Where Are Small And Medium-Sized E-businesses Going With CRM


Oh, the heartbreak of the abandoned shopping cart. What's up with that customer? CRM might hold the answer.


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Where Are Small And Medium-Sized E-businesses Going With CRM

They enter your online store, browse through your products, check out your prices and select a product for their shopping cart. Now, they’re going back to look at more of your inventory. It looks very promising. It seems like your hard work has paid off. Your site looks good, it downloads quickly, navigation is easy, and customers are visiting. But – wait. Where are they going? They’ve got products in their cart, ready to make that final order for ‘check-out’, and then – no! It can’t be! They’re gone - a full cart abandoned. What just happened here?

You’re an online merchant, but you’re also a consumer. So, you understand the reason customers usually leave a store is because they are either dissatisfied or not interested in what you have to offer. The challenge is determining the specific reasons behind their abandonment.

The shopping experience is an individual experience dependent on the expectations and preferences of each of your customers. Customer relationship management (CRM) is a term used to describe the processes and strategies used to manage customer relationships to increase customer satisfaction, and maximize revenues and profitability.

CRM uses the power of the Internet and Web-based tools to gain a clearer picture of customers by capturing critical information about their behavior. Utilizing this information effectively enables merchants to provide customers with a positive and valuable shopping experience.

The ultimate goal behind CRM is to develop, nurture and retain relationships with customers to lower acquisition costs and effectively market and sell to current customer bases. According to Harvard Business Review, “Companies can increase profits by almost 100 percent if five percent more of their customers were retained.” It also states “it is six to ten times cheaper to keep a current customer than to add a new one.”

Small and medium-sized businesses (SMB) realize how important it is to retain customers. Today’s technology environment is making it harder for companies to differentiate themselves by product features alone. Online merchants are also becoming more adept at developing better web sites. As a result, consumers’ expectations are higher and they want more. They want to be individually recognized, demand immediate response to their complaints and crave the interaction they experience in a traditional retail environment.

Small and medium-sized businesses are seriously considering CRM. According to Jupiter Analysts, “Spending on CRM software by SMBs will reach $651 million and make up 19 percent of the market by 2006 - up from 10 percent in 2001.” While SMBs have been reluctant in more recent times to conduct online transactions, due in part to economic difficulties and the dot.com fall-out, they still recognize the value of the Internet and the benefits they can attain from their participation in it.

Many analysts believe that the adoption of CRM by SMBs will drive the growth of E-commerce. Jupiter analysts predict that as the relationship between small and medium-sized businesses and their customers increase in complexity, the demand for CRM software to manage these relationships will become more important.

The CRM Challenge for Small and Medium-Sized Business

Developing a successful customer relationship management (CRM) system is not a simple task for small and medium-sized businesses (SMBs) due not only to market barriers, but also high failure rates and dissatisfaction among companies who have engaged in CRM projects. In fact, according to Meta Group, 70 percent of CRM projects “fail to live up to expectations” (12/2001). As well, Gartner Group states, “More than 75 percent of enterprises involved in CRM projects cannot successfully create a full and accurate view of the consumer with actionable, personalized advice for either the consumer or the customer-service representative.”

Lack of Understanding

Many factors have contributed to the failure of CRM systems. On a basic level, most businesses simply do not understand how to successfully develop a system to meet all their needs. Developing a CRM system is not just about buying software and installing it. To work effectively, companies need to determine their objectives, identify what kind of customer information they require and decide how they will use the information. They also need to determine where and how this information is stored so that all levels of the company, whether it is sales, customer service or marketing, know how to gain access to it and use it to improve their business processes.

As a simple example, imagine you are the owner of a fur and leather clothing shop that sells its products through both a traditional bricks and mortar retail outlet and an online site. In addition to the recent launch of your online site, you have also implemented a CRM system that will help you determine what products sell the best, and among other things, enable your customer service team to track customer comments and complaints.

Recently, customers who have visited the online site have been asking questions pertaining to the texture and quality of your coats. As well, your sales data is showing that many of your coats are not selling online as well as they do in your traditional store. With this information, you are able to determine that there is correlation between the two sets of information. To prove that a correlation exists you ask your marketing team to contact customers (using information from your contact database) to determine why they have not purchased your coats online.

Once you understand why customers are not buying the coats online, you can improve your marketing and sales messages, as well as your site, to reflect their needs.

Lack of Internal Support

Another factor contributing to the failure of CRM systems is organizational barriers such as lack of support from within the company. Lack of commitment and communication between those involved with customer relationships can result in an incomplete picture of the customer. For instance, if your customer service team is not supportive of the system and fails to input customer comments or complaints, the company will not understand the reasons customers are not visiting or buying from the site. Furthermore, marketing and sales cannot identify changes required in marketing and sales messages to entice customers to buy.

Lack of Financial Resources

Identifying the right kind of customer relationship management system at a reasonable price has also presented a challenge for companies, particularly small and medium-sized businesses. Traditionally, CRM solutions have targeted large, affluent organizations that could pay large sums to develop complex systems.

According to The Data Warehousing Institute, who conducted a survey in 2001 of more than 1,600 business and IT professionals, 50 percent had CRM project budgets of less than $500,000, which appears to indicate that CRM does not always require a big budget. However, the same survey showed some businesses with CRM project budgets over $10 million. As well, Gartner Group states, “CRM systems cost an average of $35,000 per call-center agent to deploy and that setup and maintenance of CRM sales software typically costs $28,000 to $40,000 per salesperson (over three years).”

In addition to potentially high implementation costs, many businesses that do integrate systems find themselves overrun with hidden costs they fail to identify during the planning stage. According to Gartner, “the majority of businesses implementing CRM projects will underestimate the costs by 40 percent to 74 percent.”

The combination of high initial costs and hidden costs presents a huge financial risk for small and medium-sized companies. As a result, companies need to conduct careful planning before implementing a CRM system and look beyond the obvious costs such as software and consulting charges to other areas including project management, training, testing, and maintenance.

The CRM Opportunity for Small and Medium-Sized Business

Traditionally, customer relationship management (CRM) systems have been out of reach for small and medium-sized businesses (SMBs), primarily due to high implementation costs and ongoing maintenance and support. But, changes in the technology market have enabled SMBs to jump on the CRM bandwagon.

ASPs, application service providers, are providing small and medium-sized businesses with access to costly CRM solutions previously unavailable to them. Application service providers are third-party organizations that manage and distribute software-based services and solutions for customers from a central location. Instead of housing the software on their personal or company computers, businesses can "rent" software that is installed and upgraded by the ASP.

According to Datamonitor analysts, the ASP channel will remove the cost barrier by providing benefits such as ease of integration, savings on labor, and access to new applications. With easier access to the CRM market, small and medium-sized businesses are expected to shape its growth, which, according to the Meta Group, is predicted to expand from a $20 billion market in 2001 to approximately $50 billion in 2003 (12/2001). Further, Datamonitor says “revenues accrued through the ASP channel will grow 128 percent in the next five years to be worth $431 million to CRM software vendors in 2005.”

While cost has been a significant barrier for CRM implementation by SMBs, it is not always the lower-cost vendor that is first choice. According to Jupiter analysts, SMBs consider scalability and knowledge transfer as important as obtaining the best price. SMBs are taking advantage of the Internet and spending large amounts of money to do it, but only for solutions that bring solid results and complement their current business processes. Realizing this opportunity, larger E-commerce and CRM vendors, that have traditionally targeted large companies, are offering relatively affordable CRM solutions to meet the needs of smaller clients.

Siebel

With over twelve hundred small-to mid-sized clients, Siebel Systems has proven its ability to meet the needs of its customers by offering solutions that provide fast benefits to their bottom line, are affordable in the long term, and are scaleable with business growth. Siebel’s solutions enable SMBs to create a single source of customer information that sells to, markets to and services customers across multiple channels including, but not limited to, the Web, call centers and retail networks.

The Siebel 7, MidMarket Edition Suite introduces a new highly interactive Web Interface, designed for easy deployment, and includes enhanced product features that improve sales, service, marketing, and partner relationship productivity.

In particular, the Siebel eCustomer 7, MidMarket Edition is a comprehensive, out-of-the-box application that supports both business-to-business and business-to-consumer online selling by integrating multi-channel sales, customer service and marketing applications. Siebel eCustomer 7, MidMarket Edition is comprised of a multimedia product catalog, product searching and comparison tools, integration with tax and payment software, a Web-based shopping cart interface, and an automated order process, that enables small and medium-sized businesses to provide high-level customer service and compete more effectively in the online environment.

Oracle

Oracle Small Business Suite is an integrated online business and Web store management system that automates key business processes seamlessly in one complete system, giving business owners a thorough and up-to-the-minute picture of their business anytime, anywhere.

The Oracle Small Business Suite enables businesses to use the Internet to manage all aspects of their business including accounting, sales force automation, customer support management, Web store development, online bill pay, payroll, and customer care. Sales people can learn everything about their customers, support people can keep track of product shipments, accounting employees can keep up-to-date on online bill payments, and customers can determine their order status and make payments online with a credit card.

Backed by the highest level of data security, the Oracle Small Business Suite provides both employees and customers with access to valuable information that improves business processes and increases satisfaction at all levels of business.

PeopleSoft

PeopleSoft Accelerated eBusiness Solutions deliver a fully integrated suite of affordable software applications for small and medium-sized businesses that provide a range of benefits, from streamlining business processes and improving decision-making, to identifying customer needs and reducing costs.

As a scaleable suite, PeopleSoft Accelerated eBusiness Solutions can be implemented on a wide-enterprise scale or developed according to the specific needs of any small and medium-sized business.

The suite includes a number of applications that utilize Internet technology to tightly integrate customers, suppliers, and employees, as well as reduce costs, increase productivity, and improve profitability. In particular, PeopleSoft’s Accelerated Customer Relationship Management system enables businesses to anticipate customer requirements and increase customer loyalty by improving operational efficiencies across all customer access points—sales, marketing, and customer service.

salesforce.com

With over 3,800 customers worldwide, salesforce.com offers affordable and powerful online CRM applications for sales force automation, customer service and support, and marketing automation.

The company’s sales force automation application enables sales teams to forecast revenues, track leads and identify bottlenecks within the sales process. Its customer service and support application enables customer service and support professionals to keep on top of critical customer issues and track all customer interactions. Additionally, using its marketing automation application provides advertising and marketing employees with ROI data to help determine the effectiveness of campaigns and optimize valuable time and resources. To complement these applications is salesforce.com’s reporting analysis tool that provides business owners with standard and customized reports.

salesforce.com’s CRM applications are rapidly deployed, provide quick return on investment, are highly flexible and include global support that will attract, grow, and retain profitable customers.