The power of CRM

by Halley Stith

Here’s how three distributors tapped into the power of customer relationship management.

Customer relationship management (CRM) is not technology. It is not a software package. If you stop reading now, you know the most important thing distributors can learn about CRM.

CRM means something different to everyone. What is it exactly? Here is a definition from “CRM for the Common Man” by Russ Lombardo:

“A centralized database that contains customer profiles for the purposes of understanding customer requirements and satisfying customer needs.”

That’s a lot to swallow in one gulp. Simply put, CRM is a centralized database that everyone can access, instead of multiple databases on each employee’s computer. It contains detailed customer profiles, including why, where and how they prefer to buy and more. Using this information, companies gain a better understanding of customer requirements and can make changes to their businesses to satisfy customer needs.

Following are stories about how three distributors – Precision Airconvey, Kundinger Controls and Central States Industrial Supply – use CRM in their companies. Their stories may help you evaluate, plan and implement a CRM program. As Lombardo wrote, “The hard part is not the technology. The hard part is the frontend planning that precedes the technology.”

Precision Airconvey
Newark, Del.-based Precision Airconvey’s CRM story began eight years ago when it started using Lotus Notes. It was great when first implemented, but when the business changed, the software didn’t. The result? People stopped using the application. So, company president Tom Embley started looking around for other options.

He assembled a team from IT, sales, marketing, engineering and production, which evaluated a variety of software packages for 14 months before settling on GoldMine Corporate Edition by FrontRange Solutions.

Embley decided the goal of the new system would be to organize sales processes. But Precision Airconvey had one significant problem: there were no formal sales processes.

“You need to have processes in place to really utilize CRM, so we did both at the same time – developed sales processes and implemented CRM,” says Embley.

Precision executives met in October 2002 with Beringer Associates, a FrontRange Solutions partner specializing in CRM implementations for manufacturers and distributors, to analyze existing processes and develop a comprehensive sales strategy. Following Beringer’s “CRM Done Right” philosophy, they determined how to customize GoldMine to fit Precision’s needs. Precision purchased the add-on product QuoteWerks to improve its quote process, plus two more add-on products: Street Wizard, to map locations, and CardScan, which scans business cards directly into GoldMine.

Precision also developed a “Sales Cookbook” where salespeople keep a personalized “recipe for success.” Each salesperson can look in their cookbook to determine how many calls he or she must make to be successful. For example, a person with a 30 percent success rate and a quota of 20 sales per month would have to make at least 67 monthly calls. This is incorporated into the sales forecast function of GoldMine, allowing sales management to see if a salesperson is on target.

The strategy meetings also helped define measurable objectives.

“It is difficult for many people to measure a return on investment of CRM products because they don’t determine a baseline measurement. They need to know what they are doing now, how much it costs and how long it takes,” says David Buggy, vice president of Beringer Associates.

Precision rolled the program out to its implementation team in January 2003 before introducing it to all users a month later. Doing so enabled the project team to suggest improvements before everyone started using the system.

Beringer helped Precision train a GoldMine administrator to automate processes, send blast e-mails and troubleshoot common problems.

The team also set a goal to cut in half the time spent creating quotes. Using QuoteWerks, Precision reduced the time to create and send a quote from five hours to less than one hour.

“It’s not amazing, it’s real,” says Embley. “We do the same work, with fewer people in a shorter time.”

Although entering products into QuoteWerks was labor intensive, Precision eliminated a $50,000 position, significantly improving return on investment.

Embley would do a few things differently if he were to start the process over again.

“We didn’t take the implementation seriously enough,” he says. “I should have spent more time teaching senior managers to motivate users. Though we have above average usage, we probably would have seen a quicker return if I’d done that.”

Embley plans to use GoldMine for marketing, production and engineering project management, and eventually for credit status and collections efforts. Precision holds monthly meetings with all users to find out how they can add more value to the system and Embley schedules tune-up refresher courses and Q&A sessions to help users understand how GoldMine can help with each job.

Kundinger Controls
Brian Kundinger, president of Kundinger Controls based in Auburn Hills, Mich., is no stranger to CRM software. After using GoldMine for 10 years – primarily for contact management – he was ready to upgrade. It was time to grow out of the contact management phase and into customer relationship management.

Kundinger learned about Selltis at a Fluid Power Distributors Association meeting in 2002. He instantly recognized that it could do many things out of the box that were important to him. For example, he could link manufacturers with reps by product line, color-code complaints or expedited orders, and see every call, appointment and issue involving a vendor on a single screen.

Kundinger evaluated SalesLogix and GoldMine before purchasing Selltis in January 2003.

“The decision was made when all of the salespeople received a Web demonstration of Selltis. After seeing the product, they all really wanted it,” says Kundinger.

Kundinger had two goals: to improve communications between inside and outside sales and to more effectively manage the sales process.

“Too many companies try to manage the sales process after quoting. That’s too late. You need to manage the process from the initial call to improve your close rates,” says Kundinger. From these goals, Kundinger Controls developed specific objectives for sales call planning, tracking, profiling key and target accounts, quote and lead follow-up.

The company rolled out Selltis in phases. Selltis hosts the solution at its headquarters in Mandeville, La., making implementation free of hardware purchases and difficult installations. Each location (one in Michigan and one Wisconsin) trained four users for an initial six-month pilot test. After 90 days, Kundinger began adding users, stopping (for now) at 20.

One modification to Selltis allows users to indicate whether a company is a key or target account (or neither). For key accounts, the company’s name turns green. For target accounts, the name turns red, allowing salespeople to find key and target accounts at a glance.

Users received two days of initial training and refresh their skills through customized online training and “Lunch and Learns,” hour-long sessions on specific topics such as sending e-mail blasts.

Since implementing Selltis, Kundinger can better monitor sales lead follow-up and reward or congratulate employees. The program also helped shorten monthly sales review meetings. Because Kundinger has already reviewed each salesperson’s call logs, salespeople don’t have to spend time reviewing key and target accounts, so he can move on to more important discussions. Instead of wasting time on an account’s status, the sales team can discuss ways to move each account closer to the purchase decision.

Improved vendor management is another key benefit. For example, Kundinger uses Selltis to help schedule joint sales calls. With information at his fingertips, he is rarely blindsided when vendors call.

“When meeting with our vendors, we can have a much more meaningful discussion on issues, since I can look into Selltis and quickly tell a vendor about the numerous complaint calls, expediting calls, and any red flag issues,” he says. “We can also review activities each salesperson has for that particular vendor along with open opportunities and lost quotes.”

In hindsight, Kundinger would have developed more specific processes before the rollout. He made up for lost time with a detailed reference book for each salesperson, with specific instructions on entering sales calls, tracking projects and opportunities and how to enter other general information.

Central States Industrial Supply
Central States Industrial Supply, a pipe, valve and fittings (PVF) and industrial pump distributor based in Omaha, Neb., is in the final stretch of a long CRM journey. Four years ago, Central States recognized the need for a CRM solution and started “playing around” with ACT! contact management software. But the solution was better suited to individuals than to enterprises, so Central States started shopping around before settling on SalesLogix.

Central States hired a value-added reseller (VAR) to integrate SalesLogix with SX.enterprise, its back-end system from NxTrend. Though the VAR was experienced with SX.enterprise, using the back-end data proved difficult. Central States learned it would take a significant amount of money to complete its SalesLogix customization. The company had just stepped into the stereotypical CRM nightmare.

That’s when Al Pfeifer, vice president of information systems, attended a NxTrend Technology conference that introduced CORrelation, a new NxTrend relationship management solution with various modules, including sales and marketing, customer service, employee relationship management, analytics and more that integrates with SX.enterprise.

Central States absorbed the cost of the 10 SalesLogix licenses it purchased, and a project team consisting of sales, marketing, IT and upper management launched a CORrelation implementation. CORrelation is currently in beta testing, meaning Central States is one of the first users of the software.

Central States purchased a new SQL server to host CORrelation. NxTrend’s consulting division helped Pfeifer integrate the CRM program with SX.enterprise, and the consultants can remotely access the server to troubleshoot any problems. Since the database is stored on the server, the 25 users can view complete information about their accounts, including orders, inventory inquiries and even data warehouse information. Users log on via the Internet through a virtual private network (VPN). For users with Palm Pilots or laptops, Central State set up a Microsoft Outlook sync function to sync tasks, appointments and contacts to Outlook and then to their PDAs.

The system administrator and the marketing manager received online training from NxTrend consultants in March 2003 and then trained field sales on an individual basis.

“We had such a diverse range of computer skills that classroom training would have been difficult,” says Pfeifer. Sales managers monitor usage and retrain users with low usage rates.

This individualized training approach, which took approximately two months, allowed each user to learn the basics, such as developing itineraries and entering sales calls, and then learn whatever features would most help them with their job.

The CRM initiative helped inside and outside salespeople collaborate while creating a large database of customer knowledge. They expect this will help build new business when they use more of the system’s marketing functionality.

“We left the security wide open, though we plan to tighten it later, so that everyone can help in the data scrubbing,” says Pfeifer. This allows everyone to delete duplicate contacts or edit contact information. A college student enters e-mail addresses into the system for future marketing campaigns.

In hindsight, company president Steve Anderson wishes he implemented a CRM system sooner.

“Even if they had more formal sales processes and completed them manually, it would have helped operations. It’s important to track customer information,” he says.

This article originally appeared in the September/October 2003 issue of Progressive Distributor. Copyright 2003.

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