Why is Customer Relationship Management Important?
Customer Relationship Management (CRM) and the various
software systems designed to assist in its implementation have been hot topics historically across distributor-land. The truth is, many companies made the purchase, launched their efforts with the greatest intentions and then stumbled on the execution of such systems.
Lack of performance has many root causes. Some of the early CRM packages lacked important features, such as the ability to sync data with Outlook (which is commonly used by salespeople to manage calendars, contacts and daily activities.) Other times, the distributor failed to understand how CRM systems interacted with their business, making the whole thing an exercise in dead-end data entry. A few times, technical issues like the ability to quickly enter and access data from remote locations, made the process unmanageable. In my opinion, however, will power could be characterized as the biggest driver of less than stellar results.
Since most technical issues are solved, most distributors are rethinking and relaunching the CRM effort and now we are squarely facing the “will power” part of the question. For some reason, salespeople fear and loathe CRM systems.
Below I have characterized the major reasons:
1) Time, Time, Time – CRM takes time. I work hard. I already put in extra hours and CRM is just another device which sucks away from my personal (and off hours) time.
2) What’s in it for me? – I can see why management wants the information, but see little value for me as a salesperson.
3) Others can mess with my accounts – If information is available for the team, there is an opportunity for someone else in our organization to inadvertently open some terrible commercial can of worms.
4) The Big Brother Syndrome – CRM allows management to look over my shoulder and I don’t need that distraction in my life.
5) Job security – Tied to the Big Brother thing, many salespeople view their unique knowledge and relationships with customers as their personal bit of job security. Some even have the fantasy of taking their customers to some new employer who will pay them handsomely for delivering their territory to some other grateful employer. Experience dictates this strategy rarely works. Further, in many states, the strategy is covered by “trade secret” laws.
There are compelling reasons to fully engage with CRM
Research and anecdotal reports from dozens of sellers who believe in CRM have demonstrated that it is a prevailing tool for salespeople if they invest the time and effort to apply the concept properly. Some of these are so powerful, they offset some of the fears and contradict all but a couple of the concerns outlined above.
Let’s review those positive results from a seller’s perspective.
Better contact management – Let’s talk about customer contacts. The average distributor salesperson encounters hundreds of buying influences. Keeping track of your main contact at the top 20 accounts is pretty easy. Pushing further, my guess is a person can even handle the next level contacts which puts us near 50 contacts. This is only 10-20 percent of the total and maintaining a relationship with the other 80 percent is critically important.
What about the rest-- the ones who get lost in the shuffle? First, the project managers who are only actively involved with you when they are engaged in work which uses your products and services. Safety managers, production managers, training managers who influence their company’s purchases are out there somewhere too. Most importantly, the financial influencers of your customers are in your system and these are the people who can veto a purchase order headed your way.
How do we track our interactions with these folks? If you review your records, are there people with whom you have not interacted for 6 months? A year? Maybe longer? Salespeople fully intend to review their lists monthly, but schedules and other activities often distract from the task; so it goes undone.
A good CRM package will allow you to review your contacts and scan for activities (often automatically logging email exchanges.) Imagine being served up a weekly list of folks you haven’t talked to for a while. It’s hard to argue with this power.
Team selling empowered – Forgetting the personal computer, fax machine, cell phone and smart devices for a moment, the biggest single change in our industry over the past three decades has been distribution’s adoption of team selling approaches. Good CRM practices enhance the value of the team. What’s more, they help the salesperson sell more and ultimately make more money. Let me explain.
Inside salespeople are constantly dealing with your customers. Mostly, the same individuals call in orders, ask a
few questions or get price/delivery information, but occasionally they get questions which could lead to bigger opportunities. They communicate with new people and some of those customer contacts with whom you don’t often interact. If the inside salesperson has access to your customer list via CRM, they can add new names and identify those peripheral contacts not in your regular call routine. Pushing this concept further, with the proper flagging, the salesperson is then quickly allowed to ring up that seldom contacted individual to determine if immediate attention is required; thinking especially toward project managers or financial guys.
Similarly, specialists and technical support people are able to identify and enter the names of technical people at the customer, many of whom are hidden deep in the bowels of the customer organization. These are the kind of contacts who can give you the inside scoop on what’s happening at your customer from a technology point of view.
Marketing is growing in importance - Just a handful of years ago, the marketing groups at most distributors were basically event coordinators and the keepers of the company golf balls and other trinkets. Today, they are developing plans for generating leads, building interest in new customers and reinforcing the company brand. Much of this requires accurate customer contact information, including the current email address.
Herein lies three major issues:
1) trust and cooperation with marketing (will they send the right information to each customer contact or just irritate them with spam?)
2) can sales provide accurate email addresses?
3) does the company maintain the proper segmentation of customers?
As River Heights Consulting wraps up several major
distributor/customer satisfaction surveys, the “bounce” rate for email address stands in the 30-40 percent range. Here’s what we found: email addresses which were spelled incorrectly, email addresses which were obsolete because the customer changed their name and “url” (for example the “@riverheightsconsulting.com”,) inactive accounts and customer contacts who have been dead since 2009.
It is the salesperson’s responsibility to make sure the emails are accurate and proper. This is part of good CRM practice. Further, it proves, at least to me, that the seller has not been regularly touching some of these contacts; at least by email.
Supplier engagement – While this one might be viewed as more of a benefit for management, there is nothing more powerful than demonstrating just how hard you are working to help a supplier develop their business and grow market share. I have heard countless tales of suppliers complaining about selling activities only to “eat their words” when somebody showed them the number of selling events made on their behalf.
With Special Pricing Agreements (SPAs) growing at exponential levels and giving distributor sellers a near exclusive deal with suppliers, I believe CRM data can make a difference in the win-loss column for salespeople. By sharing sales activity with various key suppliers, I believe seller position themselves for a pricing advantage should intra-channel competitive rivals (other distributors selling the same supplier’s product) rear their ugly head.
Further, sharing similar reports monthly can help harness the power of the supplier’s selling resources, be they individual calls, demos, samples, access to factory engineers or marketing goodies. Imagine a meeting where the distributor and supplier’s salespeople sit down as co-equals, dividing the work and assigning one another focused tasks. The exercise might also include populating the CRM with new contacts and future opportunities discovered by the supplier’s team.
Opportunity tracking – Last month we wrote about opportunity tracking (read it HERE.) In that post, we assumed you were somehow tracking opportunities. However, based on emails and calls over the past few weeks, it turns out a good number of people aren’t tracking opportunities. That’s some “bad juju”, so allow me to review why tracking opportunities as part of your CRM practice is better than a collection of good-luck charms and rabbit’s feet.
Like customer contacts, a seller should discover hundreds of opportunities every year; some large, others small, and varying in time to fruition. The big opportunities coming in the near term are easy to remember, so too might be smaller and immediate potential orders. The ones that make the difference are those coming in six months, a year or perhaps even a couple of years. This phenomenon is pretty evident. Generally, most distributors do poorly with long sales cycle selling. However, a few (typically those distributors selling OEM parts where design and development is part of the product offering) excel in a world where 18-24 month selling is the norm.
The question is: how do they do it? They carefully track each and every opportunity constantly positioning themselves for the final decision. Unfortunately, without a process for tracking each and every opportunity, most distributors fail. They certainly fail when they go up against a competitor with a longer range view. Again, let me urge you to read the opportunity post.
Wrapping all this up…
Forgetting management and the organizational value, we’ve explored five of the advantages of CRM from the seller’s perspective. We could have listed 20 or maybe more, but time and attention spans are in short supply.
I can already hear some of you disagreeing with me so here’s a challenge. Shoot holes in my theory. Send me an email, make a comment or call me up and give me a piece of your mind. If you don’t like CRM systems because of one of the five reasons outlined in the first three paragraphs, just post the number and I will understand.
Those of you who believe in CRM practices, send us a quick note on what convinced you to embrace the practice. The Grand Prize will be, yep you guessed it, post card from Iowa.
Lack of performance has many root causes. Some of the early CRM packages lacked important features, such as the ability to sync data with Outlook (which is commonly used by salespeople to manage calendars, contacts and daily activities.) Other times, the distributor failed to understand how CRM systems interacted with their business, making the whole thing an exercise in dead-end data entry. A few times, technical issues like the ability to quickly enter and access data from remote locations, made the process unmanageable. In my opinion, however, will power could be characterized as the biggest driver of less than stellar results.
Since most technical issues are solved, most distributors are rethinking and relaunching the CRM effort and now we are squarely facing the “will power” part of the question. For some reason, salespeople fear and loathe CRM systems.
Below I have characterized the major reasons:
1) Time, Time, Time – CRM takes time. I work hard. I already put in extra hours and CRM is just another device which sucks away from my personal (and off hours) time.
2) What’s in it for me? – I can see why management wants the information, but see little value for me as a salesperson.
3) Others can mess with my accounts – If information is available for the team, there is an opportunity for someone else in our organization to inadvertently open some terrible commercial can of worms.
4) The Big Brother Syndrome – CRM allows management to look over my shoulder and I don’t need that distraction in my life.
5) Job security – Tied to the Big Brother thing, many salespeople view their unique knowledge and relationships with customers as their personal bit of job security. Some even have the fantasy of taking their customers to some new employer who will pay them handsomely for delivering their territory to some other grateful employer. Experience dictates this strategy rarely works. Further, in many states, the strategy is covered by “trade secret” laws.
There are compelling reasons to fully engage with CRM
Research and anecdotal reports from dozens of sellers who believe in CRM have demonstrated that it is a prevailing tool for salespeople if they invest the time and effort to apply the concept properly. Some of these are so powerful, they offset some of the fears and contradict all but a couple of the concerns outlined above.
Let’s review those positive results from a seller’s perspective.
Better contact management – Let’s talk about customer contacts. The average distributor salesperson encounters hundreds of buying influences. Keeping track of your main contact at the top 20 accounts is pretty easy. Pushing further, my guess is a person can even handle the next level contacts which puts us near 50 contacts. This is only 10-20 percent of the total and maintaining a relationship with the other 80 percent is critically important.
What about the rest-- the ones who get lost in the shuffle? First, the project managers who are only actively involved with you when they are engaged in work which uses your products and services. Safety managers, production managers, training managers who influence their company’s purchases are out there somewhere too. Most importantly, the financial influencers of your customers are in your system and these are the people who can veto a purchase order headed your way.
How do we track our interactions with these folks? If you review your records, are there people with whom you have not interacted for 6 months? A year? Maybe longer? Salespeople fully intend to review their lists monthly, but schedules and other activities often distract from the task; so it goes undone.
A good CRM package will allow you to review your contacts and scan for activities (often automatically logging email exchanges.) Imagine being served up a weekly list of folks you haven’t talked to for a while. It’s hard to argue with this power.
Team selling empowered – Forgetting the personal computer, fax machine, cell phone and smart devices for a moment, the biggest single change in our industry over the past three decades has been distribution’s adoption of team selling approaches. Good CRM practices enhance the value of the team. What’s more, they help the salesperson sell more and ultimately make more money. Let me explain.
Inside salespeople are constantly dealing with your customers. Mostly, the same individuals call in orders, ask a
Similarly, specialists and technical support people are able to identify and enter the names of technical people at the customer, many of whom are hidden deep in the bowels of the customer organization. These are the kind of contacts who can give you the inside scoop on what’s happening at your customer from a technology point of view.
Marketing is growing in importance - Just a handful of years ago, the marketing groups at most distributors were basically event coordinators and the keepers of the company golf balls and other trinkets. Today, they are developing plans for generating leads, building interest in new customers and reinforcing the company brand. Much of this requires accurate customer contact information, including the current email address.
Herein lies three major issues:
1) trust and cooperation with marketing (will they send the right information to each customer contact or just irritate them with spam?)
2) can sales provide accurate email addresses?
3) does the company maintain the proper segmentation of customers?
As River Heights Consulting wraps up several major
It is the salesperson’s responsibility to make sure the emails are accurate and proper. This is part of good CRM practice. Further, it proves, at least to me, that the seller has not been regularly touching some of these contacts; at least by email.
Supplier engagement – While this one might be viewed as more of a benefit for management, there is nothing more powerful than demonstrating just how hard you are working to help a supplier develop their business and grow market share. I have heard countless tales of suppliers complaining about selling activities only to “eat their words” when somebody showed them the number of selling events made on their behalf.
With Special Pricing Agreements (SPAs) growing at exponential levels and giving distributor sellers a near exclusive deal with suppliers, I believe CRM data can make a difference in the win-loss column for salespeople. By sharing sales activity with various key suppliers, I believe seller position themselves for a pricing advantage should intra-channel competitive rivals (other distributors selling the same supplier’s product) rear their ugly head.
Further, sharing similar reports monthly can help harness the power of the supplier’s selling resources, be they individual calls, demos, samples, access to factory engineers or marketing goodies. Imagine a meeting where the distributor and supplier’s salespeople sit down as co-equals, dividing the work and assigning one another focused tasks. The exercise might also include populating the CRM with new contacts and future opportunities discovered by the supplier’s team.
Opportunity tracking – Last month we wrote about opportunity tracking (read it HERE.) In that post, we assumed you were somehow tracking opportunities. However, based on emails and calls over the past few weeks, it turns out a good number of people aren’t tracking opportunities. That’s some “bad juju”, so allow me to review why tracking opportunities as part of your CRM practice is better than a collection of good-luck charms and rabbit’s feet.
Like customer contacts, a seller should discover hundreds of opportunities every year; some large, others small, and varying in time to fruition. The big opportunities coming in the near term are easy to remember, so too might be smaller and immediate potential orders. The ones that make the difference are those coming in six months, a year or perhaps even a couple of years. This phenomenon is pretty evident. Generally, most distributors do poorly with long sales cycle selling. However, a few (typically those distributors selling OEM parts where design and development is part of the product offering) excel in a world where 18-24 month selling is the norm.
The question is: how do they do it? They carefully track each and every opportunity constantly positioning themselves for the final decision. Unfortunately, without a process for tracking each and every opportunity, most distributors fail. They certainly fail when they go up against a competitor with a longer range view. Again, let me urge you to read the opportunity post.
Wrapping all this up…
Forgetting management and the organizational value, we’ve explored five of the advantages of CRM from the seller’s perspective. We could have listed 20 or maybe more, but time and attention spans are in short supply.
I can already hear some of you disagreeing with me so here’s a challenge. Shoot holes in my theory. Send me an email, make a comment or call me up and give me a piece of your mind. If you don’t like CRM systems because of one of the five reasons outlined in the first three paragraphs, just post the number and I will understand.
Those of you who believe in CRM practices, send us a quick note on what convinced you to embrace the practice. The Grand Prize will be, yep you guessed it, post card from Iowa.
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