It’s just one of a million three-letter abbreviations out there, but as a small or medium-sized business you still might be apprehensive about CRM. After all, customer relationship management got a bad rap a few years ago after a number of failed rollouts. Today, however, companies large and small

are seeing the benefits of CRM — if done correctly.

CRM allows you to turn your data into a valuable commodity. Instead of just tracking customers’ names and numbers, you can freshen leads, target new clients and create marketing campaigns using the information.

There are many CRM products for small companies. In addition, the traditional enterprise vendors are recognizing the need to offer lower-priced versions of their CRM offerings too. With the release of Microsoft CRM 3.0, for example, Microsoft rolled out a Small Business Edition that offers a migration path from its Business Contact Manager. Siebel’s CRM Professional Edition targets the mid-market and allows you to deploy CRM in modules.

Like many SMBs, you might be tracking data in a spreadsheet or contact manager, and that’s not a bad way to start. It can help you figure out what data you need to track, and how often.

The crux

Contact management is about understanding who your customers are. CRM is bigger than that. From a technology perspective, it means integrating your customer contacts with back-end systems, says Peter Reeve, sales consulting manager with Siebel Systems Canada Ltd. in Toronto. From a business perspective, it means understanding customers’ purchases, why they buy and what their buying cycles are, past problems and how they were resolved, and if customers were satisfied with the resolution. In other words, CRM is about building customer loyalty and managing that loyalty so you create repeat customers.

When venturing into CRM, many SMBs start with a contact manager that has some basic account management capabilities. As your business grows, you may want to take advantage of the more advanced capabilities of a complete CRM suite, including sales force automation, marketing automation and customer service features, says Peter Callaghan, vice-president of sales and marketing with Maximizer Software Inc. in Vancouver. The challenge, however, is finding the solution that delivers the right functionality at a price you can afford.

Choosing the right CRM solution depends on how you plan to use it. “”It’s not the size of the company,”” says Callaghan. “”It’s what you want to do with the application.”” Consider your level of technical requirements, the size of your IT department and your budget constraints. For SMBs, usability is often more important than deep functionality.

Step by step

There are six key stages to a CRM implementation, says Reeve. First, understand your current situation. Where are you today and where do you want to go? Second, define your critical success factors. Third, determine what technology you’ll need. Consider how much functionality all your users require, and if people are going to work from home or if it’s a thin-client deployment, for example. Fourth, build the system and roll it out.

The fifth stage is the most critical, but people often forget it — and this is where many CRM implementations fail. Measure your original critical success factors — did you get there? If not, why? The final stage involves operating the system, and adding new functionality as needed.

However, each of these stages requires exit criteria that must be satisfied before moving onto the next stage. “”If you don’t, at some point in time you’ll revisit that and there will be some risk,”” says Reeve.

But don’t rush into a decision. Most organizations don’t know what they need and don’t spend an adequate amount of time figuring that out before they rush out and buy products, says Denis Pombriant, founder and managing principal of the Beagle Research Group in Boston.

Make sure the entire organization is aligned, and that upper management is actively involved when it comes time to do the implementation. “”I’ve never seen a CRM project that succeeded without some pretty strong support from upper management,”” he says. And expect to make mistakes — these can help you make improvements to your CRM solution over the long-term.

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