executives and their management teams. They are often under the impression that a company implements a single system, and that’s that. They quickly find out, though, that this is rarely the case. So what do they then do? In more and more cases, they buy more technology to augment and enhance the systems they have already installed.

Again, as part of the 2007 survey, we asked the firms who had implemented a core CRM system if they had installed any additional CRM-related applications as well. Figure 3 highlights that many of these firms have implemented other tools.

The study found that there are four major areas of technology being implemented by firms over and above the capabilities provided via their core CRM application. These included:

• Sales Collaboration:
  Most common are tools such as WebEx, GoToMeeting, Live Meeting, Convoq, etc., that allow sales and marketing to more effectively communicate with customers via webinars, or that support collaboration between sales teams, or sales and other functional areas in the company via Web-based meetings or chat sessions.
• Lead Management:
  Systems like Eloqua, Chordiant, SPSS, Unica, Vtrenz, Manticore, etc., that help sales and marketing teams implement direct and Web-based marketing campaigns, and then track and assess the results of those programs.
• Sales Knowledge Management:
  Applications such as Pragmatech, Involve Technology, MobilePoint, Savo, Sant, etc., that help salespeople easily access the sales support tools they need (data sheets, presentations, sales best practices, etc.) to help them sell more effectively.
• Incentive Management:
  Programs like Centive Systems, Exactly, Callidus, etc., that help sales managers implement the sales compensations programs they have designed to hopefully direct the behavior of their sales teams to sell the right things, the right way, while also allowing reps to easily track how much they are getting paid on each deal.

We now begin to see that CRM is not “one-stop shopping.” Your core CRM system provides a solid technological foundation for helping to improve sales rep efficiency and effectiveness, but other add-ons are needed to create a complete suite of capabilities that reps need to address all the challenges they face. And as our study also surfaced, the need for additional functionality is not limited to the list in Figure 3.

Again, when we asked the survey participants to tell us what, if any, additional software they were planning to implement in 2007 over and above their applications already installed, we got quite a shopping list, seen here in Figure 4.

Here we find that while three out of 10 firms reported that they have no plans for additional enhancements or add-ons to their core CRM application, seven out of 10 do plan to expand their CRM platform during the coming year. And in addition to the capabilities previously mentioned, we find some new functionality generating CRM project team interest. Let’s review some of these capabilities.

• CRM and Sales Process Integration:
  In 2006 we published an analysis of how companies who had implemented both CRM and Sales Process (formalizing the way reps sell through the use of a sales methodology either developed internally or licensed from firms such as Sales Performance International [SPI], The Complex Sale, TAS Group, etc.). The numbers showed that significant increases in revenue can result from these initiatives as reps improve their close rates. Because of this, we are seeing a leap of interest in integrating sales process and CRM, and companies like Landslide, ShadeTree Technologies, White Springs and MobilePoint are stepping in to fill that market need.
• Sales Management Analytics:
  Now that reps are leveraging CRM systems more often in their daily work flow, a significant amount of data is being entered into these systems. Companies are realizing that there is gold to be mined in those databases. This is sparking a growing interest in sales management analytic capabilities. This is a core CRM area in which vendors are making improvements, but we are also seeing robust applications emerging from companies like SPSS, SAS, ShadeTree Technologies, etc., to meet this market need.
• Data Cleansing: A major problem being encountered by many CRM project teams is data management. How do you rationalize the data used to initially populate CRM systems, and then how do you continually refresh it to ensure currency and accuracy so that reps have confidence in the information they are using? This is a task being taken on by firms such as OneSource, Factiva, Hoover’s, etc., as they provide CRM data management services. In addition, we are seeing companies like TrueAdvantage, Before the Call, Generate, Spoke, etc., also stepping in to help populate CRM systems with useful information that can be gathered across the Web on customers, competitors, changes in the marketplace, etc. One now sees why we often tell clients going down the CRM path that they may well find the experience similar to eating Lay’s potato chips. Once you eat one, you find you want another, and another and another.

We are seeing the vendor community respond to this hunger for more functionality. One needs to only look at the list of developer alliance partners that companies like Salesforce.com, Oracle and SAP are creating to understand that literally hundreds of new options for enhancing CRM platforms are or will soon be available.

But that wealth of options raises a concern. As the chief marketing officer of a technology firm recently shared with us: “If I bought every CRM application that promised me an ROI, we would be out of business in six months!” This CMO’s caution is worth noting. Not every type of application coming to market will be useful to every sales and marketing team. And even if they were, the amount of “new” that we can drop on our teams at any one time is limited, so we must be judicious in the choices we make in terms of adding new capabilities into our CRM platforms.

That being said, we need to realize that for the promise of CRM to fully be realized, companies are going to have to continue to make new investments in CRM technology for the foreseeable future. To be competitive, we are going to have to provide our front-office teams with the all the tools they need to be more efficient and more effective. Fortunately the CRM vendor community understands these needs and is responding.