Essentials for a 21st-century start-up: Business plan? Check. Line of credit? Check. CRM strategy? Check.
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Essentials for a 21st-century start-up: Business plan? Check. Line of credit? Check. CRM strategy? Check.
CRM has evolved into far more than a strategy for 100-year-old international enterprises. Now, many young companies are building a CRM strategy before the ink is dry on their articles of incorporation. And why not? Advances in scalable CRM solutions for small business make it possible to deploy a wide range of sales, service, and marketing capabilities from day one, without spending all of year one's budget on software and implementation.
Here we profile five companies that have different clients, different growth plans, and different visions for the future, but are united in a belief that integrating a CRM strategy early, in some cases even before the first customer is found, is crucial to long-term prosperity. While some firms choose to make only tactical investments in CRM at start-up (e.g, identifying a sales automation system for the nascent pool of account executives or an entry-level call-handling system for a client services group), these companies are clearly declaring that CRM not only can but will be an integral component of their success. For them, CRM is a must-have, not a nice-to-have--and the sooner, the better.
Company: Compellent Technologies
Industry: Enterprise Data Storage
Founded: March 2002
Compellent Technologies was founded on hope for the future. The company, which specializes in data storage networks for business customers, was formed during the dark days of the dot-com bust, when IT investment in start-up companies was scarce. So it is no surprise that Compellent's Dennis Johnson, executive vice president of sales and marketing, began a CRM search in the spring of 2003, almost a full year before the company's products were ready for market. The company had a unique requirement for a fast-growing start-up, as it planned to rely entirely on resellers to bring its product to market.
"We strategically made the decision to be all indirect channel, all the time, which is very unique in our storage industry," says Michael Beach, director of sales operations.
A wholly indirect strategy creates challenges for any organization, doubly so for one with no in-house staff with a history of selling the product. For Compellent, bringing partner sales activity as close to the company as possible was the only solution. "The work we do with our partners needs to be very collaborative at a high level," Beach says. "So we decided to build a CRM system like Field of Dreams--build it and they will come."
After evaluating several solutions and eliminating some on scalability limitations and others on price, Compellent settled on Microsoft CRM, and set about building a powerful Web portal to provide deal tracking, product information and marketing materials, and other partner-support collateral. "We've gone so far as to put forecasting and deal registration built right into the system, so we were able to run reports and fulfill orders from day one," Beach says. Less than six months after bringing its first product to the public, Compellent is also adding partner certification tracking, video training sessions, and a product configurator to the mix.
"We're compressing a couple of years of work into six months, and we did it all before the company started," says Scott Horst, Compellent's director of marketing.
The early introduction and rich feature set has made partner cooperation a breeze. "There was no resistance, because the companies that have joined us as business partners have been using this from day one," Horst says. "If I did this in three years, I would have had a lot of complaining about 'Why are you changing this?' But [implementing now] is seamless."
Compellent did not even put off the back-office integration step that sometimes eludes smaller companies. "We've tried our darndest to foresee how we would do business, so we had to think about how to do [return merchandise authorization and other] kinds of transactions," Beach says. "The integration piece is a little cumbersome at times, but we don't want data being entered in dual or triplicate mode."
The benefit has been extensive access to data for partners. "Our business partners are astonished at the amount of information available to them...they probably almost feel overwhelmed," Beach says. "We've been pleasantly surprised by the feedback, and we believe we've been able to get information into the hands of our business partners in a more efficient manner than we could otherwise, so it's been a tremendous success."
Company: Frisco Roughriders
Founded: February 2002
The plans for the Dr. Pepper/Seven Up Ballpark in Frisco, TX, home of the minor league baseball team the Frisco Roughriders, called for a comfortable place for families to watch baseball. But team President and General Manager Mike McCall also wanted to ensure the ballpark was a comfortable place to do business, for both his team's staff and the partners that rely on the stadium as a place of business.
"Sports is very antiquated in the ways we communicate to the fan base, both in the ballpark and externally," McCall says. So even before the inaugural pitch was thrown in 2003, McCall worked with EADS Telecom to implement a flexible telecommunications system that would grow as the team's fan base, sponsorships, and partnerships grew.
The key CRM element of the EADS system is a unified message platform, which gives each stadium tenant, such as the broadcast and catering partners, the ability to manage their own network, while sharing information with ballpark partners. It includes capabilities for text-to-speech and speech-to-text.
The advanced telecom system was far more than the baseball team and its partners need to conduct day-to-day business, but McCall didn't want to build an ordinary ballpark. Independent telephone systems are already installed in some premium areas of the ballpark, including all suites, and the team is working on plans to create a wireless data network throughout the stands. Still in the planning stage, the wireless network could be used to provide customers who use wireless handhelds with up-to-date in-game statistics, games, and other entertainment between innings, and the ability to order concessions right from their seats.
"We think there's a future out there in how sports [organizations] accommodate the customers at the physical game itself, and I would say we're only 20 to 30 percent of the way there," McCall says.
Integrating its internal customer database with information collected by Ticketmaster, the team is already aggressively analyzing how to win back customer no-shows on a daily basis, rather than simply worrying about season ticket holders during the off-season. In time, this should give the team the ability to adjust its marketing message faster than retooling a ticket drive on an annual basis. The team is also working with more unified data than many of its peers, ensuring that up-to-date statistics are given not only to the press, but to all paid ticketholders as well. Daily programs are run from the same information typically only available in the press box, not from week-old notes.
If McCall is at all concerned that he is overly optimistic about his minor league team's ability to change CRM in sports, it doesn't show. "Hopefully, within twelve to eighteen months we will be the model, and I think it'll be duplicated after that."
Company: Providus Software Solutions
Industry: Enterprise Software
Founded: May 2003
The passage of privacy and corporate governance legislation like Sarbanes-Oxley and HIPAA has created a thick forest of new regulatory hurdles and risk factors for companies. Providus Software Solutions wants to be there to cut through the confusion. Originally an internal unit of Zions Bancorporation, Providus began operating independently in the spring of 2003, and its original mission-- selling software to help companies locate and resolve operational risk factors that could create exposure under the new regulations--evolved from catering to a single client to seeking new business opportunities.
Harry Heermans, senior manager of technical and customer support, joined Providus shortly after the spin-off to help manage the transition, and one of his first action items was deploying a comprehensive CRM system for the company. "All of the groups here at Providus that were customer-facing-- whether marketing, sales, professional services--needed something, and there was either nothing in place or they were limping along, because that's the nature of a software start-up," he says. "I saw an opportunity to not only satisfy my needs, but to see if we can do this right the first time out, and get a CRM system in place that will satisfy the needs of a lot of these folks, rather than create a point solution."
Near the end of 2003 Providus rolled out a CRM application from Soffront, initially using ASP hosting to speed the deployment. "We went to a hosted model, because of the fact that it allowed us to get up and running quickly," Heermans says. Providus recently switched to an in-house deployment to obtain more control and functionality.
Using both the ASP system and the current, locally managed Soffront server, Providus has been able to focus on using its CRM tools to improve business performance, rather than reengineering the business to suit the software. "We have been able to have the product reflect our business processes, rather than having to change our business processes to fit the product," he says.
One of the company's first goals was to get a defect tracking system in place so customer issues could be logged and resolved efficiently with the software developers, closing the loop on customer satisfaction. Customer support calls are also handled through the Soffront system, and sales and marketing functionality will be rolled out soon.
Heermans says the extremely young industry of compliance-monitoring software has created the kinds of challenges that only a comprehensive view of customers can solve. "This is not a mature market, it is not a new flavor of chewing gum where everyone knows what it is," he says. "We really have to be driven by what customers are telling us, and in that regard we need all of the different channels and touch points feeding back to the folks designing the product."
Company: Oriel Wines
Founded: November 2002
Wine may not be sold before its time, but for Oriel Wines, there is no time like start-up to begin forging a deep understanding of its customers. "It's central to our business model," which is a mix of direct and indirect channels, says John Hunt, Oriel's founder. "The U.S. consumer pays more for wine than consumers in most other countries because of layers of intermediation."
To cut through the inefficiencies early on, Hunt, a veteran of consumer packaged goods giants Kraft and Proctor & Gamble, insisted that Oriel implement an integrated CRM system. "It seems silly to win a customer once and not have the capacity to speak to them again," he says. "CRM is logical for someone concerned about the costs of customer acquisition and customer retention."
So before the nascent label started shipping cases to clients and distributors it implemented NetSuite, including the on-demand provider's CRM capabilities. In what Hunt refers to as a soft launch, Oriel now offers a portion of
its eventual selection for consumer sale, uses an intelligence-gathering mailing list, and is conducting additional market research to aid in its indirect channel launch as well as to determine the future product mix.
Using customer data to constantly retool Oriel's product offering is crucial to Hunt's plan, which involves buying and leasing more than a dozen vineyards to provide the company's wine stock. "Most of the wine industry is producer-led. Most people own a vineyard, farm that vineyard, and then figure out how to sell the product," he says. "We don't do it that way. We identify what the consumer wants, and go out and find the best example of that."
Oriel is taking advantage of this soft-launch period to carefully monitor customer feedback, both in terms of survey and mailing list responses and Web-site traffic, before taking the product to the broader wholesale and restaurant markets. "With my background, we test the consumer message before we send it out to wholesale, and we have refined our messaging enormously since our first crude expression," Hunt says. Having a solid understanding of the Oriel enthusiast customer base made it possible. "We found that the small-scale outreach to the early adopters was the right audience to use [to test the message]."
Industry: Enterprise Software
Founded: October 2003
Corporate data-analytics vendor Datanautics is part start-up, part restart--the company was formed in October 2003 after investors purchased the assets of Accrue, a company already doing business in that space. So the brand-new company inherited nearly three dozen large enterprise customers, but needed a better way to manage them than its predecessor had. "Accrue had a Vantive system in place--quite an old one, which hadn't been changed in several years," says Jim Harter, vice president of client services. "My decision coming in and looking at that system was to start from scratch and look at a more modern system, because being able to serve right off the bat was the first priority."
A veteran of other start-ups, Harter knew what he was after--a service tool that internal staff, remote employees, and customers could access equally well, and could be deployed and managed by an outsourcer. In February Datanautics engaged RightNow to provide a support structure so the company could keep
its new clients happy, while working to create a larger customer base.
"We could have gone for a low-end, in-house system--there are a number that sell for about $10,000, and there were a couple of other service provider options," Harter says. "But the longer term for us is to centralize customer information earlier rather than later, so we don't get into the multiple-systems, multiple-stovepipes problems [others] go through."
The RightNow solution allowed Datanautics to integrate existing customer and product support information quickly. It also provides analytical tools for Hartner to monitor the performance of the support operation immediately, rather than risk losing an early adopter customer. "I really want to understand, even with 35 customers, what happened before the case was entered, and tune the [support] process as we go along," he says, "so that as we have more customers, the process is already more effective."
RightNow represented a significant investment for the new company, but Harter says that looking beyond minimizing short-run costs is the right decision. "I've gone through two support system transitions before, and what I have found is that the cost you have tends to be pretty significant, in terms of direct costs from consultants and your own staff costs," he says. "This company is operating under the assumption that we will be wildly successful, so we are planning as much as we can to have the right infrastructure to support that."
Contact Executive Editor Jason Compton at jcompton@destinationCRM.com
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