As a result, the CRM market, which is mature at the high end, has opportunity for growth in the SMB arena, where buyers have waited for the technology to mature and prices to come down before taking the plunge. CRM vendors are responding by creating products that are more attuned to the different pain points that CIOs bring to the table.
"Vendors have been able to package products better to make it affordable and easier to install, and those two things have opened up the [SMB] market," said Denis Pombriant, managing principal at Beagle Research Group LLC in Stoughton, Mass. "The technology is mature -- it's more about secondary characteristics, such as total cost of ownership and ease of deployment."
CRM can certainly make a difference for a smaller company, notes Scott Brogi, vice president of finance and business development at Pictage Inc., a digital photo lab based in Torrance, Calif. Brogi started using Salesnet, an on-demand CRM package from Boston, Mass.-based Salesnet Inc., about three years ago, primarily for sales force automation (SFA) functions. "When we first started using it in March of 2003, we had about 1,000 studios as customers. Since then, we have been able to use Salesnet's tools to grow our client base from 1,000 to 6,000 without having to grow the sales team dramatically," he said. "It's amazing how much less time it takes to create reports and stuff when all the data is in one place."
How to research CRM tools
There are plenty of issues to consider when evaluating CRM tools. Here are a few:
Doing the up-front evaluation. While CRM tools are similar in many ways, there are enough differences between enterprise and small-company packages to necessitate a thorough evaluation. Enterprise-class applications, for example, often have more sophisticated sales forecasting tools and more robust customization and integration tools to help integrate the package into an existing complex infrastructure. Small business packages, on the other hand, tend to emphasize ease of installation with pre-build business processes and software that's built around simplicity and usability rather than customization.
"Things such as sales forecasting and management tools might come pre-integrated into accounting," said Sheryl Kingstone, CRM program manager at The Yankee Group, a research company in Boston. "We're looking for out-of-the-box business processes that are more generic. It plays to the lack of resources in an SMB."
But even these packages contain a wealth of detail and questions, so McCabe recommends getting help. "If an SMB can at all afford to use an outside consultant to steer them in the right direction, it will save a lot of aggravation," Kingstone said.
Consider on-demand software. One attractive possibility is the hosted provider option, in which CRM is provided per seat over the Web, ASP style. This greatly eases the burden of installation and ongoing maintenance, which can be crushing for a small IT staff. "More often than not, SMBs are good candidates for on-demand CRM," McCabe said. "They don't have to dedicate significant resources to the care and feeding of CRM, and they are likely to get a high level of service and reliability from their hosted provider."
That certainly was the impetus for Brogi's decision to go with Salesnet. "The low cost to get it going and the impact it had on ROI was huge," he said. "There was no big setup, and the ability to pay as you go based on seats was really attractive from an up-front cost perspective."
Flexibility counts. SMBs also need to choose a CRM package that gives them the flexibility to grow easily. Brogi, for example, loves the idea that he can just add seats as needed. "Most SMBs need something that they can upgrade or even change within a three- to five-year time frame as they grow or their needs change," McCabe said. Sage Software Inc. in Irvine, Calif., for example, offers both an on-demand version and a more traditional package of its CRM solution, giving companies the ability to bring CRM in-house if they deem it a strategic necessity.
Pay attention to the data. While choosing the right software is undeniably important, so is making sure that the data with which it is populated is worthwhile. "The technology is just one aspect. You need to also make sure you have data management processes to make sure that the information going into the system is clean, and that you have instituted standards," Kingstone said. "The data needs to be clean and up to date, or it won't add business value."
Plan for the future. While many SMBs initially focus on SFA, that's just the first step, Pombriant said. "CRM in general has been built to help organizations improve efficiency and reduce the cost per lead in the sales cycle," he said. Today, however, companies need to do more than follow up on new opportunities; they need to find ways to nurture and grow existing customer relationships. "Traditional CRM is not well suited to that, but there are additional tools and modules coming up that help in that critical area," Pombriant said.
Carol Hildebrand is a contributing writer based in Wellesley, Mass. Let us know what you think about this tip; email firstname.lastname@example.org.
This was first published in February 2006