The State of CRM in the Minority Business Community

The CRM spotlight is shining brightly on the SMB market. Microsoft's entry into CRM coupled with the emergence of the ASP model has enabled firms of all sizes to implement complex customer-focused strategies at a fraction of the cost paid a few years ago. As evidenced by Siebel's purchase of Upshot, major vendors are adapting their business models, clearing the way for CRM to be highly functional, affordable, and successful.

Small business is the foundation of the U.S. economy, thus it was destined that major CRM vendors would target the SMB sector. According to industry experts, less than 15 percent of SMBs have invested in CRM, enticing vendors to vie for market share. With the industry focusing on SMBs, it seems the good news of CRM has reached the masses. However, one segment within the SMB market appears to have missed the news.

CRM and minority business
So how are the nation's minority business enterprises (MBEs) leveraging CRM to help drive business? Although no scientific studies have been performed, preliminary research has found that minority-owned businesses in general have not adopted CRM.

The vast majority of minority businesses are classified as small to midsize. The Census Bureau's latest "Survey of Minority-Owned Businesses and Enterprises" count roughly 15 percent of all firms as being minority-owned, generating nearly $600 billion in receipts. Even during the economic slowdown, the National Minority Supplier Development Council reports that the nation's biggest companies purchased $72.1 billion from minority suppliers in 2002, doubling the $36.1 billion purchased in 1997.

According to the Milken Institute, minority businesses are growing at six times the national rate of business formation and account for $1.3 trillion of the U.S. total $6.5 trillion purchasing power. If this growth continues, minorities will achieve parity in small business ownership by 2007, owning 23 percent of all U.S. small businesses.

With the industry focused on capturing SMB market share, and minority business' relative value rapidly increasing, why is CRM not being adopted by minority business?

The answer is CRM...community relationship management
The disconnect between MBEs and the CRM industry is key in explaining the low adoption rates. Although CRM information is readily available, virtually none of it is found in minority business forums. The dearth of CRM advertising in minority publications has limited brand awareness tremendously. Publications like Black Enterprise and Hispanic Business enjoy large readerships of entrepreneurs and access to the nation's leading business minds, but no CRM advertising. This may also explain the lack of articles espousing CRM strategies and technologies in these publications.

It appears the challenge and solution to raising CRM awareness is another type of CRM: Community Relationship Management. MBEs have built their own business organizations, alliances, and publications to help them compete in the marketplace. CRM vendors, consultants, and other experts using these established channels should prove highly effective in creating the kind of loyalty the vendors themselves cite as a main benefit of their offerings.

The future
As of this writing no major CRM vendors could be identified having engaged the minority business community in terms of advertising, sponsorship, or research grants aimed at increasing CRM awareness and adoption. Research has shown that corporations that are quick to build relationships with this segment tend to gain their most loyal customers. "As our businesses generate an increasingly larger portion of the nation's economy, we strive to do business with companies reaching out to the Hispanic business community" says Carlos Pagoaga, chair-elect of the Georgia Hispanic Chamber of Commerce.

However, there are movements afoot to increase the community's exposure to CRM. One example is MinorityCRM.com, a site dedicated to help minority business professionals and entrepreneurs understand CRM. Vicki Hamilton, senior vice president, shared services and IT operations for The Weather Channel, agrees with the Web site's objectives. "We must continue to reach back and help others understand best practices in this area," she says. "'Diversity mixtures' are becoming the norm and not the exception."

As minority business continues its explosive growth it is apparent CRM strategies and technologies will be needed to help manage this growth. "Recent findings suggest these CEOs would benefit by greater investments in CRM," says Georgia Tech economics professor Thomas Boston, Ph.D., who conducts The ING Gazelle Index, a survey of 350 CEOs of the fastest-growing black-owned businesses. The second quarter 2003 survey also showed that these entrepreneurs are looking for solutions to help grow their businesses, and that these CEOs devoted a great deal of expenditures to marketing over the past few years when the economy was growing very slowly.

By applying a little community relationship management, the adoption process of customer relationship management will be greatly accelerated.

Brenton Leary and Michael Thomas are partners and cofounders of CRM Essentials LLC, an Atlanta CRM consultancy. CRM Essentials is a Salesforce.com Certified Implementation Partner, as well as a Microsoft Business Solutions Certified CRM Partner. www.crm-essentials.com

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