Professional services firms' adoption of CRM has been low; analytics functionality and the hosted model may help raise it.
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The name of the game is selling expertise in the professional services industry. The vertical is governed not by traditional durable goods, but by intellectual property. Without the ability to physically demonstrate a product, word-of-mouth endorsements and leads from colleagues are critical for professional services organizations, which include accounting, consulting, IT services, financial services, and law firms. Despite tech-light sales and marketing approaches, however, those looking for ways to better nurture current relationships and acquire new ones can capitalize on robust CRM functionality and processes.
In particular, social networking applications, which help people uncover potential connections, are making it easier for employees to identify who within their organization has ties to customers and prospects. "Frequently, people do business with people that they know or people that they trust," says Denis Pombriant, founder and managing principal of Beagle Research Group. "When social networking came out a few years ago, one of the first areas that really took advantage of the concept was the professional services world."
A cluster of social networking players include BranchIT, LexisNexis Interface Software, Leverage Software, LinkedIn, Plaxo, Spoke Software, and Visible Path, while broader CRM suite vendors, including NetSuite and SAP, offer professional services--specific solutions.
The challenge plaguing many professional services firms is to get people to share knowledge. "If somebody else in my firm wants to access a relationship that I might have, one of the first things that I want to make sure of is that I'm not giving away some business that I could handle," Pombriant says.
The industry's adoption of general CRM functionality, however, has been anything but rapid, largely because "there haven't been a lot of CRM tools that directly fit the particular business processes" of professional services firms, Pombriant says. As a result, executives have tried to adopt a variety of systems, including homegrown systems and spreadsheets, to more effectively and efficiently do their jobs.
However, organizations are starting to replace these homegrown systems, as analytics is generating much higher interest among these firms, according to Ed Thompson, a vice president and research director at Gartner. "People want to know [the answer to] that fundamental question: Who is our most valuable customer?" Thompson says. Some large professional services firms are already using CRM analytics tools, but "what we'll see in the next few years is a big focus on midsize professional services companies starting to measure [their most valuable customers]," he says.
As for application delivery, Pombriant expects hosted offerings to boost deployment rates, especially among smaller firms. "To the degree that we see greater reliance on the hosted model, we will see greater uptake."
Connecting in Philly
An accounting firm extends its contacts throughout Pennsylvania.
Like many other professional services companies, Parente Randolph (PR) lacked a central repository to house its customer and prospect information. The Philadelphia accounting firm used a combination of systems that included Microsoft Outlook and paper-based tools like Rolodexes to store information. But with more than a dozen offices spread across several states, exchanging customer and prospect information had grown increasingly challenging.
For example, says Rhonda McDermott, vice president of marketing at Parente Randolph, if "someone in our Wilkes-Barre office thought of a prospect down near the Allentown area [roughly an hour away], he may contact that person, not realizing that someone in our Allentown office actually may have already had a relationship created there."
PR sought a CRM system capable of spanning across its multiple lines of business while enhancing principals' and managers' ability to uncover new business opportunities. Following the firm's evaluation of a handful of vendors, PR selected Interface Software's InterAction (now LexisNexis Interface Software), designed specifically for professional services firms.
These firms depend on social networking to tap into various sources like alumni networks and current clients to extend their business, according to Darryl Cross, director of business development at LexisNexis Interface Software. "If they tap into that, it could be their greatest asset. If they ignore it, it could be their biggest liability."
The firm's initial deployment launched in June 2001, but it has since been upgraded several times, most recently in October 2005. "Since we launched," McDermott says, "the average contacts that are now in the system--compared to what it was in the beginning--[have] doubled," increasing from about 12,000 individual contacts and 7,500 company contacts when the PR first launched, to its current figures of about 30,000 individual contacts and 16,000 companies. That's an impressive feat, considering how territorial people can be when it comes to their contacts. "They really view it as the first place to go and check for information." --C.B.
As LinkedIn grows, what does the future hold for enterprise social networking?
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