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CRM Systems increase sales – breaking the myth

March 1st, 2011 Sandeep Walia No comments

We spent time studying and analyzing over 100 businesses that had implemented CRM in the last 12 months and how their results had changed. Our first observation was that most CRM implementations did nothing for customer experience and did nothing for sales. Ouch! For someone who sells CRM systems – this was damning. We investigated further – less than 10% of the organizations actually had stellar results after a CRM implementation (“Winners”), a nearly 30% had minor improvements (“Minor Improvements”) and about 60% saw no change or had negative sales (“Losers”). We defined ‘stellar results’ as a simple metric of revenue increase of at least 5%. Those that had revenue increases but less than 5% fell in the Minor Improvement category and the rest fell in the Losers category as they had negative ROI with their CRM implementation. Ignify also had implemented Microsoft Dynamics CRM a little over 2 years back and we definitely had fallen in the 10% that had stellar results. Our revenue numbers had more than doubled in a 24 month period with zero increase in sales persons. Obviously CRM worked for some and could bring spectacular results. However, it didn’t work for most. So what differentiated the Winners from the Losers?

Revenue-Growth

Our research showed that businesses that had run-away success were able to do the following with CRM. Most of the Winners typically made 80% or more of the items on this list.

  • Attract more customers
  • Close deals faster
  • Improve Customer Retention
  • Improve Customer Service
  • Discover Insights about Customers
  • Enhance Customer Relationships

We found that the Winners did the following with their CRM implementations that made the difference between them and the Losers

  1. Deployed Organization wide: Made it pervasive – CRM was not just a sales side or customer service initiative. Typically all employees had access to CRM
  2. Familiarity: Selected a CRM system was intuitive and familiar to the users so that minimal training was required
  3. 360 degree view: All customer information was available to employees – an employee could look up a customer and see opportunities, incidents for the customer, order history, customer balances
  4. Rewrote Business Processes: Used CRM to redefine their sales, customer service and order management business processes and put in more formal controls in the CRM system to ensure higher consistency. Very often the businesses ‘templated’ their process and built into CRM the ability to send automated communication such as emails to customers, prospective leads to increase sales and improve customer retention with zero human effort. In addition the templates provides users a guide map on how to do their daily work.
  5. Adaptability: Had the ability to make incremental changes very easily – the implementation became a continuous process and new functionality was added as often as every week
  6. Started simple: Started with a pilot that had limited functionality – got user buy in and then increased functionality on the system. While this is a common approach, most businesses target a pilot with a limited set of users. These organizations deployed the pilot with limited functionality but to all users in the company.
  7. User Buy-in: Deploying CRM to the entire organization lead to quick feedback and lots of new ideas for improvements. User forums on the CRM system became the bed rock for innovation. Since the selected system was adaptable, these changes could be implemented fairly quickly. More importantly user buy-in was established early on and eliminated the biggest hurdle CRM implementations have.

Is it easy to get positive ROI on a CRM system. Yes – frankly even the businesses that had minor improvements got positive ROI since the 2 – 5% increase in revenue was usually more than enough to cover the cost of the CRM implementation. But it was by no means run-aways success. The run-away success lay with the winners that on average had over 15% increase in revenues in a period that most businesses struggled as evidenced by the Losers. However, the rules for success seem simple – and they are. That’s what made the results so amazing. By doing a few key things organizations were able to start an organizational transformation using a platform that baked-in best practices but with the additional benefit of user buy-in and a sense of excitement in the organization that gave it power to be successful. Many of the businesses that had minor improvements – selected lower cost systems or systems that were good enough for them as they were better than what they had in place – which often was nothing. However, the Winners selected systems that they felt could drive organizational transformation and fit in with their business. The systems were not just good enough but were powerful, adaptable and easy to use. The Winners then went on to make this the most important project in the company and with a limited pilot rolled out an early version in 8-10 weeks or less to the entire organization. Further improvements were made through user forums where the best ideas that bubbled up were implemented in 3- 5 week releases. The project became a continuous improvement cycle. On the other hand, the organizations that showed only minor improvements or no improvements went through complex requirements, and took months to get the project off the ground with a core user group. The projects in those set of organizations did not get user buy-in and CRM became another system that was pushed out to the users. It was also encouraging to me personally that over 2/3rd of the winners selected Microsoft Dynamics CRM – the product we implemented for Ignify and also the product that we sell and implement. Only 25% of the Losers selected Microsoft Dynamics CRM. Having said that – we don’t believe that the choice of system itself drove success but the implementation model used that ultimately brought success.

Back to the Myth – Does a CRM Implementation increase sales? No! But a CRM Implementation done the right way can absolutely increase sales dramatically.

Sandeep Walia is the CEO of Ignify. Ignify is a technology provider of ERP, CRM, and eCommerce software solutions to businesses and public sector organizations. Ignify has been included as the fastest growing business in North America for 4 years in a row by Deloitte, Inc Magazine and Entrepreneur Magazine and ranked as one of 100 most innovative companies in the world in the Red Herring Global 100 in 2011.

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