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CRM: What does it mean to you?

28 Jun 2004 by Jason Fried

CRM is all the rage these days. From to Peoplesoft, CRM applications sound like they are must haves for growing businesses. But are they? I keep hearing about CRM-this, CRM-that, but I still don’t know how 37signals would use a CRM tool. Plus, I feel like CRM tools are tailored towards the big guys, not small business. Do you think CRM can help the small guys? Are you using CRM software to manage your business? What does CRM mean for you? Or, better yet, what does it do for you?

27 comments so far (Post a Comment)

28 Jun 2004 | Aaron Post said...

"I still donít know how 37signals would use a CRM tool"

To be honest, 37signals would really have no need for one. My limited experience working with various CRM-tools, is that you need to have a sales staff and some sort of widget that you are trying to move off your warehouse shelves. Small or Big companies can certainly use them. Speaking from experience, I have help a few small companies get set up with Net Suite and I have talked with a few Big companies that should be using something. Problem with most of the CRM software, its a pain because it contains everything for everyone, making the learning curve tough.

28 Jun 2004 | JF said...

To be honest, 37signals would really have no need for one

But we have clients/customers and we need to maintain relationships with them. Is there nothing out there for us besides a standard contact management software package?

28 Jun 2004 | CRMguru said...

Yes companies pay million of dollars for a contact management software package.

28 Jun 2004 | Charles said...

I reckon one of the problems is that CRM means something different to every company (or industry), so it before having a conversation about it I think you're really better to start by talking about what the company does, how they engage customers, what processes they use for managing information.

This is a simplification of course, but these kinds of things all determin what (if anything) the company will get out of one CRM package or another. In my limited experience it is easy to gloss over this and focus on the software...which is often not flexible enough, a problem exacerbated by companies whose internal processes don't properly support the management of CR information. I guess at the end of the day I am saying it is about processes and people not software (duh!).

Anyway, you guys need to get busy...I want to see 37 Signals do hosted CRM for small/medium sized service businesses. That would be cool.

28 Jun 2004 | Aaron Post said...

Sure you have clients/customers. But (and this may be the problem), most CRM-tools involve a lot more than that. They not only involve people within various departments, products on the self, services performed, services to be performed, accounting, budgeting, but they also track: Key Performance Indicators (KPI), including opportunities won and lost, income and profit. Besides being able to forecast, sales reports and commissions.

In my opinion that is where CRM has been over hyped. It really gets down to how you view CRM, for many companies its about the numbers. Cost per customer, how many times did I call them before the deal was closed, how may orders from customer A in the last 6 weeks, was the warehouse able to tell the customer where there package was when they called and how long did it take them.

By definition CRM is about customer relations, but for the companies who are purchasing these software packages, its about numbers and tracking every aspect of your company.

28 Jun 2004 | Charles said...

..."Baseline" or "Basejump" maybe :)

29 Jun 2004 | SJ said...

CRM is a business strategy, not a piece of software. CRM has three main components: marketing campaigns, sales force automation, and customer service. Every business has a customer relationship management stategy, even if it is not formally documented.

Your competitors have a CRM strategy. The tactical use of software allows you to either achieve a competitive advantage over them or keeps you from falling behind them in the marketplace.

There must be an adequate return for your money when you implement software to improve your CRM performance. This return comes in the form of better leads, more sales per salesperson, and more purchases from existing customers. These types of results are measureable.

Other benefits are less quantifiable -- business process improvement, improved vendor relations, and increased employee satisfaction -- yet add to the total ROI. These qualitative measures, however, should not be used as the primary basis for determining the soundness of spending money on CRM software.

29 Jun 2004 | Max said...

CSULB (California State University, Long Beach) uses PeopleSoft to keep records of their students, staffs and faculties (35,000+ users). There is no need for CRMs if you don't have large (5,000+) clients or users.

29 Jun 2004 | Sean Devine said...

I work for a 40 person software company and we use pretty effectively. While the features aren't breakthrough, they are worth the money that we pay for them (sort of like Basecamp).

The features that are most important to us include:
1. Pipeline and sales activity reporting
2. Campaign tracking
3. Contact management
4. Central document repository

I think that is too heavy sometimes, but I would probably recommend it - especially if you have money to invest in implementation and upkeep.

29 Jun 2004 | Fazal Majid said...

CRM has lost most of its shine as a buzzword at least two years ago. It is a business methodology, not a software category (no mater what Siebel shills may say), the idea being that strong customer relationships (e.g. good tech support) are a competitive advantage every bit as much as lower production costs.

For small companies, giving personalized service comes naturally. For larger ones, it is much harder. CRM is from one point of view an attempt to give mom-and-pop level of services by a Fortune 500 organization. The way they do this is by optimizing and automating all the customer interaction processes and implementing them in software - e.g. if a sales rep does not respond to a quote request within 3 days, the request is automatically escalated to the supervisor.

But just as standardized cooking processes at McDonalds give you food that is merely consistently mediocre, CRM will at best give you a company that has its act together, not necessarily one with superlative service. To do that, you have to empower the base, something most command-oriented, hierarchical corporate bureaucracies are loth to do.

For a small company such as yourself, CRM as software is mostly irrelevant. At the most, some form of sales force automation such as would do the trick. The process of asking oneself constantly how to improve the customer experience is valuable, but for most small businesses that don't have excessively high growth, it usually comes naturally.

29 Jun 2004 | Randy Peterman said...

I use a CRM: Thunderbird. It has a nice contacts part of the application that works just fine for the small number of clients I have. Seriously, CRM is a really nifty acronym for database with lots of stuff in it. I'm sure people want a CRM in Basecamp, but the truth of the matter is that if Basecamp gets a lot bigger it will lose its ease of use and value in the market. It will also cost more to maintain which means its subscription fee will go up which means... (cycle repeats here)

29 Jun 2004 | Carl said...

37s, is this market research? Got another product up your sleeve?

29 Jun 2004 | Liz Tracey said...

I don't know if 37s would need customer management as much as resource management. I'm currently building a ERM app for a client who does outsourced IT/development, and their primary needs are to figure out who can go where/do what when, billing for it, figuring out who they haven't sold services to and then tracking all the stuff they did for the clients (knowledge base).

Having formerly been director of strategy at a Web design/development consultantcy, the worst thing that would happen is you would get a new, hotsy-totsty project, and realize everyone was too booked to work on it. Oy. (not that being busy is bad...)

29 Jun 2004 | walker said...

I take my coffee black, thank you.

I think they need to get off this one and move on to another idea.This one will definitely not be the runaway success that basecamp was. Fazal Majid is absolutely right in saying that CRM has lost much of it's shine. I have implemented many CRM solutions and can say that each one ends up being used in a manner that is too specific to that particular company.

The problem is also that the CRM field already has entry level applications that do what people require of CRM applications in the entry level market. Keep phone numbers and address and little notes about that person and business with them. Hitting this particular market with a standalone web application would be overkill.

Why not make good on your intentions and introduce CRM as a sort of addon for Basecamp. You said you were thinking about time tracking and financial modules for Basecamp, do those. Those will succeed where a standalone CRM-ery will falter, if succeed at all.

29 Jun 2004 | Don Schenck said...

In the early 1990's, CASE tools were all the rage. My dear friend, Paul Conte, said that CASE stood for "Contrived Attempt to Sell Everything".

Somehow, I think CRM falls into the same "fad" category.

Companies Really making Money ??

29 Jun 2004 | Arne Gleason said...

I think:

There are many ways for a small company to put low cost, non CRM specific, tools to good CRM uses.

The high price of enterprise CRM tools restricts real ROI to large companies. Before spending time and money here, itís worth noting that the value of these systems is proportional to how completely it interacts with the rest of your tools and processes (ECRM as an island is probably a waste Ė there is a lot of waste out there).

Itís not just what you have, but how you use it (someoneís maxim?).

29 Jun 2004 | Iolaire McFadden said...

For me Sean's #3 would be the key reason I would learn and use a CRM solution when starting a business with at least one employee or numerous clients (even with no sales team):
3. Contact management
i.e. having contact information handy and a history of interactions with that person.

CRM systems allow you to transfer customer history through an organization - or if you are forgetful, to transfer it back to you as need.

For example, you are selling basecamp which may be fairly easy for people to use, but undoubtedly people keep calling or emailing with questions. It would be quite a big help if you could look at past interactions with that person. Maybe Jason was out and XXX discussed a problem with them - but if Jason had left a note regarding the last time they called, they could say, "Oh yes we are working on that..."

Its sort of like calling your Internet provider, most of the time they are asking you for the trouble ticket number - now they have a computer, can't they just look up the last ticket number on your account? Wouldn't it be better if you (and the people you work with) could quickly look up what the client's needs are. Is there a reason to make a client spend 15 minutes each call explaining a longstanding issue?

29 Jun 2004 | August said...

The University of Waterloo uses Peoplesoft to manage its students/facutly/staff records, student registration, and so on. Laurentian University uses something similar from Novell. Both products feel like they were designed and built by 9th graders taking their first computer science courses.

Given the number of times I've had to physically go to an office to get things done rather than use the CMS, or when the CMS has failed, and given the long lines of frustrated users I have encountered each and every time, I am hard-pressed to understand why such things are a step up from notepaper and stamps.

29 Jun 2004 | One of several Steves said...

As several pepople pointed out, software doesn't solve whatever issues the sellers of CRM software claim it does. It takes changes in business processes and cultures to really see the benefits.

An actual CRM package has best value, IMO, for organizations where several people have contact with individual customers and clients. For instance, if I contact about an issue with an order, and it takes a few communications to resolve, I'm likely to interact with multiple customer service reps. Having a centralized system of tracking and monitoring each interaction, the promises made, the resolution of those promises, etc. is highly valuable.

For the small business, that's no less valuable, but I'm not sure you need software to do it. Especially when you can lean over and ask someone else "Did you talk to so-and-so about the whatever."

BTW, based on what I was reading a couple years ago - the last time CRM was all the rage - most companies get very little out of their implementations. Part of it is the complexity and utility of the software, but it's more so because the companies thought software would solve their problems, instead of viewing it as a tool and making the necessary changes in business processes.

29 Jun 2004 | August said...

CMS = CRM (sorry)

30 Jun 2004 | Larry Caretsky said...

My company Commence Corporation now has several hundred small to mid-size companies with very successful CRM implementations realizing ROI. We have taken a novel approach to CRM, via a implementation methodology called STEP, which enables the company to take bite size chunks of CRM and implement just that component, before moving on. As such, we have some customers that have implemented contact management and a sales pipelin and forecast, that's it for now. Others have begun with automating the marketing function in-order to get bul e-mails and direct mail campaigns out the door. Commence has proven to be more than a contact manager without the cost and complexity of traditional CRM solutions. See for a free trail.

01 Jul 2004 | bongoman said...

On a much smaller scale, I'm using DayLite on OS X. Great app that came from Next to OS X.

02 Jul 2004 | rox said...

I would love to have a simple, fast system that is irresistably rewarding to use. The main challenges I see in an app for small companies are the lack of time, and dare I say - discipline - to repeatedly use yet another piece of software. Small biz owners/employees multi-task by default. On a typical day I have a minimum of 10 apps open at any one time.

One of the reasons large co's can implement CRM sw and strategies, is because they have so much more operating capital (human and financial) to work with. Small co's are typically not flush with cash or people with time on their hands. Plus, many of the corp employees (such as call centers) are interacting with the sw all day long - so it's easy to get useful data into the system; their raison d'etre is to enter data and interact with it.

For a system to get my attention/interest, it would have to support me and not add more to my to do list. It would have to not require me to be at my computer all day long to be useful. It would have to allow multiple users to interact with it; I already have systems that work for me, they just aren't available to anyone else without request - and - I have found others are not as interested as I am in tracking the customer data. I want awesome reporting capabilities. And for me, a reminder system is essential. (I love the flexiblity and power of alarms in iCal.)

02 Jul 2004 | Walker Hamilton said...

Commence? Good god I hope not. I used to have to support commence at Boelter and Yates (don't blame me for their site, I had nothing to do with it).

Anyway, that thing was the biggest hunk of junk ever. If it wasn't a problem with the laptop users not being able to synch up, it was a problem with the server choking on tasks, or a user having data overwritten.

Ptu! I spit in Commence's general direction.

02 Jul 2004 | Don Schenck said...

Walker, I know you had nothing to do with it ... but that Boelter and Yates site looks horrendous. Yuck.

03 Jul 2004 | Nick said...

I use an internal project on basecamp as our "CRM," based on my experiences with when they were just starting out. Client contacts are stored as messages; the sales pipeline is modeled through message categories. We track our contact history through comments to the message. Milestones makes those "call me back in 4 weeks" easy.

This really just models communication, which is exactly what I needed. It's an online tickle file. did a nice job generating sales forcasts based on the probability of a project's success and reveune, but I'm able to eyeball this well enough.

I tried working with DayLite twice, with the full intent of loving that software. Maybe I was too close to at the time. I found its object model clunky, and its reporting insufficient.

07 Jul 2004 | Len said...

Sounds to me like you're putting the cart before the horse. What you're hearing is buzz from CRM vendors. Software is suppossed to help you solve business problems. Don't buy/use software in the search for a problem, identify a problem and look for the solution.

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