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February 2, 2012

Buying CRM: A 10-Step Guide

Since customer relationship management (CRM) connects to all aspects of an organization, purchasers must know the intricacies of their own businesses as well as the products and vendors available to them. That’s why we divided this guide in two parts: Know Yourself and Know Your Requirements.

I. Know Yourself

Buying CRM starts with the question, “Why do I need a CRM solution?” Many CRM projects fail because that question is never asked. With that in mind, here are four steps that will help you provide an answer and prepare your organization to evaluate CRM solutions.

Step 1. Look At Your Business

Develop a thorough understanding of how your business really works. Not how it should work or how you assume it works. Take this opportunity to map your business processes, their dependencies, and how changes to those processes can affect others. Begin with processes that aren’t working well. These will correlate with areas of your business that can be improved and help you identify
those that can be addressed with CRM. Process mapping will also reveal processes that work well. These processes may not need to be changed, but changes to other processes could affect them.

The evaluation that accompanies process mapping requires total honesty, which can bruise feelings. The objectivity of a third-party consultant can help minimize the dissension this might cause. A consultant can also reduce the internal resources needed to conduct process mapping.

At the end of the process mapping exercise, you should have a list of processes and activities that can be improved with CRM. The mapping exercise could show that your business isn’t ready for CRM or that the problems it faces can’t be solved by CRM. This is valuable information to have. Making the jump to CRM too early or for the wrong reasons will result in frustration and dissatisfaction.

Step 2. Pick The Right People For The Team

In addition to executive leadership and IT, enlist a group of front-line users to participate in the selection process — and listen to them. Not only will this ensure that you understand what users want and think is important, it will help accelerate adoption among their peers once a solution is chosen. Too often decisions are made about CRM applications without input from the people who will use them.

Step 3. Know The Regulatory Environment

It’s also important to take into account how information systems impact your ability to satisfy compliance requirements in your industry. Regulatory bodies vary in the restrictions and procedures they mandate for how data must be stored and managed. Solution delivery methods such as software as a service (SaaS) may not be appropriate in certain industries because they rely on a shared services model.

Step 4. Understand How The CRM Delivery Model Will Impact Your Budget

On-premise CRM software requires companies to own or lease the technology infrastructure — servers, storage, backup and recovery, and networking capabilities — and to provide the personnel who maintain it. There are also software license costs, maintenance fees, and integration expenses. Cloud-based SaaS software uses infrastructure provided by the CRM vendor, and while there may be integration costs, the software licensing expense is paid as a monthly subscription per user.

Certainly, smaller, cash-strapped companies often use the cloud. Likewise, larger companies with IT resources frequently use on-premise. But there are many exceptions to that general rule. More and more large companies employ cloud-based applications because they shift hardware requirements and the installation of patches and updates to the vendor. Conversely, smaller companies in fields where regulation makes the cloud problematic elect on-premise solutions.

Now You Have A Framework

The first four steps give you a framework to make a CRM selection that addresses your problems while creating a minimum of new ones. The framework includes:

* A list of processes and activities you need to improve

* A CRM decision-making team that includes users

* A knowledge of the regulatory constraints that may influence your decision

* An understanding of how the CRM delivery model will affect budgeting

II. Know Your Requirements

What is a good CRM solution? A solution that fits your business. Features are part of the equation, but more important are business considerations such as stakeholder interests, budget, support, integration, and industry demands. You also want a vendor that will work well with your organization over the long haul.

Step 5. Integration Requirements

Whether you plan to use CRM as a departmental solution or across your entire organization, integration can add significant cost and delay to a CRM implementation. So it’s wise to make ease of integration one of your preliminary criteria. Even if you have no immediate plans to integrate, a solution that’s too rudimentary or too complex to integrate with existing systems will almost certainly cause problems eventually — problems that will be expensive to fix.

Step 6. Support Requirements

No matter how adept your staff, they’ll need some degree of help with the CRM product you choose. Knowing their level of sophistication will help you determine how much, which is important since levels and costs of support vary from vendor to vendor.

Use your social network to find peers who have employed support from CRM vendors. They can be a source of unvarnished opinions about this important area. When you’re comparing vendors with similar capabilities, how they stack up in terms of support — cost and responsiveness — can be a deciding factor.

Step 7: Vertical Market Requirements

Are you in an industry that collects unique forms of customer data or in which customers negotiate a specific, non-standard path to buying? If so, there may be CRM solutions tailored to your industry. Purpose-built CRM applications have been created for insurance, real estate, agribusiness, non-profits, and others.

Companies such as resellers or distributors may need to manage tiers of customer relationships with direct customers, partners, and customers who buy from partners. These companies often buy CRM and find it ineffective. A related technology, partner relationship management (PRM), could be a better option for these businesses.

If your market does have unique demands, don’t forego a look at horizontally targeted CRM systems. They’re often more flexible than purpose-built solutions and, with the right customizations, may work better for your organization.

Step 8: Feature Requirements

Good CRM solutions have the same basic features. And features that are rarely used shouldn’t drive purchase decisions.

Feature selection is where the process mapping exercise proves especially valuable. In that exercise, you identified business problems you needed to solve or activities you wanted to improve. Look for features that map to those areas. For example, if you want to incorporate social media into your CRM strategy, look for a solution that can link with social networks to offer an expanded view of the customer relationship.

Listen to your front-line users on the selection team. Allow them to identify things that will make their jobs easier and use those ideas to guide decision-making about features.

Step 9: Financial Requirements

By now, you probably have several solutions in mind. It’s time to decide which of these is most affordable. As stated earlier, costs will vary depending on the delivery model. For example, on-premise software may carry an annual maintenance fee of 22 percent or more. Assess the full initial cost of your CRM candidates and their projected annual costs. Solutions that don’t fit your budget can be scratched from your shortlist.

Step 10: Vendor Requirements

When you think you’ve found the right CRM solution, examine that vendor’s track record — and do it independently. Vendors cherry pick their references so they may not reflect the majority of buyers’ experiences. Again, social media can be useful here. Ask whether a CRM implementation was genuinely transformative and, if so, what role the vendor played in that. You should also learn
something about a vendor’s financial stability. Once you’ve made your selection, you want to be sure the vendor will remain in business to support you in the future.

Getting It Right

The road to buying a CRM solution contains multiple decision points where your business requirements intersect with what the market offers. Take the time to make informed decisions. Even if your company decides against implementing a CRM solution, the evaluation process can improve efficiency and be the catalyst for a more customer-centric approach to business.

Editor in Chief of CRM Outsiders, Chris Bucholtz is a founding editor of both Forecasting Clouds and InsideCRM, and a recognized influencer in customer relationship management. To find out more about how to build your business’s outreach and empower your employees with Business CRM please visit