When Should a Company Set Up a CRM?

posted Oct 28, 2013, 2:23 PM by Douglas McCartney

One question that many new companies ask me is when should they create a CRM. But the fact of the matter is that all companies have a CRM, it’s just a question of how well they manage it, how much it helps or hurts them, and in the end how well they understand what it is they are trying to achieve.  

What Do You Mean “All Companies Have a CRM”?

By saying that all companies have a CRM I mean to say that all companies - at least those with at least one customer or prospect - have customers, have a relationship with those customers, and that they manage those customer relationships in some fashion. They may not manage them particularly well, they may not be in a centralized or integrated system, but they do have some system - even if it is mostly accidental - to manage their customer relationships.

And in fact, not having a centralized “system” is by no means proof positive that things are not being managed well. Quite to the contrary, many companies manage their customer relationships extremely well and yet they have not licensed software or built a system they refer to as a CRM. So a CRM, to me at least, isn't exclusively defined as a product that you buy or subscribe to from a company like Salesforce.com. Instead it is just what the name implies - the approach by which your company manages customer interactions.

The question for every company thus becomes, not should I implement a CRM, but is your current CRM working for you?

So What Would or Should Prompt a Change?

Taking my more general definition of a CRM, many companies don’t start with or have a standardized and centralized CRM system. Instead, the “system” they have came about as the result of several individuals’ or separate groups’ efforts to get things done. For example, the sales and support teams - each as a group or even as individuals - may have started  managing customer contact detail in MS office or Google contacts. Other details about customers, for example customer interactions, may simply be stored as archived emails. After all, who among us hasn’t dug up important information stored in old emails in our Outlook or gmail system. Or, likewise, someone smart in accounting may have started organizing order forms or license agreements in 3-ring binders or as file attachments in the accounting system. Elsewhere, perhaps development built some tracking into the system itself.  These are all part of a CRM and hence all part of the process. The question is, if this more or less describes you and your company, is it working for you now and will it in the future?

What may be missing in most cases is that the above approach is highly fragmented. Data for one individual or group isn’t easily shared with others or with other departments. Sales may have access to their contact detail and historical emails, but what about support? Wouldn’t it be nice if that information could be shared? Or what about the license agreements stored by accounting? It might be very helpful to the support group or even development to have access as well.  More importantly, it can be hard to summarize and report data. Does a new customer acquisition process take a month or six? How about the new customer on-boarding process? How many emails and calls on average are required? Or for accounting, what is our average price really and how often do we give customers a discount? With the accidental approach most every answer to these types of questions is anecdotal, an educated guess from that area’s resident expert. When you are very small that can be accurate, but in short order our “sense” of what “is” may be very different from reality. Even the expert can be wrong. Further, if you wait too long you may find that your fragmented systems are deeply entrenched and extremely hard to improve on and combine going forward. You are in essence trapped and the more successful you become the harder it will be to fix.

So What Should You Do?

In a nutshell, plan what you want to get out of your CRM and start creating a unified system as soon as possible. No doubt you will get some things wrong, but the sooner you start thinking about what it is you think a CRM should do for your company the sooner you can make it better. At its core, you want a way to look back and see what every customer interaction entailed. What you offered, what they licensed, what they owe you. Sales should be able to see what support has done and visa versa. A CRM, when it is at its best, is in many ways how you run your company.

Is a commercial CRM required? Absolutely not. But you might want to play with one a bit before you assume you should “go it alone”. There is much that can be unique to each CRM implementation and yet much is the same from one business to the next. You certainly don’t want to be reinventing the wheel. Plus there are many choices, meaning it isn't only about Salesforce.com. Many CRMs may be much more complex than your require, while others will be far too simplistic, but one of them may be just about right. In the end, the key is to start building a system that will help you maintain, grow, and better understand your business. That, after all, is what it is all about.