The History and Future Of CRM According To Marco Formaggio

I am Switzerland when it comes to CRM (Customer Relationship Management) products and have spoken for vendors including Oracle, Sugar and SAP. CRM and sales enablement technologies are one of the four topics I write about, along with leadership, strategic selling and social selling.

I have known Marco Formaggio for years and he is one of the leading CRM consultants in the SAP arena. I respect him greatly and SAP is one of the powerhouses for enterprise software globally. Their approach to CRM has been different from Oracle, Salesforce, Microsoft, Sugar and others; yet the power of real-time data from a truly integrated enterprise.

I asked Marco to share his thoughts on the history and future of CRM. He was there during the birth of enterprise CRM back in 1997, back when it was merely a philosophy before Siebel burst onto the scene at the turn of the century. CRM became the next big thing following the ERP (Enterprise Resource Planning) craze sweeping the enterprise world at the time. ERP was driven by hysterical fear of Y2K bringing computers around the world (and in the air) crashing down.

Marco believes that CRM is best executed as part of an integrated ERP strategy. He has seen ERP drive productivity, data integrity and systemisation of previously loosely coupled processes within organizations. ERP drove the era ofintegration which was the most commonly used buzzword in IT circles in the mid to late nineties.

Here are some of Marco’s other thoughts. “Customer Relationship Management is really a business philosophy espousing the idea that the enterprise needs to be customer centric. In other words, all process and functions should be designed with the customer at the centre. In this model, processes are viewed from the customer’s viewpoint and enable the customer to connect in every possible way to the enterprise. ERP did not do this! Thus tools were built to cater for this ‘One Face to the Customer’ approach. The best known tool was Siebel. This sought to address the need for a software tool that would allow sales, service and marketing functions to provide consistent data and experiences with their customers. CRM now became a tool!”

“Back when Siebel was gaining momentum, SAP decided to build a standalone system known as SAP CRM to address this need. This system would ‘integrate’ via middleware with the flagship R/3 Solution. In the early 2000’s a number of CRM implementations were carried out with varying levels of success. Needless to say the success for SAP was not as revolutionary as ERP. The success was also mixed for organisations who spent untold millions on integrating their standalone CRM systems with their integrated ERP systems. ‘CRM’ was now on the way to becoming a dirty word.”

“And then came Software as a Service. The advent of tools such as Salesforce.com sought to address the needs of sales and marketing by providing them tools that were not sold to IT but to the very people who were the ‘face’ to the customer. They addressed the needs of the disgruntled staff members who were not getting what they needed from IT to help them drive their customer centric objectives. These systems were implemented rapidly, generally not too focused on integration or process standardisation. They definitely filled a gap and raised the bar in terms of gathering customer related data in a single repository and assisting sales and marketing in the execution of their day to day to roles. ‘CRM’ was now a Sales Force Automation (SFA) tool but where was the customer!?”

“The advent of social media has now driven a wave of change where the customer is now in control whether suppliers like it or not. The challenge now is to provide ‘one face to the customer’ as a business imperative. Customers looking from the outside-in do not care about the businesses disparate systems and do not understand why the sales representative cannot tell them immediately what the progress of their delivery is in the warehouse or the when the imported service part that has been ordered will arrive in the country. For this required integration it requires a customer centric enterprise. This is CRM in the real world; beyond pretty user interfaces!”

Thanks Marco for sharing your experience! Here is a snippet of Dr Michael Hammer who created the term: Business Process Reengineering... enjoy hammer-time!

If you valued this article, please hit the ‘like' and ‘share’ buttons below. This article was originally published in LinkedIn here where you can comment. Also follow the award winning LinkedIn blog here or visit Tony’s leadership blog at his keynote speaker website: www.TonyHughes.com.au.

Main image photo by Dr Michael Hammer. Creator of Business Process Reengineering

CRM Truth – Insights From Jason Jordan

Last week I was speaking at a conference in London for Top Sales World along withJason Jordan who is the legendary co-author of Cracking The Sales Management Code. In his book he highlights the insanity of what many seek to measure and manage within their Customer Relationship Management (CRM) systems. This is not a beat-up of CRM because...

Without a well implemented CRM, you have no chance of being truly customer centric. Nor can you create awesome customer experience and properly manage customer lifecycle without a good CRM

Both Jason and I therefore believe in the value of CRM but we are equally intrigued by the fact that so many implementations fail. Jason has been kind enough to share his thoughts here on why, and how to ensure success. The rest of this post (in italics) is from the keyboard of Jason Jordan. 

It has been 15 years since Gartner famously reported in 2001 that 50% of all CRM implementations were considered failures, and various studies since then affirm the fact that sales forces are still not satisfied with CRM. In fact, we work with some of the most successful sales forces in the world, and all of them are working intensely to improve CRM’s impact on their businesses. So why do we remain so vexed by this software? Why do the smartest and most motivated executives on the planet still rub their foreheads and wrinkle their brows when they consider their next steps with CRM?

When conducting the research for our book Cracking the Sales Management Code, we spent several years observing how company measure and manage their sales forces. This gave us unique insights into the intersection between the technology of CRM and the practices of sales management. We believe that sales will continue to battle with CRM until we fundamentally shift our thinking in four key ways.

It’s Not About Managing Customer Relationships

We continue to use the moniker ‘CRM’ for our sales force’s software, as though we’re using it to manage our customer relationships. If we’re honest with ourselves, we actually use these systems to manage our sales forces. Sure there are customers on the other side of our salespeople, but we really want the software to automate important selling tasks like aligning territories, managing pipelines, winning opportunities, and generating forecasts. For these purposes, we prefer the somewhat abandoned term Sales Force Automation (SFA) to CRM, because it describes what we’re really trying to do. It’s a subtle change, but if we started calling this software what it is, then we could begin to think more specifically about what we are building it to do.

It’s Not About ROI

One of the most cited measures of CRM failure is a low return on investment. In our opinion, ROI analyses should no longer be required to justify CRM’s place in the sales force. ROI analyses were developed to help evaluate competing alternatives for capital investment, but CRM is no longer an investment alternative. CRM is now corporate infrastructure that’s required to operate a sales force, just like e-mail, mobile phones, and laptops. Try searching the web for articles on the “ROI of e-mail.” You’ll find no results, because e-mail is not an investment – it’s an expense. So is CRM. We are at least a decade removed from the time when CRM was a strategic investment that required careful consideration and justification. Let’s disregard the ROI calculations for CRM and start looking for more meaningful ways to measure its business impact.

It’s Not About User Adoption

Most of our clients are obsessed with ‘user adoption’ of their CRM tool, and it is a common metric of a successful implementation. It shouldn’t be. User adoption is an outcome of good CRM, not a measure of it. Someone once told me that when you lead a horse to water, your goal shouldn’t be to make the horse drink – it should be to make the horse thirsty. Similarly, when you lead a salesperson to a CRM, your goal shouldn’t be to make them use it – it should be to make them want to use it. Reporting ‘low user adoption’ implies that the salespeople are somehow to blame, when the underlying cause is a tool that isn’t compelling to sellers. How about tracking a metric like ‘Percentage of Reps Who Love Using CRM.” That would be a better measure of a successful implementation, because it would shift the business challenge from getting users to log in to providing users with irresistible and unavoidable functionality.

It’s Not About Technology

Since CRM has technology at its core, we fall into the trap of thinking better technology will solve our problems. But can it? Today’s CRM technology is astonishingly better than it was 15 years ago, but research says it’s just as big a failure from a business perspective as it was in the beginning. What we need is not another iteration of CRM technology (call it CRM 15.0) – what we really need is to teach sales forces what to do with CRM. It’s like we’ve taught millions of people how to get in and out of their cars, but we haven’t taught them how to drive. We’ve taught sellers how to log in, but we haven’t taught them how to use the data to win more deals. We’ve taught their managers how to log in too, but we haven’t taught them how to use the data to coach more effectively. CRM technology has become amazing over the last 15 years, but our business practices haven’t. It’s time to stop focusing on what’s on the computer screen and start focusing on what’s in the user’s head.

CRM has been with us for a long time, but it remains underleveraged because we are viewing CRM all wrong. We need to concede that we don’t really use it to manage customer relationships – we use it to manage our sales forces. Our goal shouldn’t be to achieve an ROI or to boost user adoption – it should be to provide an invaluable service to our sellers. And the focus shouldn’t be on revolutionizing the technology – it should be on revolutionizing the sales force’s ability to use the data it provides. If we can’t put CRM into the context in which it belongs, we’ll be reading the same research findings for the next 15 years… and beyond.

Thanks Jason for sharing your wisdom and here also are other blog posts I've written about CRM, some with other thought leaders:

• CRM's Dirty Secret
• CRM Must Evolve 
• CRM For Sales Enablement
• CRM Hijacks Customer Experience
• You Can't Manage Revenue in CRM (more wisdom from Jason Jordan) 
• Can You Function Without CRM?
• CRM Is Best As A Mash-up
• Is Your CRM a Graveyard of Information

I highly recommend you buy Jason's book, Cracking The Sales Management Code, the best ever written on effective sales management.

If you valued this article, please hit the ‘like' and ‘share’ buttons below. This article was originally published in LinkedIn here where you can comment. Also follow the award winning LinkedIn blog here or visit Tony’s leadership blog at his keynote speaker website: www.TonyHughes.com.au.

Main Image Photo by Flickr: David Blackwell - Promotion

Should You Invest In LinkedIn Or CRM?

The world of business-to-business selling is changing and I recently had a conversation with John Smibert, one of the most influential people in professional selling globally, concerning the roles of LinkedIn and Customer Relationship Management (CRM) software.

LinkedIn has the hearts and minds of salespeople because it helps them find the people they need to build pipeline and also the next employer to progress their career.

CRM, on the other hand, should be the engine for managing sales process but sadly is often a 'manage-up' reporting tool. Sales people are often reluctant to embrace CRM because they feel their contacts, relationships, prospects and pipeline belong to them personally more than they do for their employer.

But CRM can be transformational when it becomes the 'single source of truth' about prospects and clients to manage the entire customer lifecycle for marketing, sales, services, support and finance. The very best implement CRM as a coaching platform for sales managers with their people to review opportunity qualification and discovery, call plans, relationship mapping, sales stage progression with action tracking, close/win plans, and much more... all integrated within the CRM.

LinkedIn helps build opportunity pipeline. CRM manages sales opportunities. LinkedIn's Sales Navigator enables you to integrate the world's most powerful contact database and engagement platform to the leading CRM systems.

LinkedIn and CRM [should] solve different problems and both systems create value in their own right. Each organisation needs to understand how they can extract the best value. Watch this video interview and a full transcript is below. 

Interview

John: Hey, you've been a CEO of a CRM provider in recent years in Australia. And you would have seen lots of changes in the way CRM have been progressing. You’ve also see a lot of the problems with the implementations of CRM, and now you’re doing a lot of work with LinkedIn. I’m sensing LinkedIn is overlapping with CRM a lot. How do you see the relationship between LinkedIn and CRM, and how people are using LinkedIn now almost to do a CRM?

Tony: Yes, it’s very interesting, because there’s people asking the question “Will LinkedIn become the new CRM?”

John: I've heard that being asked.

Tony: Yes, and it’s an intriguing question. I know, for example, that Salesforce look at LinkedIn, and they’re a little bit worried about the way that LinkedIn is really moving into what they traditionally see is their space. There’s a few things that we know are true, and that is that LinkedIn has the heart, souls and minds of salespeople, and CRM does not. CRM is historically very much a reporting up managing tool for an organisation. And the way sales reps feel, the way they’re wired is their contacts and relationships and prospects and pipeline belong to them more than they do their employer.

John: Is that really true? I feel that a good sales guy represents his or her company.

Tony: Yes, he does. In inside sales maybe not so much, but certainly for field sales and business-to-business selling. Salespeople tend to feel the way they believe that they operate really is as a hired gun.

John: And it’s probably represented in the fact that a tenure in sales jobs tends to be only about, what, three years these days, on an average.

Tony: Yes, most.

John: And they therefore know they’re going to move on to another company.

Tony: Well, the statistics are really scary. It depends on whose numbers you believe, but anywhere from 40% to almost two-thirds of B2B salespeople don’t make the numbers every year, and a lot of it is not the fault of the salespeople. The way that organisations are doing territory planning and rolling out quotas, they have their blowtorch out on people, they expect them to get up to speed very quickly. So, you’re right; the way an employment contract is written is very much that those prospects are the property of the employer, not the employee.

John: Interesting to see whether it can be enforced though.

Tony: Well, you've got to honour the law of self-interest in any negotiation of putting together business models. So, my view is that what salespeople want to do is they want to build good quality pipeline. The biggest problem they face is, yes, they need to manage expectations of management internally, which they do through a CRM. But the biggest problem they’ve got is they need to build quality pipeline, and LinkedIn enables them to research, find and connect with people, monitor for trigger events, engage early at senior levels, stalk them, in essence, in social to find out what are their interests – I mean, at a business level, not at a Facebook, personal level – at the business level, find out what’s driving industry so they can go and connect with people.

John: LinkedIn is the best engagement tool I’ve ever seen – it’s brilliant for me.

Tony: It is incredible.

John: I can use LinkedIn to engage with anybody I want to target, and I can build a relationship well before I ever meet anybody.

Tony: Yes. And Sales Navigator, which is the highest level of subscription in LinkedIn at the moment, when you combine the power of LinkedIn Publisher for evidencing your credibility and building relevance for the markets that you target, with Sales Navigator for seeing social proximity, doing your research, see who’s connected to the people you’re targeting to get warm introductions – those things are incredibly powerful.

John: So, CRM providers, watch out? How should they be looking at this?

Tony: Well, I think CRM has a role in that CRM is ideal for sales process automation. People need to think about the sales methodology that they use inside their organisation, which is different to sales process. They need to enable their process within their CRM, and then use CRM as a coaching platform to create transparency and help people sell. The weak link in the revenue chain for organisations is sales management. They need to get out of their spreadsheets or the CRM systems, and coach their people.

John: Yes. And that’s the reason a lot of CRM implementation’s a fail, right? They’ve been put in for management, not for the sales guy.

Tony: Correct. The first rule of having a successful implementation of any technology, including LinkedIn or CRM, is serve the user, the user in this case being a field salesperson. And clearly LinkedIn serves the user really well – in their minds help them get their next job as well, so the law of self-interest is honoured – but it helps them build pipeline. They need to implement CRM in a way that helps them execute process.

John: I don’t think LinkedIn are looking to replace a Salesforce.com or a Sugar, right?

Tony: Correct, correct.

John: So, it’s really looking at how do we, as an organisation in sales management, use both tools, and make sure we leverage them both, and make sure they work well together.

Tony: To me there is a role for both. And LinkedIn is incredibly powerful for monitoring trigger events, building connections, creating pipeline for, in essence, salespeople to become micro-marketers, and take responsibility for building their own pipeline. Once they’ve identified an opportunity, it belongs in CRM so you can manage that process.

John: Exactly. So, I think that’s cleared it up very much in my mind. Thanks, Tony – I think there'll be a lot of value for the viewers.

Tony: Thanks, John!

****************

Thanks John Smibert for the video interview and transcript which can also be found on on the Strategic Selling Group website where he interviews sales thought leaders from around the world. More of John Smibert's interviews with Tony Hughes:

• "The challenge of change in B2B sales"
• "Empowering salespeople with technology"
• "Be an influencer in your field"
• "The power of social in B2B sales"
• "If you can't write you can't sell"

If you valued this article, please hit the ‘like' and ‘share’ buttons below. This article was originally published in LinkedIn here where you can comment. Also follow the award winning LinkedIn blog here or visit Tony’s leadership blog at his keynote speaker website: www.TonyHughes.com.au.

Main Image Photo by Flickr: Garrett Coakley - Decisions, decisions