What CRM Means to Your Business

An Activant Industry Expert Article

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Contact Management

Contact management encompasses how you manage information about your customers, such as name, job title, address, size of the company, the industry they serve, their purchasing history, and more. It even includes personal information such as birthdays and anniversaries. In the past, this information was kept in a date book, Rolodex, or even the salesperson's head, and was mainly used to ensure good communications with the customer. When distributors started to use technology, they focused on the customer as a company and not as individual people or contacts.

The key to contact management is not that you have the data, but what you do with it. For example, imagine a larger customers. They have an engineer you deal with when specking out projects; a buyer who receives the product quotes, and a payables person you talk to when collecting your money.

In the early days of technology in the distribution industry, you did not have the ability to direct specific correspondence to specific people or contacts. Usually, your system would either list one contact or none at all. When an invoice would be sent, who knew where it might end up. With today's technology, you can direct specifications directly to the engineer, quotes to the buyer, and invoices to the payables person. Best of all, it can be mailed, faxed, or e-mailed automatically based on the contact's preferences.

So what value does this provide you and your customer? In the past, the salesperson knew the detailed inner workings of the customer, so he made sure all the correct documentation got to the right person, making the customer very happy. As the distributor reduced or eliminated the outside sales force because they thought it was too costly, the customer lost this service. Suddenly, paper work did not get to the right people, and no one at your business knew exactly who to talk to about it.

A good contact management system, that is an integral part of your technology, restores this service without the cost of the outside salespeople.

Sales Force Automation

The second aspect of CRM is sales force automation. Sales force automation means automating tasks related to sales functions.

Take for example the issue of follow up. Obviously, you do not need to talk to or visit every customer or prospect everyday. Not only can't you afford it, but also your customers would think you were crazy.

So how do you know when to follow up?

In the past, many salespeople would keep a folder on each customer. These folders would sit in a stack on their desk in piles that topped 18 inches. Each day they would take the top 20 or so folders and make their visits or phone calls. Depending on what was discussed they would decided on when the next contact should be. When they got back to the office, they would update their notes on the customer, put them in the folder, and then, depending on when the follow-up was to take place, put the folder in the appropriate spot on the stack of folders. If they were to call back the next day the folder would go right on top. If the next contact was to be in a week, the folder might go a few inches from the top, a month might he half a foot from the top, and who knows where a six-month call back would go. Pity the poor customer who ended up on the bottom of the pile. Who knows when he would get a call back?

This manual process might not have been very labor intensive, but it lacked accuracy as to when customers would receive follow-up.

With sales force automation scheduling becomes much more accurate. The process remains very similar, but room for mistakes is reduced to zero. Using technology, a salesperson can look at their activities for the day, and, as they work through their activities, they can create future activities of exactly when they should follow up. Now you do not have to worry about a customer getting stuck on the bottom of the stack.

If done correctly, a side benefit to this process is how these activities are tied back to the contact management system, which is tied to you business system, so you can track and measure the activities of your sale force. You can determine the revenue they generate per visit, if they spend their time were the money is, if they are developing new accounts, etc. You can use the information you uncover to help your sales people be more effective.

Marketing/Sales Automation

We wrap up our discussion of CRM with marketing/sales automation. Marketing and sales are often combined because of the fine line that exists between the two. Marketing finds sales opportunities. Sales turns those opportunities into a sale. If a salesperson makes a cold call on a company that never did business with you before to try to find out if they have a need for your products, that is marketing. Once the salesperson discovers a need and starts to convince them that they should buy your products, that is selling.

As with the other two components of CRM, this aspect has traditionally been done by the outside salespeople with some support from within the company, possibly from a marketing department. The salesperson would visit the customer, examine the customer's needs, past purchases, and possibly what similar customers are buying to determine which products to sell the customer. This worked because the salesperson, with many years experience, had a lot of product and industry knowledge and could quickly figure out what the customer needed. As the sales force was reduced, some distributors saw their market share slip because the proactive marketing part of the job was lost. Unfortunately, some distributors did not realize this until it was too late.

Going back to the contact management system, information on each customer and contact, including the size of the company, the industry they serve, and their purchasing history can help automate the marketing and sales functions. As can the sales force automation system.

Let's say you want to increase sales to a specific customer. Using you contact management system, you look for similar customers, and then search the sales history database to find the different products these similar customers are buying. This product list becomes an opportunity list. It says what products your customer probably needs, but isn't buying from you. You then tie that list to your sales force automation database and make sure your salesperson looks at this data prior to calling on the customer.

The above example shows how you can automate the marketing process and give your salesperson a list of opportunities for his customers.

To go a step further and automate part of the sales process. You know the customer needs these items and is most likely buying them from another source. Using your technology, you can put these items on special just for the customer and automatically send a fax or e-mail alerting. You do not have to put the items on special for everybody, only for those customers that are not buying them.

Another example of automating the marketing/sales process is dynamic suggestion of accessory items. We have all been to fast food places and ordered a burger and soda. The first thing the person taking your order asks is if you want fries with your order. The reason that person knows to ask you that is that the computer that he types your order on prompts him to do so.

Shouldn't you do this in your business? If you sell a power drill, shouldn't you ask if they need drill bits? If you sell a water heater, do they need a relief valve? If you sell a lighting fixture, do they need lamps? With a product that a fast food restaurant sells, it is not difficult to set up a database to make the correct suggestions. In a distributor's business with as many as 70,000 SKUs the task could get overwhelming.

A good CRM system should build this database for you and your salespeople. You could further automate the process by deploying this technology on a Web-based storefront and automatically giving your customers suggested add-on items to buy. This provides a huge value to your customer, saving them time and frustration. Think about it how annoyed you get when you buy a new power tool only to find out you forget to buy the accessories you need to operate it.

Finally, you can use marketing automation to track where opportunities come from. Many companies only track sales back to the salesperson, not the source. Marketing automation enables you to track opportunities back to the source - trade show, mailing, fax special, salesperson, etc. This information becomes invaluable when measuring the success of marketing programs.

In the past, salespeople kept this information in their heads, making it hard to decide how to spend marketing dollars. By tracking the lead source for each transaction, you can now see where opportunities (quotes) come from and where revenue (orders) come from. This now allows you to track the return on your marketing investment and become much more effective in there process.

As you can see, CRM can add tremendous value to you and your customers. Also CRM is not as simple as many people make it out to be, nor does it touch just one area of your business. To be successful developing and improving your CRM processes it must be a company wide initiative with the right technology backing it up. If done right, CRM can mean the difference in thriving verses just surviving.

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