Why is implementing a professional services Client Relationship Management (CRM) system so difficult? CRM systems have been around for a long time now. We first saw tailored professional services CRM systems in the 1990s. Most firms know that capturing data to help them win and retain clients is important. Despite this, CRM system implementation projects continually fail. According to T Exponents:
“Customer Relationship Management (CRM) system implementations have consistently high and troubling failure rates trending around 50% but ranging from 30% to 70% depending on the study.”
So, why are so many firms not managing to implement them successfully or not attempting to implement them at all? It’s not that firms don’t have up-to-date technology. Most firms have practice management systems and the latest versions of the software they need to advise their clients.
Here are only some of the reasons why firms find CRM systems difficult:
Not the Same Data
It’s not the data that was historically collected. Professional services firms have always collected data. Information about clients is recorded so practitioners can do their jobs. All professional services firms will have a billing system that records the contact information of the client and the contact information of the person the firm’s bill is sent to. The database holds the client’s contact information, to contact them, and the debtor information, to invoice them. Records regarding the client work are meticulously kept and the time spent is recorded by the minute.
Client relationships are managed by the person who ‘owns’ the client, usually a partner, director or other principal of the firm. Information about the relationship with the client is not recorded for others in the firm to view. There are territorial issues going on here, and other reasons why relationship information is not shared, but I’m just pointing out the practical reasons why some data was not historically collected. It was simply not needed.
When it hasn’t traditionally been a part of everyday workflow, it’s extra work for time-poor practitioners. Because the extra data collection was information that the relationship owner needed to input themselves, or have an assistant input, it just didn’t get recorded. It’s because of this ‘culture change’ that’s needed that it takes a long time to implement the new system. People had to change what they had done before, and they couldn’t see the reason for it. This brings me to my next point.
No Benefit Analysis
Because CRM was viewed as a marketing responsibility, marketing teams often ‘own’ the CRM system implementation. While Marketing needs to be heavily involved, it’s actually a whole-of-firm tool and Marketing, Technology, Administration and Management need to be equally involved in the project. Marketing have historically struggled to communicate the benefits of a system that records relationship and sales information. The world changed and this information became crucial to record, but firms could not see why.
This lack of benefit analysis, only cost analysis, has led to many firms having the misinformed view that CRM systems are not useful and, from that, a lack of understanding why they are typically quite expensive.
There are many other reasons why CRM projects fail, but here are some of the major benefits to getting it right:
Maximising Existing Relationships
While relationship owners have a lot of information stored in their brains or in Outlook, Excel spreadsheets and other places, there is also a mountain of other data that needs to be collected in one central place. Others in the firm may have useful information in their dealings with the same client. Marketing will have information about the marketing activities the client is involved in, like which events the client attends, which articles and thought leadership pieces the client reads, and a whole lot of other useful information gleaned from emails, the website, and event management systems. Finance will have all of the financial information, including what the client relationship is worth to the firm and what it may be worth in the future, based on trends. A CRM can compare how much the client spends in fees with how much the firm spends on them with marketing. All of this data informs future management of the client relationship.
Another key benefit is client relationship succession and professional network succession. Retaining client knowledge when professionals leave the firm is crucial. Whether it’s a partner retiring or a partner or other senior team member leaving, they have the relationship with the client and they also build strong networks of contacts that they leverage to win new business. When someone leaves the firm, there is a danger that the client knowledge and the entire professional network is lost. A CRM system reduces this risk considerably.
By keeping all of the existing client management data in one place cross-selling is accelerated and the firm’s Fee-Per-Client is maximised.
Firms must deal with many different regulations, including data management (the Privacy Act and Spam Act in Australia). The best CRM systems help firms keep up with key regulatory requirements, with built-in functionality enabling firms to record compliance. The Privacy Act imposes requirements on how firms can store and manage client data. Good CRM systems put the firm in full control of the data, with full transparency about how it is used. Then it’s possible to keep track of the source of the data and why it is being held. The CRM also facilitates erasing data if a client requests their personal data be deleted.
The CRM system can also be the ‘one source of truth’. This is extremely useful for reporting, but also if an individual requests access to their personal information. This process is much easier if the data is all in one place.
Probably the most significantly missed opportunity is recording and automating the sales process. Information relating to new contacts is the data that is most often not recorded and analysed by firms. Practitioners at all levels will meet new people and often have a pile of business cards. Sometimes the data is entered, but often it then stays in Outlook or, if it is entered into a system, nothing is added or done with it after that.
New contacts could be new client prospects or new referrers. The first thing that is missed is who in the firm already knows that person and how well they know them. This process can now be assisted by LinkedIn’s business development platform Sales Navigator. Sales Navigator is a powerful tool for building prospect lists and following and interacting with leads. TeamLink allows you to see who knows who, in LinkedIn, and analyse it directly in your CRM.
“Social selling is about leveraging your social network to find the right prospects, build trusted relationships, and ultimately, achieve your sales goals.”
Actively building your online network, over and above the functionality in the standard LinkedIn, allows you to engage with potential new clients, referrers and influencers. Sales Navigator has dramatically changed the way we begin business relationships.
There are now a large number of systems that help with CRM data collection. Inbound digital marketing systems will capture relevant information from the web and make automated decisions, based on the criteria you set. They can then trigger a number of different automated activities, to nurture the lead. There are also data integration systems that make it easier to collect the data inside the firm, by scanning different existing systems, emails and new Outlook contacts etc.
The CRM can track the sales pipeline, showing where the prospect is in the sales process. Lead nurturing can happen online or offline, depending on the stage in the process. You can capture contact details online, via valuable gated content, and permission to send more valuable information to them. This can begin the relationship much earlier than before. Relevant content can be sent via email, keeping the prospect aware and interested in your expertise, moving them even further through the sales funnel. Prospects and referrers can be invited to more relevant events, based on their email engagement activity, and other indicators.
I get it. I understand why CRM systems are not easy to purchase and implement, but it has to be done. It’s become a must have. The benefits far outweigh the costs. There are more systems to choose from these days, so there are options for all sized firms and all budgets. When looking for a project manager it’s important to find someone that understands professional services and CRM.
Reach out if you’d like to discuss any of these ideas further.