David Raab Article Archive

It has always been important to treat your customers well, advice but the standards today are higher than ever. Pampered by online merchants, hyper-competitive retailers and efficiency-obessed business services, customers expect personal attention, 24/7 Web sites and call centers, and up-to-the minute account information. You may know it’s a lot harder to coordinate several financial products than deliver flowers overnight to Boise, Idaho, but the customer does not see the difference—or care.

The cornerstone of your efforts to meet customer expectations is a Customer Relationship Management (CRM) system. These systems manage outbound marketing campaigns, distribute leads to salespeople, track contacts with existing customers, and ensure that service problems are resolved successfully. They are built on a master database that combines information from operational systems to build a complete picture of each customer and her transactions. Some CRM products also help the marketing department do its own work better by planning campaigns, organizing schedules, tracking costs, cataloging marketing materials, and reporting results.

That all sounds great, but where do you get such a system? Well, the technology itself has been around for at least two decades, so there’s a pretty good chance your institution already has some type of CRM product in place or people you work with have used CRM elsewhere. So you’re probably starting with an idea of what you want a new CRM system to do better or differently from what you’re doing today.

This is more important than you may realize. Knowing what you want is the most important task in the entire selection process—and you’ve already done it! Requirements are to software selection as location is to real estate: pretty much everything. Of course, you have to convert those vague notions into specific objectives. Exactly what do you want your CRM system to accomplish? Who will be involved in making that happen? What data will they need and where will it come from? What other systems will CRM need to connect with? How will you measure whether you’ve achieved your goals? After you’re accomplished your initial objectives, what will you want to do next?

Once you have your business objectives and the related requirements clearly defined, you can move into the selection cycle itself. This means identifying potential vendors, weeding out those who clearly don’t qualify, and digging into the details of those who remain. It’s good to set some parameters up front, such as the budget for the project, amount of help you can expect from your Information Technology departments, technologies you are willing to consider (Windows? Unix? Externally hosted?), and vendor background (are you willing to consider a small firm or will you stick with established industry leaders?). Once you’ve done that, scour the Internet, trade shows, industry magazines, analyst reports, and your personal network to build a list of candidate vendors. Use your general requirements to eliminate the non-starters and then focus on the rest.

The list of serious contenders will look different in each situation. Some companies need a full-blown CRM suite to integrate all departments; others need just a single capability such as sales management, marketing administration or customer support. You may find one of your existing software vendors offers a CRM add-on that meets your needs and costs so little that you needn’t look anywhere else. But in nearly every situation, you will find your list includes two types of vendors: “hosted” systems (also known as application service providers, software as a service, or on-demand) that are run by an external vendor and accessed via the Internet, or “on premise” systems that are installed and operated in-house. Each approach has its partisans but the emerging consensus is that hosted systems are cheaper, easier to install and more effective than on-premise systems, particularly at smaller organizations with little need for customization or integration with other products. Unless your company has a policy against hosted solutions—which do, after all, require sending sensitive customer data to an outside vendor—they are worth a close look.

The detailed evaluation process needs to look closely at all aspects of each vendor: functionality, technology, financial strength, future product direction, service and support mechanisms, and, of course, cost. While all are important, a system that doesn’t meet your functional requirements is worthless no matter how well it scores in other areas. To ensure functional success, develop detailed scenarios for key tasks and work through these carefully with each vendor. This not only lets you see how well the system will perform the specified tasks, but also gives an in-depth understanding of how the system works in general: something you will rarely learn from a standard vendor demonstration.

Once you’re narrowed the field to one or two final candidates, you will need to enter the actual contract negotiations. Note that software pricing is particularly flexible, especially for larger deals and toward the end of a sales quarter. You’ll get the best terms when a vendor knows you are serious, so there’s little advantage to talking money earlier in the process. Bear in mind that some components, such as professional service fees, are often easier for a salesman to bargain about on than others. Software contract negotiation is an art in itself, so be sure to employ an experienced advisor to get the best deal possible while keeping your risks to a minimum.

So there you have it: focus on requirements, know what you’re buying, and negotiate carefully. Above all, keep in mind that your real goal is to get a system that works, not to run a textbook-perfect selection project. So move ahead carefully but steadily, and get the benefits from your new system as soon as possible.

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David M. Raab is a Principal at Raab Associates Inc., a consultancy specializing in marketing technology and analytics. He can be reached at draab@raabassociates.com.