Customer Relationship Management (CRM) solutions have been around for decades, but they used to be much harder to implement than they are today. But being able to easily implement a CRM and actually creating a system that drives the business in an effective and efficient way, and not the same thing!

At it’s most basic level CRM is a way of consolidating every touch point your company has with every prospect and customer. Doing this means that every time marketing reaches out to anyone(push) it is logged, and every time anyone reaches in to your marketing (pull) it is also logged. It also requires that every conversation and interaction a salesperson has with anyone must be logged. From this it’s then possible to map out the state of every customer, prospect and potential future prospect, and report on the pipeline.

This all sounds fine, but there are a few critical challenges that must be overcome.

  1. Everything must be recorded. If you don’t enforce that every interaction is effectively tracked in a timely fashion, then the picture you build of your business is fundamentally flawed, and can lead to bad decisions being made.
  1. The goals you place on your team must not be just around entering data in the CRM, as that will push the team to just create busy work that does not actually meet the business goal. For example, if marketing people are tasked with creating a specific number of new contacts in CRM then they will, and it can be done as simply as copying names from the phone book, clearly not the intent but will lead to achievement of objectives.
  1. Don’t treat every entry by sales into the CRM as a committed pipeline deal. Most conversations sales have with a prospect are just networking conversations, and if you press your salespeople to report on each one daily you will just drive them to hide ones out of the system to reduce their paperwork.

It’s a fine balance. But the value of a well maintained CRM on the long term health of the business are amazing.

The number of touches that your company must make with a prospect before they become a won deal can run into the hundreds, and the time it takes can be years, and CRM is the tool to keep you positioned for that win despite changes in staff, etc. over time. Depending on the type of deal your company is looking to make, some B2B deals can take many years to progress and while CRM doesn’t change this, it does allow you to focus the right resources on the right deals in the right way at the right time.

Let me give you an example:

Imagine your business sells a solution that on average costs $50,000 and you have an annual revenue target of $1,000,000, that means you will need to sell twenty deals a year. And if you know that currently you win about 25% of the deals that your sales people engage in, then you know that your sales need 80 deals to work on this year. And if you think that each sales person can work on 10 deals a year then you need 8 sales people to achieve your goal. Can CRM change these numbers? No!

What CRM can do is allow you to understand if your marketing team are delivering enough demand for your sales team, and if your sales team are able to manage these deals as planned. What CRM can also show you is how long it takes for deals to move through the process. Prospects don’t often model their decision making process on your annual schedule, and it may take years to help a prospect through their buyer’s journey, so you may well need a lot more than 80 prospects in your pipeline to ensure that 80 become active sales engagements in any given window of time.

Clearly this example only considers some of the variables that a business must consider, and the numbers I’ve used may not reflect any particular business situation, but as a formula it makes the point. Knowing average deal size, win/loss %, and length of sales cycle by prospect type and geography (and how much you can improve these metrics) can often be the difference between success and failure of achieving forecasts and goals, as can understanding how the effectiveness of a sales person changes after 6, 12, and 18-months on the job.

The fundamental question that every business leader wants to know is “do we have enough?”.

A well managed CRM system can provide you with this answer, but only if you have a complete view of all the data, and that data wasn’t generated just to meet a data generation goal. The behavior is at least as important as the technology.

CRM is not a simple answer to a complex problem, but it is a great tool to help a business run as a team. But you must deeply understand the processes by which your market moves, and create an open and honest relationship within sales, marketing and the business team as to what must be achieved. Every successful team must have mutual trust, empowerment at every level and everyone in the team must be willing and open to support each other.

CRM can provide a lot of data and generate beautiful dashboards and reports but data detached from reality is delusion.  CRM that provides data that is a true reflection of everyone’s commitment to the business is a winning formula for sales, marketing and the business.

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