10 ways to sidestep common CRM mistakes
By Julie Sturgeon • Bankrate.com

As vice president of market development for Storage Access in Boca Raton, Fla., he wanted each of his 25 employees to handle any customer call as though she'd always handled that person. In Kramer-speak, customer service means never having to say, "I'm sorry, Fred is at lunch. He'll call you back."

"CRM is merely standard business practice. Nobody would keep a controller who only recorded the debits, for instance," says Kramer. "So how could you possible run an organization that touches customers every day without recording all the transactions associated with them?"

Yet 25 to 30 percent of CRM initiatives launched in this country never see completion, claims Jeetu Patel, executive vice president of research at Chicago-based Doculabs. "Larger companies invest money upfront to define the system's purpose. Smaller companies tend to fly by the seat of their pants because they don't have a lot of resources to allocate," he explains.

Kramer agrees. In his experience, vendors weren't into handholding. "They try to sell you whatever it is they can sell you," he says. "It's your responsibility to know what you want."

The trick to effective CRM is to differentiate your company from the small-business pack.

Here are 10 ways to determine whether you need a CRM package and, if so, how to get the one best for your business.

1. Do you need a CRM package?
According to Jeff Multz, director of sales and marketing for Firstwave Technologies in Atlanta, CRM doesn't make sense for companies with five or fewer employees. Businesses reach critical mass at 10 employees.

Patel offers a more detailed breakdown. He grants the baseline to apply sales force automation technology starts at 10 people, but pooh-poohs the pressing need for customer service software for less than 50 persons, especially if you offer a product rather than a service.

And keep in mind that the sophistication of many marketing automation solutions tends to reach far beyond many smaller companies' scope.

2. Write your goals.
Soul searching to answer "What am I not doing?" "What would I like to do?" "How do I expect CRM to address this challenge?" mirrors what large conglomerates do under the guise of expensive consultants. Committing your discoveries to paper allows you to share this objective clearly with every vendor you contact, and reduce miscommunication.

3. Determine how to measure success.
Do you label CRM a success based on the number of times staffers use it to solve problems each month? Should it directly impact hard returns you can quantify? Does success equal saved time or a specific number of full-time employees it replaces? You must be able to recognize progress or failure.

4. Ensure buy-in.
"We have a lot of customers who've been victimized by the hype and lack of reality that shows up in sales pitches," Patel warns. He asks his clients to appoint a search committee of cross-departmental employees. "The typical mistake is that most small companies think they don't have internal politicking, so everything will be fine once you install the program," he says. Think again. "Three people equal politics. You need buy-in from all sides so that everyone is cooperative rather than combative about this change."

5. Insist on flexibility.
Now that you've lined up your ducks, invade the marketplace with questions and more questions. But no matter how detailed your discussions, always circle back to the issue of flexibility. For instance, if you choose an ASP model to host your software rather than put it on your own server, could you switch to in-house control when the business grows? Can you tie in existing packages like Act! with this infrastructure? Can you customize sections to cover future needs?

"Many CRM packages are designed to be used out of the box, but after seven days the buyer says, 'I shouldn't have bought this,'" Multz reports. "But he was afraid he'd pay high rates for customization, and chose incorrectly for short-term needs instead of forecasting."

Multz compares it to buying a suit. Most business owners wouldn't pay $100 for an outfit they could wear only once if the $400 suit offers more mileage. And your written goals (step number 2) keep you thinking logically when the Armanis parade before you.

6. Grill the vendors.
Capitalism encourages entrepreneurs to grab a share of a sizzling market, so CRM vendors crowd this space. It's not likely a startup is experienced enough to really know how to devise its software, Multz says. Ideally, a CRM vendor should be in the business five years or more.

Next, ask if the company's résumé contains companies similar to yours. "There are big players who have no right selling to a small shop," says Multz. "They don't have the time or the patience."

And pore over their financial statements as if you were buying stock in the company. To determine if this vendor enjoys a healthy cash position, ask point-blank, "How much cash do you have in the bank?" "What's your burn rate?" "What do you employ as a sales model and is it realistic in these current economic times compared to the burn rate?"

7. Watch the clock.
The shorter the implementation time, the better the return on investment. "Long installations suck labor, time and hard dollars," Kramer notes. "Plus, the project requirements change during a long implementation cycle, which only runs up your tab." Never settle for a ramp-up that exceeds 30 days, and that includes importing your current data into the correct screens, fields, list boxes and validation lists.

8. Stick to your guns.
Patel often sees a frightening disconnect between what buyers need and a seller's products. "Yet the two consummate the deal because the sales rep might be a savvy person," he says. Small businesses look particularly appetizing at the end of a quarter, lured to the wolf's teeth with promises, pats on the back and winks. "The sales rep is interested in closing to make his quota. He wants to worry about details later, thinking, 'It's a small business and not a big deal if it doesn't work.'"

9. Have a designated champion.
Appoint a research team, but designate one person to make final decisions. Patel has seen his share of ventures fall flat because too many parties stuck their fingers in the pie. "As a result, no single person has ownership, and there's not a good follow-through on the implementation steps." The best candidate already works in IT or displays technical aptitude. "You can't have the director of sales manage the logistics of negotiation contracts, handle vendor relationships and stay on top of the customization. That's when things go wrong," he explains.

10. Offer rewards.
Some implementations fail because of punitive, rather than rewarding, contract terms. For example, it's common to assess a fine if the vendor flubs up certain criteria or milestones. "That creates bad blood between the vendor and small business," says Patel. Instead, spell out bonuses the vendor can reap if it exceeds the contract terms.

With this mindset, Kramer saw his CRM system operational with 8,000 accounts, 27,000 contacts and 3,500 activities 30 days after he signed the purchase order. Companies typically spend $8 in implementation for every $1 in software purchases; Storage Access' bill reflected 50 cents in implementation costs to every software dollar. And these days, no internal sales rep snows Kramer with optimistic visions of hot leads -- CRM tracking shows immediately where a contact stands in the sales cycle. "Before we could only count dollars closed. Now we can determine in an aged outlook when future dollars might fall.

"The idea is not merely to bring in a CRM or any other application. It's to solve certain business challenges," Kramer says.

Julie Sturgeon is a freelance writer based in Indiana.

-- Posted: Jan. 7, 2002