Is CRM On Demand Really In Demand?

Take a quick look at any one of the top CRM industry magazines and you’ll find nearly half the stories are about on demand CRM. With hype like this, I assumed every new implementation was an on demand, or hosted solution, but at the Gartner CRM conference I learned I was completely wrong.

According to Gartner, on demand CRM is over hyped. In 2006, only 8% of CRM users were using a a hosted CRM solution, while the remaining 92% of people hammered away on traditional on premise solutions. Gartner Analyst, Rob DeSisto led  a session entitled, CRM On Demand: Achieving Business Value Behind the Hype, in which he revealed this telling fact:

“Through 2009, less than 10% of active CRM users will use an on demand CRM Service.”

While much of the press continues to focus on hosted CRM, the reality is that 90% of people still use on premise solutions. So why the hype?

One part is that the people hyping on demand software are extremely good at doing so, but that’s not the only part. The hosted CRM message makes a good story. Hosted CRM allows you to reduce IT involvement, limit your initial costs, and because of those two factors, gain easier budget approval. For many people that’s good enough.

That’s a good reason for the hype, but why none of the action? Why are only 10% of people going to be using hosted CRM by 2009?

The bottom line is that on premise client server technology is still superior to newer hosted CRM. People remain concerned about security issues with hosted CRM. They need additional customizations and integration which adds complexity that only an on premise solution can handle. For most businesses on premise CRM is established and the right way to go.

So if you feel alone using on premise CRM in a hosted CRM world, you’re not; 90% of people agree with you.

The Ultimate Question: Driving Good Profits and True Growth

Fred Reichheld was a keynote speaker at the Gartner CRM Conference that I covered last September, and he positively blew me away. His speech was on the importance of customer loyalty and how powerful that asset is to a company.

Reichheld went over how loyalty leads to repurchase, purchase of additional lines, referrals and constructive feedback. He explained how several companies used loyalty as a strategy to become leaders in their industry. Chick-fil-a, Enterprise, eBay, and Harley Davidson were featured which led to my favorite quote about how seriously a company should take customer loyalty:

"Harley Davidson doesn't measure customer retention, they measure the percentage of people with a Harley logo tatooed to parts of their body."

Awesome. His book went into more depth about the question of loyalty and I regretted waiting three months to read it. Everyone on my list who was involved in business got it as a Christmas gift this year. Here's my quick review.

The Ultimate Question, makes the claim that there are good profits and bad profits, and organizations, for too long, have been chasing the bad profits. Bad profits result from cost cutting and attempts to squeeze the last dollar out of customers. Good profits come from growth in the form of a new business recommendation or additional purchases from current clients. The problem is there’s no real way to differentiate; companies feel pressure to make profit, whether good or bad. Reichheld feels there is a better way.

Reichheld says that the way to good profits is by increasing overall customer loyalty, but until now there hasn’t been a good way to measure this. Traditional customer satisfation and retention surveys have shown little to no coorelation to actual customer behaviors. So while companies pay lip service to these surveys they’ll always act on what they can measure – accounting numbers. These numbers are accepted because they follow the Generally Accepted Accounting Pricinples (GAAP). Reichheld proposes a standardized system for measuring loyalty with the Net Promoter Score (NPS) and the Ultimate Question.

While experimenting with above customer loyalty surveys, Reichheld found that no answer really coorelated with customer action, except one, the Ultimate Question.

“How likely is it that you would recommend this company to a friend or colleague?”

Use a scale of 0-10 to grade against and you’ll have a clear picture of your business. Anyone answering 0-6 is labeled a detractor, someone who is probably bad mouthing your business and creating the greatest amount of headaches. Anyone answering, 7-8, is nuetral, neither hurting nor promoting your business. People responding 9-10 are your promoters, and best source of recurring and new business. Take the percentage of promoters minus the percentage of detractors and you have your Net Promoter Score (NPS). A simple formula:

P – D = NPS

Reichheld goes on to prove that companies with a high NPS are able to leapfrog the competition even when the odds are stacked against them. He discusses how to implement the system and combat some of the problems that arise, using real world examples of companies like Enterprise and Intuit.

The Ultimate Question is an extremely powerful concept and a book I would recommend to any decision maker looking to grow their organization. If his concept catches on, businesses will have a tool to point to as an alternative to strict financial numbers. Reichheld offers a way to grow our businesses through good profits and stop attacking customers when chasing bad profits.

Whether you purchase this book through Amazon or borrow a copy from your local library, I recommend you find a way to get your hands on this book.

BtoB Marketing with CRM

While catching up on some reading, I came across a Marketing News article entitled "It takes a comittee to buy into b-to-b". Compared to a BtoC sale, the BtoB sales process is often long and complex, involves many variables, and just as many decision makers. The article, available here, gives three suggestions of how to handle these comittee driven decisions. I wanted to discuss how CRM can make these suggestions possible in your business.

"In 2005, 3.5 more people on average were involved in making a purchasing decision than in 2001."

This is the heart of the matter. Anyone who has sold in a BtoB enviornment knows the large amount of people involved in any purchasing decision. According to Sirius Decisions Inc., that number is continuing to swell.

The question becomes, "How do you manage a relationship with all these people?" Each one has their own agenda and needs that must be met. Basic contact management within a CRM system is a good start. You start forgetting names, including the wrong people on emails, or missing appointments and you're in real trouble. That's step one. Where CRM really shines is in enabling the articles first suggestion -- Focusing on function and influence.

Tony Jaros, VP of research at Sirius suggests breaking contacts into different categories:

"The category designations may include (using definitions developed by Sirius) the Champion, a user with purchasing authority; the Influencer, a person without the buying authority but with signifigant input, such as a consultant or middle manager or user; and the CXO, a member of the executive staff."

When you start segmenting roles, you'll want all that information within a CRM system. It's not enough to try and remember or keep on a pad of paper. Your conversation with the head decision maker may be very different than the one with your Champion.

That's not to say that you can just ignore the lower level needs. They may not have the power to purchase, but they do have the power to disqualify you. You'll need to know the requirements of each of these different people, and then work to address them.

Again, with so many people and so many issues involved, paper and memory will fail. Enter this information into a CRM system and you'll have a full picture of what the company needs based on different prioroties.

Once you get involved with a company, a marketers best source of information is from sales, but if you believe Marketing Sherpa, only 40% of sales and marketing departments work together consistently on leads. Communication between the two departments is critical.

"In the business-to-business economy, marketers pave the way for sales to get their foot in the door, but the sales team gets clued in on the contacts and needs through direct contact. The two departments have to communicate in order to raise the bar on marketing effectiveness."

Collaboration is the key word here, and this is one of the main purposes of CRM. In the article Brian Carroll, president of InTouch Inc. talks about a scenario in which sales knows of six contacts involved in a decision, but marketing is only aware of two. Without an effective system your marketing team is going to be in the dark and can't offer the supporting materials and evidence that sales needs to close the deal.

The BtoB sales process is much different than the BtoC. Michael T. Brandt of Marketing Resources Ltd. puts it best in my favorite quote from the article:

"The decision to spend $4 million on a new software service is a lot more complicated than buying a box of cereal."

The stakes are higher and the penalty for making the wrong decision is much greater. That's why we are seeing swelling purchasing teams and longer sales cycles. Whether you are selling software, corporate services, or manufacturing tools, the job is getting harder. That's the bad news. The good news is that it's happening across the board to everyone.

By putting in place standard processes, communicating with sales, and recording important details of everyone involved, you'll have a leg up on the competition.

Let's Not Get Crazy -- Basic CRM Most Popular

I'm going to tell you a secret. For all the coverage on the advanced tools that CRM can provide, most small and medium sized businesses are using their system for the most basic of tasks. And it's ok to do so.

The turth is that much of the value of CRM is derived from the basic tools listed on the chart below. Once you master these six areas, you can choose to get more value from marketing automation, service ticketing, returns and autorizations, and more. The list goes on and on for extra value that CRM can add to your business.

Certainly we'd like to see more people getting more value from advanced functionality, but most businesses enjoy these basic benefits and don't need more. Anyone hesitating to use CRM because they can't handle the complication, need only focus on these six areas to get real value almost immediately.

1.) Rolodex (Contact Management)

The most basic ability and usual starting point for small businesses. People get sick of digging through business cards, searching through drawers, or locating the right Post-It note to find a phone number or address.

Basic CRM provides a way to type in the name of a person or company and have all their information instantly appear on screen.

2.) Calendar

The next logical step is to begin setting up appointments with these contacts at a future date. CRM allows you to set up a meeting, follow up phone call, or reminder to send an email. That way you'll have less chance of missing a prospect meeting or following up with a prospect that asked you to call back.

At this point most, if not all, current versions of any CRM system have built in calendar integration with Outlook, Lotus Notes and other popular email and calendaring systems. That way you avoid double entry and you always are on top of your schedule.

3.) Notes and History

So you put, in your calendar, a follow up phone call with a prospect a month later, but when the phone call occurs can you remember what you talked about last time? If you don't, you'll have to rehash all that you discussed the last time. You're wasting time and frustrating the prospect.

CRM allows you to record all those notes from the last conversation so that you'll know exactly what you discussed last month. With the email integration mentioned above, you also have any email interaction that occured in the meantime.

4.) Mail Merge

Now we're getting into more advanced tools. Using a mail merge allows you to customize an email or document based on the information within the system.

Let's say you want to send an email to 100 prospects and want it personalized so it addresses them specifically. A mail merge allows you to do that. You can also build things like quotes and proposals from the information within the system. Basically whatever you put in, you can get out in a personalized form, saving time and adding real value.

5.) Forecasting

One of the more popular goals of CRM implementation is to gather an accurate forecast. You avoid having your sales staff give you inaccurate rough estimates of their upcoming sales. Instead you have everything recorded in the system. Realistically you're never going to get a 100% accurate forecasts, but our clients have all seen marked improvement.

The unintended benefit of tracking sales within the system is that it eliminates the need to compile all this data at the end of the year, quarter, or month, as most organizations do. We had one client, who had to compile a sales report every month to report on their activity, as well as closed and impending sales. Without CRM, the company shut down for the final three days of the month to compile the data. Now it takes five minutes to put together a report.

6.) Monitor Activities

This goes hand in hand with the calendering benefit that individuals enjoy. Employees find it easier to remember important engagements because they are entering meetings, phone calls, and to dos into the system. No longer are prospects and customer orders slipping through the cracks.

You also have the ability to track that data within the system. If you have a struggling sales person you'll have an easier time identifying the problem. Maybe she needs additional training because she is getting caught in certain phase of the process, or maybe he just needs to meet with more prospects. If your star sales person calls 40 prospects and meets with 10 and your laggard only calls 10 and meets with 2, it might just be a matter of encouraging more calls.

CRM may initially appear to be a complicated system and a tast too big to take on. Successful companies disagree. Most people shun the complicated advanced features and focus on improving their business with the simple tools above. It's not wrong to keep the system simple, and in most cases it's the best strategy.

Five New Rules to Email Marketing White Paper

There's no doubt that the rules of email are changing for all marketers. With the rise in popularity of email in the 90's, people quickly latched on to it as an effective way to promote their products and services. Now with people increasingly protective of their inbox and new channels of distribution gaining greater acceptance, some are declaring email dead.

Busting out of the Inbox, a whitepaper from Right Now Technologies, isn't declaring email dead, just the old way of sending it. The way to succeed is by using 1to1 email marketing.

"The new rules of 1to1 email marketing share a core attribute: they are customer-centric. This means they take an outside-in-perspective, from the vantage point of the customer rather than the company; and second, they recognize that the value a company creates must come from current and future customers."

To accomplish this, Busting out of the Inbox offers five rules:

1. Build Your Reputation, Not Your List
2. Don't Just Segment...Microsegment
3. Use Email to Enhance the Customer Experience
4. Get Creative to Drive Engagement
5. Consider the Cost of Non-Responders

Best of all, each of these rules comes with several suggestions for taking action, so you can improve your email marketing right away. I thought the whitepaper was very well written and while going through it jotted down a couple of notes to improve my own email techniques.

Busting out of the Inbox: Five New Rules of 1to1 Marketing can be downloaded here. There's a form you have to fill out, but if you want to go the extra mile you can Google the title and download the PDF without giving up any information.

Successfully Upgrading CRM -- Expert Allen D'Souza Advises

Last month we upgraded our internal SalesLogix system from 6.2 to 7.0, and I was suprised by how smoothly everything went. All I needed to do was discuss my marketing customizations for an hour. Then one Friday I went home using version 6.2 and came back on Monday to 7.0.

I, as an end user, hadn't been affected at all, but I knew that we had a team working behind the scenes to make sure everything went well. I sat down with Allen D'Souza, Senior Consultant with Technology Advisors, to talk about what made our upgrade so successful. Here are his recommendations:

Do a hardware evaluation to make sure the upgraded software runs well on the current servers and user machines

Many times the reason people upgrade is to take advantage of new features and functionality of the latest version. The problem some people have is that their existing servers or PCs don’t have the power to run these versions. You’ll have to assess the system requirements and evaluate your current hardware to determine whether or not your business can handle the upgrade. You may have to upgrade a server or two to be able to properly run the software.

“Businesses that upgrade from versions released four years ago may be surprised to find they also need to upgrade their hardware,” D’Souza says. “They may be able to get the new features, but the performance will be so slow they won’t be able to use it.”

Use the Upgrade Document to Plan the Process

SalesLogix provided a very good document to follow so there is no use in reinventing the wheel. What you do want to be aware of is your own environment and how that fits into the plan.

“The upgrade steps are a very good guideline, but they don’t tell you what to do with your particular environment,” D’Souza says. “Go through the plan and outline where you are going to run into customizations or shared server issues. Those business nuances are important so that your upgrade doesn’t negatively impact another part of your business.”

Perform a Test Upgrade First

In order to put in a new system you have to take down the old one. The key is to minimize the downtime during the transition. A test upgrade allows you to figure out solutions to problems before the actual upgrade. Then when you do the real upgrade you already know where you’ll have problems and how to quickly fix them.

"The test upgrade is a required step in any upgrade", D’Souza says. “You’re going to have bad data or customizations that need to be fixed in any upgrade. When you learn the bumps in the road during the test upgrade you can reduce the transition downtime from a couple days to a few hours.”

Experience Doing Prior Upgrades Makes a Big Difference

It’s a sad fact as well as a shameless plug for our CRM services. The honest truth is that practice makes perfect. If you want an upgrade done fast and without issues your best bet is to call in an expert.

“Fortunately you see the same issues coming up over and over again. So once you have a couple upgrades under you belt you learn to recognize issues right away. We don’t have to spend a large amount of time trouble shooting. We already know what’s going to be trouble and how to fix it.”

Do Not Mix New Changes with the Upgrade

I’m guilty of requesting this. I thought that as long as we were upgrading SalesLogix, I could tweak some customizations in there as well. This request was turned down. Now I know why.

D’Souza advises, “People want to go live with the upgrade and fix some other issues. They say, ‘Let’s roll it into one big project’ and that’s not a good idea. In an upgrade you want to minimize the variables.”

In the event something doesn’t work after the upgrade you want to go back and ask what has changed. When you start rolling in new customizations, the project team has to figure out if it was the upgrade or the new changes that caused the problem. Mixing them is only going to complicate these issues.

Always Have your Network Admin Available

Your CRM system probably touches multiple secure networks. You can give those passwords away, but then security is compromised. Those passwords were put in place for a reason. The better plan is to have your network admin available. That way the project won’t grind to a halt whenever a password is needed. Your admin will allow access and the upgrade can continue.

Be Aware of Change Management

People hate change, but change is exactly what you’re looking for with an upgraded system. Giving your users a heads up about new functionality and even holding specific training classes will smooth the transition.

“We try and encourage clients to hold upgrade classes,” D’Souza says, “That way the technology is upgraded and the users are ready.”

BlackBerry CRM Seminars Coming to Major North American Cities

The makers of the BlackBerry mobile device, Research In Motion, are teaming up with Sage Software to show you how to enhance CRM productivity using your mobile device. This seminar will be traveling to Toronto, New York, Chicago, and Scottsdale to discuss and demonstrate the latest developments in CRM mobile technology. Executives from both Sage Software and Research In Motion will be speaking, as well as successful users of the mobile CRM applications.

Three BlackBerry Pearls will be given away at each location and every attendee will receive an executive gift package.

For registration and more information, visit CRM To Go Roadshow.

Dates & Locations

	Date: Tuesday, January 30, 2007
	Renaissance Toronto Airport Hotel
	801 Dixon Rd. Toronto, ON M9W 1J5	416-675-4022 marriott.com/property/propertypage/YYZTA

	Date: Wednesday, January 31, 2007
	The Westin New York at Times Square
	270 West 43rd Street New York, NY 10036	212-201-2700 www.westinny.com

	Date: Thursday, February 1, 2007
	Hyatt Regency O'Hare
	9300 W. Bryn Mawr Avenue Rosemont (Chicago), IL 60018	847-696-1234 www.ohare.hyatt.com

	Date: Wednesday, February 7, 2007
	The Scottsdale Plaza Resort
	7200 N. Scottsdale Rd. Scottsdale, AZ 85253	480-948-5000 www.scottsdaleplazaresort.com

Featured Speakers

Dave Batt SVP & General Manager, Global CRM Sage Software

Paul Briggs BlackBerry Business Solutions-CRM Research In Motion, Inc.

Seminar Schedule

	8:30 a.m.	Continental Breakfast
	9:00 a.m.	Seminar General Session Begins
	10:30 a.m.	Break
	10:45 a.m.	Seminar Break-out Sessions Begin
	11:30 a.m.	Question & Answer Period, Seminar Wrap-Up
	12:00 p.m.	Event Concludes

*	You must attend this event to be eligible for the prize drawing. No purchase necessary. Void where prohibited. Sage Software, Inc. employees are ineligible. Can't attend? To learn more about Mobile CRM solutions from Sage Software, click here.