How to Choose the Right CRM

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Navigating the CRM landscape is more challenging than ever, depending on the types of businesses, interactions, supported channels, and stakeholders involved. As companies struggle with decisions related to their technology purchases, Forrester Research has set three basic guidelines for selecting the right CRM.

As a first step, executives first need to understand the industry in which their companies compete, their own core business models, and whether they are focused on relationships or transactions, according to Kate Leggett, a vice president and principal analyst at Forrester.

Leggett notes that business-to-business and business-to-consumer companies have very different needs. B2B interactions, she says, tend to be based on relationships with long-running interactions for considered purchases that can involve multiple stakeholders, while B2C interactions are more transactionally focused.

“You’re seeing more differentiation in the market,” Leggett says. “CRM ecosystems have become more bifurcated, with different models for different industries.”

A CRM solution for the retail market, for example, will maintain information on the customer journey, channel usage, and loyalty to help strengthen brand affinity, while a CRM system for mortgage lenders needs to incorporate government regulations, credit risk, and other industry-specific data.

Beyond being tailored for different industries, CRM systems are designed for different size companies, with the market typically divided into four segments: enterprise, midsize, small, and specialty solutions, Leggett said.

An equally important consideration is the size of the company. Small organizations need CRM systems that are simple to purchase, deploy, configure, extend, and use. But in making the CRM choice, any company will need to decide “if it’s going to be small for now or small forever,” Leggett says.

Companies that plan to stay small can stay with a simple system. Companies expecting to grow quickly can either start with simple systems and then move to larger systems when warranted or start with larger systems into which they can grow, according to Leggett.

She cautions that midsize companies with larger aspirations might want to stay with CRM vendors that cater to the midsize market. Midsize companies that don’t grow substantially will always be small customers to enterprise CRM vendors and, therefore, are less likely to get the vendor attention afforded to larger companies.

Companies should also consider industry-specific requirements, Leggett recommends, because horizontal CRM solutions don’t always support industry-specific business processes.

Some horizontal solutions can be customized and integrated with other applications to meet exact busines requirements, but customizations can be costly and difficult to manage over time, she cautions.

Companies also need to avoid over-customizing, which results in wasted time and money.

Similarly, horizontal solutions can have superfluous features that hamper the user experience, Leggett says.

Lightweight vertical CRM systems, by contrast, might not be robust enough for some industries or might require additional investment for customizations.

Deeply vertical CRM systems will support industry process and will have deep domain functionality, including compliance with industry standards, but they can also be over-verticalized with few customization possibilities. These systems also need continuous innovation to be effective, meaning ongoing investment. 

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