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CRM Basics

Introduction

As happens in business, terminology develops and becomes mixed into the environment faster than many people can assimilate. What is attempted in this article is to bring understanding and clarity to this one subject, CRM and allow you the reader to apply this understanding to your business.

What is CRM, really?

“Everyone Knows” (don’t you love that phrase?) that CRM is the acronym for “Customer Relations Management”, meaning a software application that guides and assists managing relations with customers and other functions of marketing and sales.

You probably know or have heard already that is a must-have for any sales activity, which is true – it is so true that you ARE doing CRM even if you don’t have an application. Historically, CRM has been around as long as there has been business to transact. Before computers, the tools used were the Rolodex, associated index card files sorted by upcoming dates used as “ticklers” (reminders),

and of course files, files, files – manilla and paper files, preceded by parchment and ink, preceded by marks made in soft clay, and so on, all the way back.

CRM as a generic term simply encompasses all the good and effective actions you are doing to find new prospects, convert these to new customers and continue making sales into the future with those same customers. All the modern terminology used in marketing and sales really points back to those same traditional functions. In this article we’ll use CRM as a noun even though grammar perfection should require us to say “CRM application”.  Too many syllables.

CRM as a generic term simply encompasses all the good and effective actions you are doing to find new prospects, convert these to new customers and continue making sales into the future with those same customers. All the modern terminology used in marketing and sales really points back to those same traditional functions. In this article we’ll use CRM as a noun even though grammar perfection should require us to say “CRM application”.  Too many syllables.

Unless you are one of those rare individuals who can say “I really don’t need any more customers this quarter. I have quite enough, thank you”, you would benefit enormously to acquire, to set up and to use a CRM to automate and speed up the dozens of routine actions that must be done to keep a business going. The benefits can be measured in terms of speeding up the sales cycle and never missing opportunities because key data was not filed properly.

 

Basic Terminology

The following terms are more or less common to all mainstream CRMs. Most annoyingly, when you start searching for information on CRMs you will find the ads promoting them assume that one already knows all of these terms and understand how they are being used. There really is only loose agreement in what these terms mean and so they can show up with variations of meaning depending on the source.

Even if there are slight variances in the terms, the concepts still exist especially as they relate to common business transactions. Also note that you may operate your business without observing any of these terms. But again, the concepts still exist and the events must be occurring if you are conducting business.

  • TARGET A person or company that has not established any contact nor has shown interest in your company. An example of a list of targets is an email or other list you are going to promote to.
  • LEAD A person or company that could possibly become a customer. The difference between a TARGET and a LEAD usually comes about by the LEAD having expressed an interest of any level to your company or products.
  • OPPORTUNITY When a LEAD has moved up to a qualified prospect, an OPPORTUNITY is created in the CRM to record this expressed interest. Generally, the sales personnel will indicate what the product is, the expected value of the sale, the expected close date and something to indicate the likelihood of a sale, usually expressed as a percentage between 0 to 100.
  • ACCOUNT, CONTACT When the LEAD has graduated to a customer, the LEAD is now converted to an ACCOUNT, which is the customer company, and a CONTACT which is the individual (or several individuals) that you interact with at the company. Even though a LEAD and TARGET contains information about a company and the key individual, generally it’s unnecessary work to file them distinctly until there is a business relationship.
  • CONVERSION This is the word used to describe the change or graduation of one type of record to another. A TARGET graduates to a LEAD, and a LEAD will graduate to an ACCOUNT and one or more CONTACTs. The most significant conversion is, of course, when the LEAD becomes a customer.

 

In addition to the terminology, the concepts can be applied differently depending on the size and duration of a company’s sales cycle.  For instance, a construction or architectural company has a longer process to convert leads to customers, and so the LEAD may be converted to an ACCOUNT/CONTACT combination long before the sale is concluded. For a company with a simpler, shorter sales cycle, like plumbing supplies, the conversation would not occur until a sale was concluded.

 

 

Which one is Best? Too Many Choices

Depending on how wide a net you cast, there are over a hundred possible candidates. Narrowing the field by only considering well-known established products with a large following, there are still nearly twenty to choose from.

Simple analysis

  • If you’re not using any CRM at all, any one of them will be an improvement.
  • Identify what are the actions you are doing with your current process.
  • Note any actions you are not doing and know you should.
  • Number of users, what are their roles and what permissions should they have.
  • Exit strategy: how to say goodbye. What path is available if you later decide to migrate to something else?

Factors to Consider

Following are a collection of most, if not all, considerations that should be included in your analysis.

Installation and Deployment

There are the possible installation models available.

  • Application installed locally on office network
  • Web based application, proprietary hosting by vendor (server under vendor’s, not your control)
  • Web based application, hosted on cloud-based service

Tangible Costs

These are costs you can expect to bring a new system online.

  • Cost to install
  • Hosted server cost, including IT (e. g. backup/restore)
  • Other IT (maintenance) service cost

Intangible Costs to you

These are costs to your customer of non-productive staff hours

  • Installation
  • Initial Setup
  • Initial Staff Training
  • New Staff Training
  • In-house maintenance or other responsibilities, not by vendor

Licensing and Support

  • Licensing proprietary software
    • Initial Licensing Fee
    • Recurring Licensing fees
    • Recurring Support fees
    • Recurring Licensing fees per seat
  • Open Source Licensing
    • No licensing fee
    • Support as required

Mark Thomas is a CRM and Data Solutions Master. If you have any topic you would like to  see addressed, feel free to make a suggestion. He can be reached here.

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