CRM Gives SMBs a Competitive Edge

Suppose the MD of an SMB asks you what CRM means. What would your answer be?

CRM is a business strategy based on comprehensive customer orientation that aims to maintain and improve the competitiveness of the company as a whole. The shift from supply-driven to demand-driven markets has raised the competitive stakes and, because today’s customers expect and demand customer service tailored to their own specific needs, suppliers have had to undergo a reorientation from a product-focused to a customer-focused approach. And this can only be achieved by a company that knows its customers and their requirements exactly and whose employees can access the most up-to-date and comprehensive information at the push of a button. IT is a tool that supports and assists the implementation of a customer-oriented business strategy.

The goals of CRM are to secure existing customers’ loyalty by making maximum use of the knowledge held about them and to develop systematic methods of winning new customers. Companies can increase their own profitability by systematicallyextending customer life cycles, that is, by binding customers to their own company over the long term. These goals can only be achieved if companies and customers build up a win-win situation. This includes constantly analyzing which benefits, if any, the customers gain or expect to gain from the services provided. So clients’ needs are a key factor in CRM.

What should SMBs watch out for when planning and implementing a CRM project?

As in many other areas, the seeds of success are sown during the preparatory phase. A crucial factor for success is not to view CRM as a purely IT-based topic, as mentioned earlier, although information technology does play a significant part in processing and presenting information. Company management needs to start with the question about the role customer orientation should play in the company in future. SMBs that take a consistent approach to this issue cannot avoid massive changes in employee behavior, the organization, and business processes. Unfortunately, many SMBs still lack the courage to undergo such an upheaval.

In many companies, the prerequisites for a customer-oriented business strategy are not even in place and need to be created before anything else. The majority of the SMBs we surveyed last year considered the greatest success of their CRM projects to be that the quality of their customer addresses considerably improved after implementation. If you don’t know how many quotations are currently circulating with clients because your company’s drowning in bits of paper, it’s unlikely that you’ll be too excited about the prospect of using CRM to increase the success rate of those quotations.

Which implementation phases do you recommend to SMBs?

SMBs who want to implement CRM successfully and exploit its full potential and opportunities should adhere to the following ten-point roadmap:

  • CRM must be initiated and supported by company management.
  • CRM is not an IT project, so project management should lie with the respective department.
  • All departments that have contact with customers must be represented in the project team.
  • The CRM goals should be defined first of all based on the business strategy and the analysis of the current situation. A distinction is made here between internal and external and short-term and strategic goals.
  • CRM goals must be concrete and measurable, i.e. verifiable.
  • Think big, start small: customer loyalty management should be constructed in phases based on a medium-term plan.
  • The CRM goals must be defined or adapted in line with the business process goals you want to achieve.
  • (Subsequent) users must be made aware of the personal benefits to them. This engenders trust and acceptance.
  • Companies must provide for adequate training in the plan.
  • A user support service must be on hand to answer any day-to-day topical or technical questions on the CRM system so any problems that may arise are remedied rapidly.

Does it make sense and is it workable for SMBs to use e.g. analysis tools?

Yes, absolutely, because SMBs also need to be able to select, analyze, and evaluate the data. These tools are designed specifically to handle what are usually smaller data volumes, although these volumes can actually be quite large in the case of a large SMB.

In what areas of CRM projects in SMBs do you still see room for improvement?

Too many SMBs still regard CRM as an IT-based topic. People select their software before the goals and requirements have been defined exactly. It is usually the head of IT who is entrusted with the project management. Further, the goals often focus more on managing field staff and driving sales than on comprehensive customer orientation, and this is a throwback to the situation in 1985 when CRM was still called Sales Force Automation (SFA).

A further shortcoming exists in adapting business processes and involving employees, and this can jeopardize users’ acceptance. Yet this is a fundamental requirement in assuring the quality of the data in the customer database.

What kind of CRM software is suitable for SMBs?

I need to make several distinctions in my answer here as SMBs are spoilt for choice. SMBs can choose from different types of software and different contract models.

CRM solutions can be divided into standard packages without a particular industry focus and industry-specific solutions with specialized industry functions, such as mySAP CRM. In terms of the depth of CRM functionality, we can offer cost-effective contact management programs that are particularly suitable for SMBs with a limited functional scope on the one hand. On the other, we have CRM solutions with full functionality for marketing, sales, and service, complete with interfaces to ERP systems, that are suitable for SMBs with more complex processes. If we look at integration into an existing IT system landscape, ERP systems that have been enhanced with CRM functions are available (such as SAP Business One), as are CRM systems that can be linked for data exchange purposes to the ERP system via interfaces that are generally already in place. SAP NetWeaver is an example of an integration platform that interconnects different system worlds, for instance ERP, CRM, SCM, and others.
In terms of contract models, the ASP model (Application Service Providing) with monthly rental has become an established alternative to the license model. With ASP, data management is done externally on the service provider’s hardware. When deciding which solution and contract model to go for, SMBs need to consider all the benefits and drawbacks of the different alternatives.

Can SMBs use CRM to gain a competitive advantage in future?

Yes, because CRM is both the strategy and the tool they need to achieve a competitive edge. All companies today are faced with the challenge of devising new long-term and future-proof strategies and developing new ways of ensuring customer loyalty and winning new customers. In the current economic climate, companies are much more concerned with retaining the loyalty of existing customers than winning new ones. This was clearly confirmed by our market survey of SMBs last year.

Dr. Andreas Schaffry
Dr. Andreas Schaffry