What your ERP and CRM are missing...
Almost everyone I know has bought something off Amazon.com at least at one point of their life and the beauty of Amazon is that it tells you exactly what you bought last time and the time before and the time before. And what’s even better is that based on your sales history, Amazon will give you some ideas on what else you might like to buy.
If Amazon can do this for its 182 million active customer base, why can’t enterprise systems do the same? Especially when the amounts are significantly more! Compare a $20 book or DVD with a $200k service contract or software upgrade.
One of the reasons I think ERP systems struggle with this, is that they are trying to be everything to everyone in the organisation. From accounting, to procurement, to order fulfillment, inventory management, HR, the list goes on. These core fundamental business processes are absolutely critical, but how can we possibly expect one system to do all that and find more revenue from your existing customer base?
So while the ERP system is good at managing the order to fulfillment process, when it comes to unlocking recurring revenue opportunities and digging into existing customers to find other revenue sources, it falls down.
I accept that the ERP is good at the backend of a sales process, but what about the front end?
Let’s talk about the CRM.
Customer Relationship Management (CRM) tools have become a critical part of today’s business network infrastructure. CRM systems today provide many functions, but one of the most crucial I consider they offer is the ability to store and manage customer information.
If we think back to pre CRM days, sales representatives would store their customer contact information on rolodexes, or if available, perhaps in the odd spreadsheet. If that representative left the company, the customer data would tend to go with him or her leaving the company without the valuable information and increasing the possibility of losing the customer’s business down the track.
On average only 40% of a hardware company’s renewals are actually being identified and processed.
The CRM solved this issue by providing the central repository for all customer information, including contacts, accounts and active opportunities, so that in the event a sales person leaves, the company still has records of all his or her customers and the opportunities he or she was working on enabling an easy transition to another employee.
As time has gone on, the CRM platforms have become more sophisticated, expanding into areas important not only for the sales person, but also for the marketing professional. Campaign management is a good example of this, which brings together the two teams by demonstrating what campaigns or marketing activities the customer is responding to most.
But what about the service sales or renewals team?
In my experience, these teams are usually a separate organization to the product sales team, but are given the same tools to fulfill their roles. The challenge for these teams is that to do their jobs, they actually need a bit of data from the CRM, a bit of data from the ERP and possibly a bit from the channel. So while the CRM gives them the most recent customer data they might need, they usually need to review specific details in the ERP as well to make sure they quote and invoice the customer the right thing.
As a result, I’ve found on average only 40% of a hardware company’s renewals are actually being identified and processed, largely because these teams are spending most of their day checking and cross-checking data sources.
Yet if renewals and recurring revenue were optimized, it can account for 30% or more of a company’s total revenue. How often do we hear that when companies actually analyse their customer data, they find that 20% of their customers, represent 80% of their revenue. Isn’t this something worth maximizing?
If this scenario sounds like what you face in your organisation, perhaps it’s time you looked at dedicated cloud based renewals management system…