At a time when consumers can order their groceries, trade stocks and buy a car online, it's no surprise that the other side of the sales spectrum is moving online as well.
Sales and marketing teams are jumping on the Web to better their sales forces and their accuracy with online customer relationship management.
"With on-demand services, once a month someone has to write a check," said Sean Forbes, vice president of marketing and business development at RightNow Technologies, an on-demand CRM provider. "That's different than on-premise [services], where you pay and pray."
The low cost of ownership and high accessibility of CRM applications are bringing more small and midsized business clients to on-demand models, and in a reversal of normal processes, the larger enterprises are following the SMB lead, said senior analyst Rob Bois at AMR Research.
In a 2005 AMR survey, 28 percent of enterprises with 5,000 or more employees, 39 percent of companies with from 1,000 to 4,999 employees, and 41 percent of those with under 1,000 staff were planning on using hosted or ASP-model CRM.
"People have finally gotten over their paranoia of putting data on the Web," said Mini Peiris, senior director of product management at NetSuite, an on-demand business applications provider. "They are banking on the Web now, so they have gotten over the stigma that on-demand solutions had. On-demand solutions have matured in the last couple years."
Jim Dickie, a partner at CSO Insights, a research firm specializing in sales and marketing companies, agreed with Peiris that on-demand CRM applications have overcome most of the drawbacks people once saw in them: security issues; less functionality than desktop versions; fewer customization opportunities; and access issues.
As an example, said Dickie, on-demand providers offer offline capabilities so a sales representative can write notes from a meeting with no Internet access or fill in information on an airplane, and then update the system when he gains Internet access again.
"The ASP model got started about nine years ago," said Dickie, "So they got most of the bugs out of the system by now. That's why [companies like] Salesforce.com and NetSuite have really taken off."
One of their biggest strengths could be their downfall, however, said Bois. With the low costs of ASP models, it is easier for a company with an online CRM application to switch to another online vendor.
"The assumption was that the vendor had a leg up before [in user loyalty]," said Bois. "Results show that is not necessarily true if another product has better functionality - that's across the board, for enterprises and SMBs alike."
Another possible disadvantage, added Bois, is that in the long run, growing companies may find an on-premise model has a lower cost of ownership than an online version. Where you keep paying a monthly fee dependent on the number of users for an online service, an on-premise software system relies mostly on upfront costs like purchasing the software and hardware.
The growth for the CRM marketplace, however, does not stop with the hosted or ASP models. In the AMR Research paper, the adoption rate for CRM applications for companies of all sizes is jumping up, from 2.3 percent in 2005 to a projected 8.2 percent in 2006.
But companies need to be careful, warned Bois and Dickie. Installing a CRM application as a band-aid to a failing company will not dress the wound properly. First, the company needs to find out what their problem is before deciding on which CRM to chose.
CSO Insights performed a study last year with 1,000 companies using CRM products, and found that only 29 percent of those that installed a CRM application were achieving big improvements, while 30 percent were finding some and 19 percent were finding none.
"The main issue is that people buy the solution, then look for the problem," said Dickie. "You have to look for the problem to find the right solution. There are tons of capabilities within CRM systems today. It's a pack of highly skilled hunting dogs, and you have to decide what hunt you are going on."
One of the other major problems arising from CRM implementation is that people do not follow through on training new employees after the initial training session. Also, sales teams do not use or see the importance of the CRM product, and users are not tapping into enough of its capabilities.
According to Jeff Holway, director of sales and marketing at Experlogix Inc., a Microsoft CRM independent software vendor, companies "are able to see a significant return on investment when top management in an organization has adopted and mandated a CRM product. If they are not involved in the decision-making process and don't embrace it, their employees won't use it."
The accountant for companies with CRM applications benefits as well, say experts, pointing out that CRM products increase accuracy rates in sales and quotes. That, in turn, decreases the number of errors on a final, quarterly or even monthly financial statement that an accountant would have to fix.
But for now, most people are using their CRM products as a "glorified Rolodex," said Steve Ems, managing director of information technology services at RSM McGladrey, a national CPA and business services firm. According to Ems, only 10 percent to 20 percent of CRM functionality is being used by sales and marketing users.
With growing integration into back-office systems and the need to provide better customer management, CRM appears poised to take the lead as the next "must-have" in the sales and marketing industry, even with its faults - and those of its users.
"CRMs need to be less of this 'other thing,' and more just a natural way of doing things," said general manager for Microsoft CRM Brad Wilson.
Other factors like more wireless services are also helping drive the change in the way that sales teams work, said Bois.
And open sources like the free CRM service from SugarCRM.com are also helping promote the use of CRM by offering a free on-demand CRM product that can support coding built upon it by small businesses that want to test a CRM out before purchasing one.
"It's a user's God-given right to ask, 'What's in it for me?'" said Dickie. "Don't show me the features, show me how it fits into my daily workflow. It shortens time in forecasting, process improvements and leads to a higher quality of life. It's a major improvement in how business gets done."
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