CRM For The SMB Market: Five Considerations For Making A Smart Decision

Customer Inter@ction Solutions, Mar 2005 by Dempsey, Ed

Formerly reserved for the largest of enterprises, CRM has become a practical solution for small to medium-sized businesses (SMBs) looking to boost sales and optimize performance by really managing - and improving - the entire customer relationship.

Scanning recent trade magazine articles will show that vendors have realized that SMBs represent an under-tapped market and are targeting offerings to meet the specific needs of this segment. To do so, they are lowering prices and, therefore, making solutions more affordable for these companies. Vendors also have paid attention to SMB pain points, building applications that offer more functionality as well as easier configuration and use. As a result, market forecasts indicate smaller companies are responding positively to these changes and are expected to increase their CRM spending in the year ahead.

The issue for SMBs, then, is no longer whether or not CRM is viable. Rather, it has become, "How do I find a cost-effective solution to match my business requirements?" The first step in a successful implementation that delivers on its promised benefits is understanding the different types of products and what they offer in the way of meeting the particular needs of SMBs.

Different Technologies For Different Requirements

Despite a growing number of products, there are really only three categories of offerings: client/server applications, self-hosted online applications and vendor-hosted online applications.

The traditional client/server application is installed on the company's server on-site, giving the company complete data control. With its rich, Windows-based interface, this type of product is familiar to users and requires little in the way of training to get them up to speed. This type of application may also offer more complex modules, such as call center management, to meet highly specialized requirements.

The client/server model has disadvantages, however. It doesn't allow remote staff to access information from any environment. Instead, it requires users to work from a desktop PC or a laptop and to synchronize information with the corporate database. It can also be an expensive choice, requiring hardware upgrades or purchases, as well as a hefty software investment. Finally, the client/server tool requires specialized IT expertise for administration and maintenance - which can translate to a disadvantage for organizations with limited IT staff and budgets.

Online applications, as the name implies, are Web-based, so the database can be accessed and updated anytime and anywhere via an Internet connection. Distinct advantages of online applications for SMBs are simplified deployment and management across the enterprise, as well as ease-of-use for personnel. The initial cost is also lower, as the company can leverage its existing equipment to get up and running.

The two types of online solutions, self-hosted and vendor-hosted, are named based on the location of the database - which is where purchasers will find some significant differences.

In the self-hosted scenario, the database resides securely on the company's server, giving the company both ownership and control of its corporate intelligence. This means the company can ensure information security and can use the database as it sees fit without incurring vendor charges. Highly flexible, the self-hosted online application is also easy to customize, and its affordable, one-time software cost is a plus for companies with limited budgets.

With the vendor-hosted option, a company can experience the same anytime-and-anywhere Internet access, but at a higher cost in terms of price and data ownership. The software investment is generally more expensive because there are monthly "rental" or hosting fees to pay. And because the vendor hosts the database, the information resides within its facility, not the company's. Changes, updates and customization are handled - sometimes at a charge - by the vendor's staff.

Five Strategic Considerations

Because of the advantages they offer SMBs, online CRM applications are emerging as real contenders for those looking to attain - and make the most of- a complete, integrated view of the customer relationship. Before making a decision, however, companies need to take a close look at their requirements and compare them against what a product offers. There are five essential areas for consideration:

* Productivity;

* Simplicity;

* Affordability;

* Functionality; and

* Manageability.

Productivity

One of the main goals of CRM technology is to help sales, service and other customer-facing employees work faster and smarter. Some applications with many bells and whistles are complex to learn and utilize and can actually impede productivity. Other CRM applications, however, offer powerful capabilities yet are easy to become skilled at and use, making them appropriate tools for midmarket companies with limited IT support in-house. There are several features to consider:

* Essential sales functionality. Basic contact, lead, sales and calendar management features should be complete yet uncomplicated, helping salespeople do their jobs more efficiently.