Posts Tagged ‘CRM’

CRM System: Buy or Build

LobbyEvery client-centric organization needs to adopt a CRM system of some kind. Many managers realize the clear value of a CRM system will have increasing productivity, institutionalizing client relationships, and providing better management intelligence about their customers and sales teams. The challenge then becomes deciding what kind of system they want to to have, leading then to an overwhelming series of options that are available to them.

Technology groups embedded within organizations large enough to have them, will be inclined to want to build their own system rather than rely on an off-the-shelf solution. They are ‘developers’ by trade. Most organizations though will opt to adopt a vendor product. The minute that managers begin the investigation process on vendors, they get quickly overwhelmed with options, benefits, and features. Often they feel that to get what they really need, they should just hire an unassociated group of developers to build them their optimal system.[more…]

Managers end up unsure as to what the ultimate solution should be. A CRM system decision is one that managers must live with for a long time. They want to make sure they are making the right call. I’ll outline some key considerations when making the decision of buy or build their system

1) How unique and complex is the organization’s business model, and ultimately their information model?

2) What is the organization’s capacity to support and enhance an internally grown system?

3) Of the available vendors, are their any that specialize in workflows and requirements of an organization’s specific industry or sub-industry?

4) How financially stable are the vendors that provide solutions to the organization’s industry?

5) Are there consultants or subject matter experts available internally or externally that can function as trustworthy and unbiased advisors who can help navigate the options?

Pros and Cons

Custom built solutions allow for the greatest flexibility for specific requirements, especially if there are particular nuances related to an organization’s unique business model or market differentiation. Custom solutions also have more agility to integrate with already existing systems and data. They provide the potential for the biggest competitive advantage. None of your competitors will have this tool. The biggest downside, of course, is cost. Firms will need to commit capital for the build-out, plus a ongoing costs for enhancements and support.

Vendor solutions will in most cases provide the majority of requirements if industry-specific solutions providers exist, and for most financial sub-sectors they certainly do. Most are out-of-the-box so require very little configuration. The challenges come when a firm has specific things they want to do, but are constrained by the technical limitations or development schedule of the vendors. It’s hard to get a clear understanding what the true advantages and disadvantages are with just direct engagement with the vendors. Their demos give very little insight on what their deficiencies are, or which vendors are better than others.

There is no one simple answer to whether it’s better to build or to buy. Each organization is going to have their own unique CRM and information requirements. If there isn’t in-house expertise, we highly recommend finding someone who can help navigate the waters.

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Development of Sales Systems (Capability #4)

The last of the capabilities is the anchor that realizes the value of a clear client strategy: development of an integrated sales system built as a hub-and-spoke ecosystem where all critical elements of client information are brought together in a single Sales Portal. Without the right sales systems in place, the implementation of a client strategy becomes extremely burdensome, labor intensive, sub-optimal, and easy to abandon.

Sales SystemsClient information should include CRM activity tracking, client meeting and call notes, client revenues, transactions, client documents, and any third-party data that can enrich a salesperson’s understanding of the account (for broker-dealers, for example, survey data, market share data, fund performance, and securities holdings data would be invaluable).[more…]

Now, it’s probably not practical to say that every single data system that houses client information can be brought together into a single platform. This would be a herculean task for any IT department with an existing complex array of systems, but by thinking about and reinforcing the idea that any work on sales systems should have the ultimate goal of providing better intelligence to salespeople and sales managers in a consolidated fashion.

Client Management should have significant input in, if not outright business ownership of sales system initiatives. This would guarantee that the systems are created with a client perspective. It would also help in informing the IT team what information exists and what would be important to prioritize. Because of the closeness of the Client Management team with the sales groups, they would be instrumental in designing the systems in order to best incorporate into the sales team’s workflow. A big reason for the failure of many sales system initiatives is because many development teams make the assumption that salespeople will change their daily workflow in order to adopt a new technology. Regardless of how useful the new tools are, if they force salespeople reorganize day or forces them to perform new tasks that don’t immediately provide them with a benefit, they will just not adopt them.

Three keys to successful sales system implementation are:

1) Integrate new technologies into existing workflows and systems so that interaction with new tools is seamless (for example integration of CRM functions into email application and mobile devices)

2) Attempt to bring as much disparate client information as possible into a single portal that requires just a few clicks to get from one type of information to another

3) Provide as much of a feedback loop, as immediate as possible, for any information that salespeople are asked to contribute into the system. They should be able, for instance, to run calendars or reports of activities logged into the system.

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Five Critical Success Factors for Managers Considering a CRM System

Implementations of CRM, or Customer Relationship Management, systems are notorious for failing to achieve their promise. If you’re considering either implementing your CRM system or upgrading your existing CRM system, here are some guidelines to follow to make sure that you have the most successful implementation.

– Front-line participation: There should be significant participation from front-line business managers from the very start of the project. The most successful CRM implementation that I’ve seen actually had full project leadership coming from front office management, with IT working as subject matter experts and project managers. This isn’t saying that IT managers wouldn’t have the right project leadership skills. CRM systems are probably some of the most idiosyncratic and nuanced technologies that require constant input from a very reluctant user base: salespeople. To get the right requirements that will ensure adoption, there has to be a perception that ownership is within the business, not in IT.[more…]

Culture of information sharing: The right culture of information sharing needs to be in place (within compliance guidelines of course). This is much easier said than done, and for many organizations not very practical. But in organizations where management realizes that bringing together disparate pieces of client information held by salespeople can reveal new opportunities, an effort to change the culture is the best strategy. I’ll detail examples of this in a future post.

Usability: “Usability” is a term used by IT professionals that is often not tangible to non-tech types. In my view, there are two aspects of usability which apply to CRM. The first is intuitiveness, which should be measured by the amount of training needed to get to full use. Less training equals more intuitiveness. The second is workflow integration, which means how well the tools can be integrated into the existing workflow of the user, e.g., adding content to a client record (meeting notes, emails, documents) by simple clicks in email. This area requires the most creativity and expertise to get right. As web and mobile applications become more sophisticated, the expectations of users also increase at a rapid pace.

Data accuracy/integrity: All data-driven systems are only as good as the data within them. CRM data can get corrupted remarkably fast because the source of its key data are from the users, not from a central source. This is a key difference versus other kinds of systems. A lot of thought, and a great deal of expertise, need to be put to bear around this question to achieve a success.

Information integration: I’ve found that CRM information, as useful as it can be to understand a client, when integrated with other systems and data produces incredible insights. Integrating, for instance stock interest information garnered by the sales team with stock and fund performance information can create an interesting product profile that can be actionable. Thinking about how you will maximize the use of your CRM information at the planning stages of implementation creates intense value down the road. Three big questions emerge that change how the system is built and used:

  1. What creative ways can we organize and analyze the data to provide new insights? Your organization probably already captures enough client information to create a competitive advantage, but is not leveraging today.
  2. What sources of information can we find that, when combined with CRM information, provide unique insights?
  3. What other information should client-facing personnel ask for from clients to match with other data sources?
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Can Institutional Equity Sales Be Transformed?

Institutional Equity Sales had been going through an existential crisis since 2003, starting around the time of the Eliot Spitzer rulings. The once noble profession became tainted with suspicions of fraud and conspiracy.  Since then the role has been systematically attacked from several fronts:

– a precipitous drop in commission rates paid by clients leading to drop in margins (and ultimately compensation)

– significant cynicism around the research product they are tasked to sell

– financial crisis at the banks that employ them, which has also led to…

– …instability and irrationality in the markets, making it difficult to provide rational, money-making advice to clients

– drop in the aggregate number of new deals coming to market, which is where a strong distribution platform proves its value [more…]

Within some banks, there have been discussions on whether to exit this area all together, if not strategically pull-back from non-core markets. Salespeople sitting in those seats are nervous, which is not unreasonable given the long-term prospects of the role. Language coming from the executive floors speak of drastic cuts across all Sales & Trading floors, with an emphasis on producers who can’t be easily aligned to a certain threshold of revenue. This is especially concerning to Equity Sales since the commission their clients pay is a bundled payment covering a whole host of services that make it difficult to isolate their contribution.

So is there long-term value in the Equity sales model? I would argue yes, but for the model to have long-term viability, organizations need to think differently about that role and how it can add additional value to clients. They also need to change some key business processes to enhance the impact that salespeople provide across the platform.

Better capture of client interactions

If salespeople had better information about all the interactions that their clients have had across their business and across time, they would be able to create a much more productive relationship. In speaking with many buy-side professionals, it’s clear that one of their top criticisms is lack of continuity and consistency from their counterparties. Through a robust CRM platform that features easy capture of client interactions, capture of research consumption data, and to easily log in notes, the coverage team will easily see client behavior over time and spot opportunities to better the relationship.

There are many CRM vendors in the market and for most people finding the right solution can be overwhelming. When first investigating the options, one is faced with endless possibilities, but also boundless risk. From a quick survey, there are at least 25 enterprise-ready vendors, with about as many upstarts to choose from. Also, CRM implementation projects have a horrid reputation of easily failing. In capital markets businesses, the risk is even higher because of the specialized workflow, compliance, and end-user data needs. Picking the right solution is critical, which I’ll be covered on a future posting.

Institutional Equity salespeople are probably the best positioned to take advantage of these systems and the data that they capture. They have been an integral part of their jobs and most salespeople have faced the challenges of sub-optimal systems.

Integrate with other client activity and client relevant information

IT spending at most broker-dealers has been historically concentrated on the development and optimization of trading technology in order to increase trading profits, to the detriment of the sales side of the business. With the 2008 financial crisis and subsequent reorientation to the client, there has been some shift of investment to Sales IT. There is now a desire to integrate other information into a client profile in order to have a more holistic view of the account to salespeople, including security holdings, fund performance, transaction trends from other asset classes (FX for instance), and client interest-driven information such as stock trends and twitter feeds. The more information that can be integrated into a client’s profile, the better the salesperson can provide guidance to the client. This can be a big differentiator.

The mechanics of integrating this information and rendering it in a useful fashion to salespeople is a complicated proposition, one which falls under the umbrella of the newest management buzz-term “Big Data”. There is a tendency by sales managers to avoid this complexity, but the advantage that we have today is that the cost of gaining a competitively advantageous insight though data has fallen dramatically. Although more discussion on specific strategies and considerations will be addressed in another post, it’s worth taking some time to look at applications like Qlikview, Tableau, and Spotfire to get a flavor of what they can easily do with data. Institutional Salespeople serving as the pivot point of all this information could make them immensely valuable. Of all the people in this role that I’ve spoken to, the one key complaint they all have is that they feel they are constantly chasing information from multiple sources and that they miss a lot of information that can make them more successful. This can be efficiently delivered to them so that they can spend more time with their clients.

Position this role as relationship manager for key accounts, even beyond Equities

The Institutional Equity Sales role is unique relative to other roles in Sales & Trading in that their responsibility goes way beyond executing transactions. Salaried salespeople at many large firms have little involvement with client trades at all. Their core competency is in providing access and insights from across their platforms. Their role and responsibilities should be expanded to provide insight and access across all asset classes. They should be at the center of many of the relationships, especially with clients who are not product specialized, such as macro and event-driven hedge funds.

Buy-side clients constantly say that they want to have salespeople who “think like portfolio managers”.  Institutional Equity Salespeople are the best positioned of anyone in Sales & Trading organizations to evolve into broader experts that can provide clients with innovative solutions. The key is to make sure to provide them with the best tools and information so they can execute the broader mandate.

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