And how did Salesforce get so big?

June 13, 2011 4:29 PM

Has CRM ever worked for anyone? This is a serious question.

I've seen many companies spend a lot of money and a lot of time trying to implement some form of Client Relationship Management (CRM) strategy especially with regard to the sales/business development process.

I've never personally seen or heard examples of CRM really working. Are there any independent case studies, white papers, or even anecdotes about the CRM promised-land? Has anyone successfully gotten through the consulting/implementation/documentation process and gotten to the part where CRM starts saving time and money? Do user habits ever change to embrace the CRM process, and how does data entry process work when it works?

So, has CRM ever worked for any company? What does that look like, and what did it take to get there?

posted by 2bucksplus to work & money (16 answers total)

So this is sort of an odd question. It's a multi-billion dollar industry. Is your thesis that it's completely driven by lies and snake oil?

There are lots of case studies - just go to any CRM vendor's web site. Now, "independent" case studies - certainly industry analysts like Gartner Group have such information, but they don't give it out for free. And industry analysts tend to get paid by everyone involved so it's debatable whether they're truly independent.

I used to work for a marketing automation company whose product was built on top of companies' CRM systems, like salesforce.com. Every company I've worked for has used a CRM system. In every case I've seen implementation is difficult, expensive and time-consuming. In every case though, the alternative was much, much worse. How are you going to store customer contact data? How are sales managers going to do pipeline analysis? How are product managers going to find customers to contact without having to harass sales people? CRM is typically closely coupled to accounting and product management systems as well and even those in isolation can be considerd to be under the umbrella of CRM.

But I can assure you I have seen companies that were driving lots of revenue through both new customer acquisition and sales efficiences by implementing CRM.

Do you have a more specific question?
posted by GuyZero at 4:55 PM on June 13, 2011

Very big questions. Here goes a cursory overview. This is based off my work done in call centers where CRM software is part of the daily routine.

I've worked with four flavors of CRM software. It's not so much as something that "works or doesn't work" as it just exists. For the big companies there has to be some way to manage customer data, tickets, orders, etc. There can't be any expectation, especially in a call center, that one agent can speak to another agent about an existing issue. A client could call in and get my agent here in Oregon, and the next call hit Sioux City, IA or Halifax or Santo Domingo or Cebu. I obviously can't give much by way of specifics due to NDAs and the like, but the CRM software was integral to the day-to-day function of all four companies, and was the gatekeeper to a lot of revenue for two companies.

Company A used it to track tech support information, and to a smaller degree customer service. The amount of time and money spent implementing their current CRM software was massive to say the least. Think 20,000 users tracking millions of clients and products and tens of millions of tickets. I don't believe the CRM was so much a profit-driver or really customer driven, but it was vital to the function of the company. Company A was the worst of them all as they forced an antiquated ordering system to work with the new CRM in a feeble attempt to save money. Basically they wanted to avoid replacing the outdated order system, and it caused all sorts of hell. It was poor implementation that caused orders to not arrive, and countless amounts of money to be wasted. The failure of the ticketing and order system definitely was a driver in customer dissatisfaction, so not only did Company A lose money on the order, they likely lost hundreds of dollars in future sales.

Company B had a home-built CRM specific to their own purpose. The CRM integrated all aspects of the customer and the product. The particular product required activation to use on a subscription service. The CRM software handled everything including activation, subscription, billing, e-mails, tech tickets, service and escalation procedures. Despite the software being purpose-built by a homegrown team it was single-handedly the easiest interface I've ever dealt with. All functions necessary lived on the one CRM and agents rarely had to stray from it.

Company C used an existing CRM that is quite dated. The big uses were for tech support, ordering and for service contracts. Because the company charged for tech support ($80 one-time, $1000 yearly, give or take) they had to have some type of tracking for it, hence the CRM. The system worked just fine as they integrated their workflow into how the particular CRM worked. The only problem was that the CRM was just too damn slow, and it affected the agent's work. The CRM software worked slow enough to add 10-15% to agent handle times. Even though bottom line was affected due to lost time, there was never the issue where the CRM got in the way of service, which I couldn't say for Company A.

Company D is my current company, and I'm not going there.

At any rate, in dealing with all of the companies there had to be something to at least track what was going on, and often be the combination of tech, escalation, account information and billing.

To answer a few questions: I'd say Company B hit the promised land when it came to CRM. They did it damn well. I never personally dealt with implementation, but I guarantee it was a long, drawn-out process for all companies. In the call center world, user habits changed or the user is exchanged. Data entry could be smooth as silk or hell on earth, it really depended on how the CRM worked with the databases. Company B: quick, responsive, awesome. Company C worked fine but was slower than dirt. Company A did not do such a good job of implementation.

Implementation is going to make or break the CRM. If it isn't logical and doesn't work really well from the start, it is doomed. The point of failure for using CRMs that I've seen repeatedly is when a company tries to force a CRM program to work for them, rather than choosing the right one off the bat and changing the workflow to conform with it. If you need it to do very specific things, make your own. And once a CRM is in place, changing things can be a royal pain. Changing the workflow almost invariably means changing data and databases.

If you have questions about specifics, MeMail me.
posted by Mister Fabulous at 5:00 PM on June 13, 2011 [2 favorites]

I would offer that if you are looking at it from a "let's buy a product that will save us money and/or build sales" then no, it won't work. Because you haven't identified the problem that needs solving.

Small example: my company (and the local pizza place) has a phone system that is hooked to the customer database, so that when a customer calls in, their info pops up on the screen and, with the click of a button, gets populated into the "new order" screen. Or their current sales rep's name pops up, and they can be connected with the rep immediately, without having to go through the "well, who did you order from last time" nonsense.

But maybe I'm approaching this from a different angle. Every place I've worked for have had their "the system" that ran the operation. (As in "go into the system and look up this widget") The POS for retail, the inventory/ordering system, the super magic system that runs everything at my current place. It isn't that you have to train employees to input information into it; but that they cannot do their job without using it. A bad example is the "what's your phone number" for buying batteries.

And don't use Remedy. (A company I know got soaked for hundreds of thousands on it, and it ended up being cheaper to cut bait and go back to the 20 year old DB2 style homebrew system) (and another org I know of uses it, and it is a fucking monstrosity. Added significant drag to the organization's workflow. I could have done better with Access.)
posted by gjc at 6:32 PM on June 13, 2011

This REALLY depends on who you ask.

Ask the managers/execs and they will inevitably say "WHY YES!" because they spent a lot of money, and they REALLY REALLY REALLY want to see stats where there aren't stats and will tell you why it worked. Also, they have been convinced by people selling them all sorts of CRM software that it works.

Ask the workers who are manning the phones/emails and they will say "it was shitty before...its shittier now because management implemented this system which is worse than before...and they expect more out of it".

Always. always.

What matters more is:

What is the product/service your company is offering to customers?

What does your company want to do?

Do they see post-sales customer interaction as a nuisance, or something that they can use to keep loyalty?


Feel free to memail me, I've professionally consulted in this field twice with excellent results.
posted by hal_c_on at 6:33 PM on June 13, 2011 [1 favorite]

It works for my company. (I own it.) We use a simple one that's pretty to look at, Highrise, and that has been the key. However, I don't see any evidence that Highrise would work with more than a few thousand contacts/daily user.
posted by michaelh at 6:49 PM on June 13, 2011

I recommended my Client (a b2b service company) implement one since we manage their paid search marketing and had no real way to tell whether the leads we were driving for them ever became customers.

They then tried to build a CRM in Access and realized how silly that was once I introduced them to SalesForce. By setting up our tracking through SalesForce, we are now able to run reports on the lifetime value of our lead and A. optimize against what is driving closed deals (versus just the initial lead), and B. prove lifetime value and show actual ROI. That way it is hard for them to argue that we are not very profitable for us when it comes time to ask for budget increases.

So yes, CRM does work.

That said, it also is just a tool and only as good as the people and processes it is used with. I had a lazy sales guy I worked with once who simply refused to take the five seconds necessary to update a record after a call, so we had no data in there and thus it was useless.
posted by Elminster24 at 6:56 PM on June 13, 2011

I've spent many years in the CRM industry. The key commonalities I've seen with companies who implement CRM systems successfully are:

1. They know what their goals are. They know that X is screwed up and we need to either change our workflow or implement feature Y in whatever software suite they're looking at. Their goals are specific: not "We needs teh new softwarez!" but "We need to decrease hold time or stop duplicating work" etc.

2. They have buy-in from everyone involved. Sales, customer service, IT, everyone has to agree that yes, things need changing and we're not too proud to change it. And if things are working optimally, we're also pragmatic enough to leave it alone. Some managers may bristle at this part because this discovery phase may uncover redundancies and backward workflow processes so projects often languish here. You need a good project manager who everyone respects to ease egos and break logjams.

3. They had follow-through. Just like elminster24's comment above, CRM is useless if people won't use it so there are programs and metrics that we all agree will be tracked once we get rolling.

4. They eased into it. Maybe keep 75% of the company on the old system and the 25% that's focused on a different market segment can be our test-bed. Once we get the workflow, training, and everything else ironed out, then we upscale it. I had one huge medical company in Belgium use our CRM software for a department that had 5 full time support staff. Six months later, they brought two other countries on board. Two years later, all of their Euro offices had standardized on the same platform. People needed time to learn the new way and unlearn the old. Knowledge bases specific to their company had to be built. A new footpath had to be cut before the road was put in, etc.

Software is the easy part. People is hard.
posted by Tacodog at 7:40 PM on June 13, 2011 [3 favorites]

So, has CRM ever worked for any company? What does that look like, and what did it take to get there?"

Works for us. CVB formerly using CV Breeze and switched to SimpleView about three years ago. We're still tinkering with it but overall it has worked as follows:
-simplifying of contact management process. One person for anyone who needs access to the current, relevant contacts at a given client. Also has fields for recent communications so anyone meeting with a client can easily see most recent communications/feeatures. etc.
-reports. I can save and run reports to see changes in my constituent base whether it be new accounts, new contacts, cancelled accounts. etc.

In a smaller office a CRM might not be necessary, but ~2K member accounts and an office of 160, it's too much for a non centralized data system.
posted by TravellingCari at 7:58 PM on June 13, 2011

The logic is sound- spend a lot of money to acquire a customer, then spend not as much money selling the "next" thing. The important part of this model is understanding what that next thing is. We instituted what is called a "Follow Up Marketing Model" where we identified, based on their first order, what their next purchase would be and then solicited the customer to buy this.

The response rate to the first offer was typically .007, the response rate to the second offer was .01- so to answer your question; yes, it most certainly works if you have the correct product or service identified for that particular customer to purchase.

It took us about six months to understand it all but it was time well spent.
posted by bkeene12 at 8:04 PM on June 13, 2011

The business world is full of people and organizations who don't see past the surface and so embrace they style, but never the substance of a thing (whatever the thing happens to be). It's pure cargo cult and has no chance of working.

But if your upper management is going to shift gears again before a legitimate system would have had a chance to work, then there is an easy paycheck in it.
posted by Kid Charlemagne at 8:53 PM on June 13, 2011

We just completed a value assessment of our direct advertising efforts. While I cannot say that you can replicate our results, I can tell you how we measured it and give you an idea as to what we considered success:

Basic DM theory:
By profiling customer behavior and identifying key characteristics one of two things can be achieved: either a decrease in cost to reach a targeted level of respondents/revenue, or for a fixed cost, achieve a better response than either a random sampling of customers or a selection of customers strictly by the top purchasers or top purchasers life to date. At a base level, the assumption is you are not reaching out to every contact that you have. If your business is small enough that you can reach every person, or the method of reach is sufficiently cheap enough (email) that you can reach everyone, you do not optimize - you mail to everyone - because its cheap.

Direct marketing in many of these cases isn't targeted to the top quartile - the assumption one would make is the top performers are easily selected by simple criteria - effectively these are the "always market to these people" category. Those are the Glen Gary leads.. You always market to the Glen Gary leads.

The assumption instead is that the line of marketing limits somewhere in the second or third quartile - these are the people that you want to optimize for your contacts. Basically, you want to select those most likely to respond/purchase from.

On to the test:
Get the direct marketing manager to select participants based on standard criteria (some combination of age, income, recency of purchase, total purchase price, etc.) As stated, the top quartile gets sent to automatically - that just makes sense.

From the remainder, we took an agreed upon random sampling and divided that between the continuance of selection based on the above criteria, vs using additional criteria to construct a customer model. We built two separate holdouts, and we accepted a loss of performance as well as additional production costs to maintain two very separate identities. In both cases, we calculated RPMs, response rates, and incremental sales.

The difference between the two - especially at the minimal cost - was staggering. We were able to hands down quantify how worthwhile maintaining our client data was.

Further work slated:
Based on our findings, we've generated some internal advocates. As such, we are hoping to be taking a look to see what the negative impact of blasting emails is (can we predict if we'll piss you off by emailing you?). We'll be looking to see whether secondary product marketing strategies are effective. We'll be looking at seasonal components (Can we avoid complex DM mailings at the holidays because more people just naturally purchase then?). And we'll be measuring marketing fatigue.

So yeah... does CRM provide a benefit? Does it work?

For us, yes. YMMV.
posted by Nanukthedog at 9:01 PM on June 13, 2011 [1 favorite]

The trouble is, CRM is a tool, not a solution. I've seen and implemented a number of CRM installations (Act!, Salesforce, Zoho, Sugar), and it really comes down to what problem you are trying to solve.

Are you managing the customer lifecycle and want to treat CRM as the canonical source of customer information? CRM is probably the way to go, and have it tie into your (or plug into) your ERP, trouble ticket system, marketing automation (eloqua/constant contact), financials, etc.

Or do you have a staff of sales execs selling insurance to people. If it's the latter, using the index card system (5x7 index card with customer record, dividers for months and weeks of the year, call up customer, record interaction, file it under the appropriate month/week as your follow up reminder) is just as good.

All that being said, it's garbage in, garbage out. Most systems can be setup in such a way that you can force certain fields, but it requires some thought on which fields to force input into, and which ones you can make "smart". Use something like hoovers or jigsaw to clean/sanitize data your contact data, pull in product information from your ERP, tie financials in, create the initial contact record from a form on your site, etc. Basically do everything you can to reduce the manual input of data by those who don't care about it (eg. your employees)

Feel free to mefimail me for more info
posted by felspar at 9:08 PM on June 13, 2011 [2 favorites]

Oh, this is like asking how long a string is. I used to work for a boxed-software CRM company in the 90s, initially in the support department and then moving into development/operations. From my time there I interacted with a LOT of clients who were seeing benefits from using our package. As others have pointed out, there are several factors at play.

First you have to be able to articulate what the problem you're trying to solve with CRM is and see if the package/service you choose is actually going to be able to fix that. The most common problems that our package was used to solve was record keeping of client interactions, and scheduling/keeping followups. If that's the kind of problem you're looking to correct, most packages are brilliant. Just the ability to see who at your org has contacted customer x (or vice versa) on what dates and times, and what was discussed and further actions planned is a very powerful tool for a company that previously didn't have this type of data available. And the ability for your sales people to schedule calls a few months ahead of time and ask their prospect about a couple of random things that were chatted about (saved in notes) the previous time builds a rapport with the prospect.

The big thing thing with CRM is it's an all-or-nothing system for a company. Identify everyone who will need to use it, and then you need to get buy-in from everyone on that list to actually use it, or it will be worse than useless. This is where many implementations fall apart, one or two people in a team have their "own method" of customer relations instead and resent the idea of using a CRM package, refusing or "forgetting" to use it and thus screw everyone else up. If those people are top performers it becomes difficult for the company to take a hard line with them and give an ultimatum on the CRM package's use.

And I saw this a lot more with ERP than CRM, but many potential customers buy a CRM or ERP package with the intent that it'll make life easier for them without realizing they will need to change some of their workflows and methods to use the software properly. It's just like watching someone buy a set of weights to get in shape and then throw them in the corner of the garage and wonder why they're still out of shape since they bought weights.

So, yes CRM can work, and work very well. But it might be work to get there.
posted by barc0001 at 9:23 PM on June 13, 2011 [1 favorite]

I've worked in and around nonprofits for a while now, first as a developer, but now as a content strategist. They've all had varying successes with CRMs. But I've found that the efficacy of the CRM boils down to three things:

1. Does the organization have a culture of good customer/constituent relations? If the company and its staff honestly believes in taking care of their users, they'll find a way to do it, a CRM helps them do that. However, if there is no such culture, or not enough people care, then no CRM is going to fix the problem. As telspar says: Garbage in, garbage out.
2. Do the staff want to use it? This one really speaks for itself. Even if you have a corporate culture that values customer service, and you have a CRM that was built to do exactly what you need it to do in a way that fits perfectly into how the staff works, if people are unwilling to use it, they won't. This is especially true with people who are set in their ways. Luckily with this one, you can often either force them to use the CRM until they see the light (the top down approach), or if you're dealing with reasonable people, you can convince them.
3. How well does the CRM fit into the workflow? Even if we have CRM with an amazing list of features, if it doesn't fit into how the staff actually works, it won't matter, they won't use it. A CRM needs to be integrated into how people do their job, especially when it is first being implemented.

If the answer to any of these questions is negative, attempts to implement a CRM becomes very hard, especially the first two. However, if the answers to the first two points are a resounding yes, the third doesn't matter as much. People are creative and brilliantly resourceful. Oftentimes, they'll somehow make a bad CRM do what they need. Of course, oftentimes people will become frustrated with bad tools and give up on them, but when we believe in the importance of what we are doing, we tend persevere and get things done.
posted by thebestsophist at 11:54 PM on June 13, 2011 [1 favorite]

I was around for one of the earliest implementations of CRM and from what I observed, the result was consistent with the company's communication patterns. The decisions were made at director level because, in that organization, the directors were essentially the only ones ever empowered to make decisions. As a result a lot of the database fields were non-atomic, so any data coming from those fields had to be split, usually on a case-by-case basis per value as no rule could be found that would apply to every value in a list. There was also, by design, no way of joining deal data with units actually sold, making it extremely difficult to meet legal requirements to report that data to the government. In fact, as it turned out after two years of development, it wasn't possible to do any reporting at all because the whole thing had been designed for OLTP from the beginning with no provision for OLAP at all.

Also, from the beginning, plans were made to connect Access databases to the CRM downstream "to handle the things the CRM can't do", even though the ostensible purpose of the CRM was to centralize all the data and not have stuff on the back of an envelope any more.

Meanwhile, I kept finding myself roped into dealing with relentlessly shifty and manipulative interactions with the implementation team, who were continually trying to sneak around the juggernaut that was the change control process. On one occasion one of them passed by my desk and let drop that "vital change X is happening and is going to affect you, but don't pay any attention to it because we're taking care of it". Whereupon I had to go all round the houses figuring out what that really meant (it meant they weren't going to take care of it but had technically met the requirement to inform me about it, thereby setting me up to get in trouble when it wasn't taken care of). In trying to find out what was going on, I inadvertently caused upset to the chief consultant, who told me off for listening to "gossip". But, as it turned out, there was no other process for communicating vital information to me except through informal means, and the consultant smiled and nodded and promised to keep me informed and two weeks later was replaced with someone else, and the whole festival of non-communication started again in an endless merry-go-round of churn.

Consultancy Firm A Team A owned the simple database that the CRM was replacing. Consultancy Firm A Team B was in charge of building the CRM. If Consultancy Firm A Team B wanted to see the data, the company had to pay a fee to Consultancy Firm A Team A every time. I was cheaper, so they used me, even though I didn't have the requisite access. On one occasion I was told to print the data so Team B could analyze it, in the face of my protests that this was an entire waste of time, ink, and paper. On receiving the paper, Team B quickly came back to me with "a few questions". Which is to say that while everyone else was making the decisions and taking the fees and the credit, they were wholly reliant on me for data analysis throughout the entire project. Technically the database manager could have done it, as she had the requisite access rights, but she "wasn't a technical person" and so I spent two years of my software engineering career doing nothing but running SQL queries for her. At one point, DatabaseManager's boss appeared to be trying to motivate me by gushing about how I was going to have a permanent position with the company, although she eventually let drop that that wasn't going to happen, which was unsurprising since she was never empowered to make such promises in the first place; I imagine if I'd actually wanted a permanent job and had actually believed her, this would have upset me. My manager had to take me off all my other projects - all my new system development - to accommodate these demands because, although it wasn't our department's responsibility, he explained that they would have blamed the project failure on our non-cooperation if I hadn't done it.

Confused? I was. The whole thing finally lurched into a limited release 18 months late and many millions over budget. The users were furious because every time they pulled down a drop-down list, they had to wait 20 minutes for the list to actually appear. They asked me to build some little Access databases off the old system so they could do their jobs.
posted by tel3path at 9:57 AM on June 14, 2011

Also, the the other question of how salesforce got so big - it's a very good turnkey solution. There's no capital outlay. There's come customization work, but that's up to the customer. But in general it just works. It's a very, very good product and they're real pioneers in that whole software-as-a-service (SaaS) movement.
posted by GuyZero at 10:00 AM on June 14, 2011