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Customer Relationship Management (CRM) is the key business application that enables sales representatives and sales management to track the activities with customers and prospects. When used properly it is a very powerful tool. Unfortunately, CRM deployment success rates are discouraging to say the least.

To increase your odds of having a successful CRM deployment, in order to reap the benefits of the CRM system, the three critical success factors are:

  1. Executive support and overview during both the implementation and post go-live
  2. Record and Maintain Data that is accurate and timely
  3. Clear process rules, consistently followed by the sales team

If ANY of these three elements above are not present, at time of CRM launch, you should defer the CRM deployment. Given their criticality, let’s take a closer look at each of these success factors.

Executive Support

While most enterprise-wide system projects require executive support to be successful, this is especially true of CRM deployment projects. In fact, you should not begin evaluating CRM systems unless executive sponsorship from the CEO, COO or the VP of Sales is in place.

Without the executive oversight and support, the company will be fighting an uphill battle with little chance of success, because sales reps will most likely resist using the CRM system for a variety of reasons including:

Data Integrity

One of the most common and frustrating problems encountered with CRM systems is the lack of data integrity. Data integrity issues that typically appear are a) multiple instances of the same company appearing in the database, b) data entered with minimal context or timely content, and 3) data not being maintained.

Multiple instances of the same company occur, because a formal agreed upon a naming convention is not in force. For instance, without a formal agreement, four different accounts (Acme Products, Acme Products, Inc., Acme Products, Inc and Acme Products, Incorporated) might be created for the same company. The system will treat each account as separate and distinct accounts. Sales rep notes, attachments and even account contacts could be scattered across the four accounts. Think of the CRM has an obedient soldier; it will do exactly as instructed. It doesn’t know or even care the four accounts are really the same company. It doesn’t matter to CRM, because you told it, right up front, these accounts are separate and distinct. It is following your instructions perfectly. Good job, Soldier!

If the information is scattered across different accounts, the likelihood a sales rep or management will make an inaccurate assessment of a prospect increases, because they didn’t know important information was recorded in Acme Products instead of Acme Products, Inc. This will probably result in ineffective plans and actions had all the notes been recorded in the one true account.

Just as important, a flawed assessment of the prospect will likely be reached if notes are not recorded accurately with proper appropriate detail or not entered in a timely manner. If a culture of data integrity does not exist, the data will be become stale over time and information that was once accurate, can no longer be relied upon. Data integrity issues will cause users to resist using the system and by definition, the benefits derived from the CRM will be severely diminished.

Clear Process Rules

Management’s ability to interpret the entire sales pipeline, is driven by two variables; the prospects’ location in the sales cycle and the probability an opportunity’s estimated final quote amount to become revenue. The communication of the meaning of these two variable and subsequent enforcement of the application of categorizing the prospect’s location in the pipeline and the manner in which the probability percent is determined, is the only way the sales pipeline will be accurately assessed, across the management team.

As an example, during the CRM implementation process, the company will need to define its sales cycle into steps/stages; i.e. how many steps, in the sales cycle, will there be before the account reaches the opportunity stage? These steps determine the categorization of an account; i.e. at which step, in the sales cycle is the prospect?

The opportunity stage is typically the stage where the total dollar amount of the opportunity, is a variable to forecast revenue. If the likelihood of winning the deal is small, it is up to management to decide if the low probability warrants the account to be categorized as an opportunity. There is no single right answer. It all depends how detailed management wants to monitor and review the account as it marches down the sales cycle path. However, consideration must be taken to account that additional steps in the sales cycle equates to more time the sales rep will have to change the stage and the more categories management will have to review. At some point, too many steps in the sales cycle becomes counterproductive and frustration for the sales rep; less time to sell due to maintaining the accuracy of the stage.

Strict enforcement of the categorization rules are required, else different sales reps will use their own set of rules to determine a prospect’s location in the sales cycle. Different ways to categorize prospects will immediately reduce the assessment accuracy of the pipeline.

Summary

There are many benefits of having a successful CRM system deployed, but unless close attention is paid to the three key success factors, it will likely result being an expensive failure with consequences for those leading the project.

Overview

The catalyst to acquiring a CRM system is very often the desire for management to better understand and to manage the pipeline of deals. This focus typically is on the acquisition of new customers. While CRM systems can indeed be a great tool for pipeline management, another benefit that is often overlooked in the decision to license a CRM system is the care and feeding of the installed base.

An old axiom in sales is that it is much easier to keep an existing customer than it is to acquire a new customer. From a top level perspective, an installed base customer has value for so many reasons that losing a customer to a competitor should never be taken lightly. The value that an existing customer can deliver include 1) repeat sales, 2) increased sales as a result of their growth, 3) references for prospects to contact, 4) upsell opportunities, 5) cross sell and 6) and sell to other parts of a large company.

In the SaaS environment, where the monthly revenue is the lifeblood of the company, the value of keeping a customer is one of the key determining factors in the valuation of a company. Not only will high churn, by its very existence, limit the revenue growth potential, it is a strong indicator for overall customer satisfaction. Not paying close attention to your installed base will ultimately result in disastrous consequences.

Elements to Review

Contacts: Relationships are made with people and not with companies.

One final closing comment; if your sales representatives are not keeping detailed notes regarding your existing customers all their knowledge will walk out the door if the sales person was to leave the company. The company will have a much better chance to maintain or improve the relationships with their customer during such a transition if all relevant notes, contacts and quotes are in the CRM system.

Tasks are the industry standard term for activities / follow-up items that are assigned to a CRM user and it is one of the most important features of a CRM system. Tasks are “must haves” for someone using or evaluating a CRM system. If properly used, Tasks will be how salespeople and customer support people manage and complete their daily To-Do list. In addition, it is a great tool for communication between Sales, Customer Support employees and company management.

The main purpose of CRM Tasks is to facilitate and monitor items needing a follow-up at the appropriate time. Proper use of Tasks will greatly improve the value of the CRM as well as productivity of the CRM users. Listed below are some of the best practices of using Tasks.

Task critical Information

All tasks that are created in the CRM should have the following information:

Task Notifications

If a user is assigned a Task, that user should be automatically notified by email to ensure the assignment was communicated in a timely manner. This capability may not be important for active users of CRM as these users should be reviewing the Tasks assigned to them on a regular basis.

Any task not been completed by its schedule completion date should be highlighted (e.g. Red Bold font) in the CRM system in some manner so that the Task assignee and their management quickly can see the situation and decide on the proper course of action. A more comprehensive system would have an Alert/Notification capability that will send an email or report to the appropriate people indicating Tasks:

Using Tasks

The most cost common users of are either the sales team or the customer support team. A sales representative might assign themselves a Task to follow-up with an Account by a certain date per their last communication with the Account. Similarly, a Sales Manager or the Lead Generation team might assign a Task to a sales representative, so that timely action is scheduled.

The customer support team will use a task so a representative can act immediately on a customer support ticket categorized as High Priority.

Salespeople and Customer Support personnel should be using the Task page to plan their activities for the day and the near future. The Task page should be the most viewed page by sales and customer support CRM users as it is their guide for beginning their day and checking for updated priorities during the day. If not checked frequently, a new High Priority item might not completed in a timely manner which could have significant repercussions.

Tasks should be able to be sorted by either due date or priority in order for the user to quickly determine what and when activities need to be accomplished.

Salespeople before visiting or communicating with a customer should always take a quick look at the CRM to see if there are any Customer Support Tickets open, especially Tickets with a high priority status. There are plenty of horror stories about a sales representative arriving at a customer site unaware that a major issue has been brewing. Needless to say, this is not a good situation.

Best practices are for CRM Notes and Tasks to be used in conjunction with each other. For instance, a Task may be triggered from a discussion with a customer or prospect. In this situation, the Task should reference the Note (which should have all important information regarding the discussion) so that proper context can be provided.

If you are new to CRM systems, I highly recommend that you work closely with the implementation company to make sure you understand the pros, cons and consequences of decisions regarding all the processes that need to be considered before you go-live. You can save yourself and the rest of the company at lot of frustration and false starts by leaning on the experience of others so that you can avoid common pitfalls and by reinventing the wheel.

One thing to remember is that while there are definitely wrong ways to use a CRM, there is no single right way to use a CRM. There has to be meeting of the minds where the company and the sales organization agree on the processes so the information in the CRM can be interpreted as accurately as possible. I say as accurately as possible, because unlike accounting, where an entry can be clearly determined just by looking at the debits and credits, information in the CRM will be subject to every user’s interpretation. For instance one salesperson’s view of the status of a particular account could very well be different than the status of a different salesperson’s view if the exact same situation and set of facts existed for that salesperson. To add to the complexity, each reviewer’s interpretation of any notes in the CRM could very well be different than other reviewer’s interpretation.

One of the most important processes that needs be finalized is defining the sales cycle that will be used by every CRM user. The objective of clearly defining the stages is to make sure that all salespeople understand what the various stages mean and how management will interpret each stage. With this knowledge, the salespeople can categorize each account appropriately and therefore communicate the account’s progress in the sales cycle in accordance with the company’s agreed upon definitions.

Sales Cycle Stages

With specific regards to sales cycles, it is important to define the stages in the CRM so that the stages are not too few nor too many as each condition has its own set of problems.

Now to really throw a wrench into the whole discussion, many people use two sales cycles. Depending on your particular situation, this might very well be best practices. To clarify the two stages:

  1. Initial Sales Cycle: This includes the stages required to get the account into a position where it has a reasonable chance to close. An example is:
    1. Lead: Have very little information on account (perhaps purchased a list of companies); Need to do some research.
    2. Qualifying: Have basic information, but lack enough information to determine if the account is worth pursuing; i.e. is it a fit for our product/services, but do they have enough budget?
    3. Development: Solid account to target, but they are not quite ready to make a purchase decision within the next 6 months.
    4. Working: Solid account to target and they are ready to make a purchase decision within the next 6 months
    5. Opportunity: Ready to make a purchase decision with the next 3 months.
  2. Subsequent Sales Cycle: Once the account has become an Opportunity in the first sales cycle, this sales cycle defines the stages to close the deal as a win, a loss or a no decision. An example is:
    1. Discovery: meeting to understand the requirements of the account
    2. First Demo
    3. Second Demo
    4. Checking References
    5. Win, Lose, No Decision

It is best practices to assign all accounts that have reached the second sales cycle to not only assign a stage to the Opportunity, but also to input into the CRM at least the dollar value, the percent probability to win the deal and the time frame for the decision.

Management Review

Closing note; one of the toughest parts, but a critical key in properly interpreting the CRM information is to know the tendencies of each salesperson. For example, one particular salesperson will be very reluctant to put a high win probability on a deal, for fear of disappointing management while another salesperson may always be overly optimistic. In addition, the notes they enter into the CRM may reflect their conservative or optimistic tendencies. In any case, you will most likely need to adjust your analysis of the raw data based on the person who input the information to properly interpret the situation.

One approach that some companies use to help mitigate individual bias or tendencies is to assign a fixed probability to each sales cycle stage. For instance, a prospect that likes the first demo could be assigned a 10% win probability. If they make the shortlist of vendors, then it the probability will be increased to 30% and so on. I personally do not particularly like this approach as there are too many nuances to each deal including how many short listed vendors were selected or does a key decision maker have a pre-disposed bias to your or one of your competitors product.