The R in CRM means Revenue!

"The R in CRM means Revenue!"

My Job Here is Done™ Transcript (for general use only – machine-generated and it may not be accurate.) 

Kelli (00:00) Are you sure?

Dave (00:01) about what?

Kelli (00:02) Doing an episode about CRM systems seems a little narrow-focused to me. And yeah, I know a bunch of our listeners know what a CRM system is, but some may not.

Dave (00:13) Patience, young Grasshopper. Everyone needs to hear this.

Kelli (00:17)  More of Dave's psychedelic flashbacks ...Go on Master Po, we're listening.

Dave (00:25) Yes, Grasshopper, most people know about CRM systems and what CRM stands for. But funny thing ... Most people never use the R part.

Kelli (00:34) And Master Po, I assume that you have words of wisdom for us on this R in CRM.

Dave (00:41) Yes, Grasshopper, take off your shoes, enter my Dojo and allow Master Po to teach you that the R in CRM means revenue.

Kelli (00:53) ummmm ... but I don't think it does!

Intro (00:56) Hi, I'm Dave, and I've been starting and running businesses all my life. And I'm Kelli, working for the man like a dog for decades. And you are YOU!  The driven career professional clawing your way up the ladder of success. Maybe running your own business. The next 20 minutes or so is just for you. Welcome to My Job Here Is Done.

Kelli (01:20) Thanks for joining us today. I'm Kelli.

Dave (01:22) And I'm Master Po.

Kelli (01:24) Oh, boy.

Dave (01:24) Thanks for joining us today on the podcast.

Kelli (01:28) Now that Dave's head can't fit through the door.

Dave (01:31) That's Master Po to you.

Kelli (01:32) Okay. All right, before we get started, just a quick reminder that you can learn more about the podcast, listen to all the previous episodes and interact with us at our website.

Dave (01:42) My Job Here is Done dot com and on social media at MyJobPodcast.

Kelli (01:48) This is the one about how you're probably wasting 80% of your investment on a CRM, either your personal CRM or the CRM that you use at your business.

Dave (01:57) Hey, Grasshoppers, I have a question for you all. Do you use a CRM in your personal life? I bet you'll say no, but I'll challenge you that you're probably wrong by saying no. You use a CRM. You just call it an address book or a contact manager.

Kelli (02:13) And in business, a CRM is essential to keep track of your prospects, leads, customers, and maybe even your products and services. If you're new to a CRM system, you'll know some of the big players who make them SAP, Oracle, Microsoft Dynamics ...

Dave (02:29) Yeah. And CRM's like Zoho, Sugar Pipedrive, HubSpot and Cloze. There are literally dozens of software-based CRMs available, but the one that made CRM a household name was and is Salesforce.

Kelli (02:45) Yes, businesses and especially companies ...

Dave (02:48) If you don't know the difference between a business and a company, please listen to our episode. My Dad ran a business. My Dad ran a company.

Kelli (02:56) Yeah. Shameless plug from Master Po. Again, businesses and especially companies need to keep track of how customers; people, human beings, interact with the processes of the business, the very nonhuman machine.

Dave (03:10) This is done in most cases by inserting a CRM between the people and the processes. Now, before we get into the crux of this episode, which is the R in CRM. Let's quickly look at the flow of a typical CRM and you'll see why we say that in most cases, you're wasting 80% of your money on a CRM system, no matter whose CRM you have.

Kelli (03:34) Let's go through it. Let's say you're using Salesforce, also known as Salesforce.com, but it doesn't matter. All CRMs are essentially the same. There will be a C part of the CRM where there's a listing of all of your customers. And in that part of the CRM, you can see and record things as basic as your customers business name, the address, phone numbers, contacts within the organization.

Dave (03:57) Yeah, and more specific areas like to add when you last contacted them, what industry they're in, if they have any branch offices, the names of key decision makers, who on your team is heading up the effort and notes you took from your last contact with them.

Kelli (04:13) If you even thought to add notes. The CRM will help keep track of whether the person you're working with is a prospect, just becoming curious in what you have to sell, or a lead that has shown a qualified interest in buying to an account which is now a true customer of yours.

Dave (04:30) Right. And in the end, part of the CRM system, will manage the workflow of the prospect lead or account. Things like what buying stage are they in? Are they in the discovery stage of the buying process? Are they actively negotiating with you? Did they get to a closed won stage so you can celebrate? Or did it drop to closed loss so you can cry in your beer? The M in CRM is all about managing things just like that.

Kelli (05:01) And if we pause for a moment, what's so hard about keeping track of that? What stage are they in? A note or two, a few dates and reminders?

Dave (05:09) Yes. And the C part of the CRM, the customer part, we used to do that just fine. Keeping all of that important customer info, the names, addresses, phone numbers, all of that stuff. It fit nicely in a $10 Rolodex.

Kelli (05:21) You're dating yourself, Master Po.

Dave (05:23) Okay, well, you can Google Rolodex, but it also fits nicely in a simple spreadsheet.

Kelli (05:30) Yes, all of the information in the C and M parts of CRM can be easily done in a spreadsheet in the vast majority of cases.

Dave (05:39) Then why do the vast majority of cases we've seen elect to spend what is often hundreds of dollars per month per user, which is often per employee, to license a CRM when they can do everything they need to do in a free spreadsheet?

Kelli (05:55) All of these businesses could save tens of thousands, hundreds of thousands of dollars a year by not using the CRM product.

Dave (06:03) Kelli is right. I have seen, and I will categorically say that I am right, that most SME’s

Kelli (06:08) which is small and medium business enterprise for those who don't know 

Dave (06:14) They are businesses who own, say, Salesforce or Dynamics or HubSpot or Zoho or any CRM. They're only using 10% to 20% of their CRM and wasting thousands of dollars each month.

Kelli (06:29) And as important, CRM systems don't just plug and play. They need administration, training, support, and upkeep. And that all adds up to the cost.

Dave (06:39) I hate CRMs. There, I said it. Master Po has spoken. All. Grasshoppers, take note. I hate CRMs because CRMs suck your COGS.

Kelli (06:50) Wow. In my best Mr. Miyagi impression, Wax off, dude. What did you just say?

Dave (06:56) COGS. I said COGS. CRM sucks your COGS - cost of good sold.

Kelli (07:04) Then wax on.

Dave (07:05) Okay, waxing back on. If you're not using your CRM to its fullest potential, and you're not, unless you're in that 1% club, you're likely unnecessarily depressing your margins by having an expensive hit to COGS or to your selling expenses.

Kelli (07:22) So after a little shock and awe, I need to step in and push a reset button. Okay, we actually love CRM. We hate when CRMs are used to replace what a spreadsheet or a simple database could do. And unfortunately, this is all too often the case. But we can fix it and we can fix it fast.

Dave (07:40) Yeah, in a moment, when we talk about the fix to make any CRM provide value to you.  We'll show you how this fix can be applied to both a business CRM, any brand of CRM you have, and how it can make your personal CRM super valuable.

Kelli (07:56) We decided to do this episode on CRMs because Dave was telling me a story about how he had a choice to either fix a cost problem by eliminating that cost or making the cost pay for itself while adding to the profit margin.

Dave (08:11) Yeah, and the story has to do with me either getting rid of an expensive CRM cost, to be specific, or making the CRM work to actually make more of the R in CRM, which stands for revenue. I know. I see everybody racing to add comments on the website about how wrong I am in the our definition, but just wax off for a moment, Grasshoppers, and I'll explain. I was brought in by the CEO of a company to help him rejuvenate his Sales Department. This was not a new company, it wasn't even a broken company. It was just underperforming when compared to the market. And he felt his costs of selling were way too high for the current conditions. So my job was to uncover why this was happening. I could implement anything within reason to change it for the better. And then I needed to leave a new selling system in kind of a sane place where a new leader could come in and take it to the next level. In this case, I was a fixer and all options were on the table.

Kelli (09:12) So what did you do?

Dave (09:14) I put together a team like I always do, and we worked to uncover the good and not so good of that selling engine. And specifically, to our episode today, one of the not so good things was their CRM implementation.

Kelli (09:29) So what was the scoop with their CRM?

Dave (09:31) Well, remember a few minutes ago when you were highlighting some of the C items in the CRM, like company name, address, phone number and contact information, blah, blah, blah.

Kelli (09:42) Yeah.

Dave (09:42) Well, that's exactly what this company's CRM was collecting. And they were also collecting some of the M information, too, like the selling stages knows, contract dates, that type of stuff. I discovered that the CRM and keeping it up to date was also largely optional. And while some of the users did keep it up to date, others were less enthusiastic.

Kelli (10:05) So what did you do to change that?

Dave (10:07) I asked the team if there was a policy that said all of the users of the CRM must keep it updated on all customer activity. Of course, the answer was yes, but still, there was no real good compliance on that. I was told that there were many previous meetings about this very topic from the CEO, and that initially it gets better for a little while and then it drops off again. We've all seen that, right?

Kelli (10:33) Yeah.

Dave (10:33) I suggested that the company was not using the CRM to its fullest potential. It was costing at the time about $150 per month per user.

Kelli (10:42) Wow.

Dave (10:42) And yeah, well, you can spend a whole lot more on it. It all depends. Right. And there were about 140 users. So annual cost, not including the admin and maintenance cost, which could easily double that was about $260,000 a year.

Kelli (10:57) Wow. So in finance land, this is $260,000 of cost that goes straight to expenses on the P&L and decreases profit by $260,000. Not good if this cost is not necessary to running the business.

Dave (11:12) Worse, my investor friends out there who look at profit as an indicator of company valuation, that $260,000 worth of costs may mean five to 15 times that in evaluation calculations.

Kelli (11:28) Right.

Dave (11:28) Since this was a tech company, to the CEO owner, this CRM, by not being used correctly and providing the proper value, was costing him around $2.6 million dollars of company valuation potential.

Kelli (11:43) Why wouldn't you get rid of it if you could?

Dave (11:45) Well, that was definitely an option that was on the table. But remember, everybody, please. I actually love CRMs. I hate how they're too often ineffectively used. And that was the case here.

Kelli (11:58) So if you kept the CRM, what changed?

Dave (12:01) Well, I did this to fix the problem first. It doesn't take a rocket scientist to figure out that the reason why the majority of the staff were not committed to keeping the CRM up to date was because they themselves did not see the benefit of the extra work they needed to do to keep it updated.

Kelli (12:18) Sure, it takes time to open the software, go to the right page, add your notes, update the correspondence dates and times, adjust your pipeline stages and the percentages based on today's events. If I don't see a benefit from doing that, I'd be opposed to the extra work, too.

Dave (12:34) Yeah, and putting out a new memo demanding compliance was not the answer. You're fired if you don't doesn't send the right tone. The problem was clear to me because I fixed it before, after I discovered the power of R in CRM. And R definitely means revenue, and virtually no one uses the R part, for sure. Administrators and sales leaders spend countless hours making sure the C parts of the CRM are just perfect, often way too perfect. The CRM team will make the M part magical, with all kinds of super cool automation that send email reminders, print reports, hook into slack to praise new sales, and calculate and predict stages with self-gratifying algorithms. And then they say it's done. And the R part, the revenue part, is completely forgotten about.

Kelli (13:28) Master Po, please tell me that you know the R in CRM doesn't really stand for revenue.

Dave (13:32) But it does, Grasshopper. It does. Revenue comes from relationships, not the other way around. So, if you're suffering from selling efforts that are below your target or expectations, and your revenue is suffering as a result, put as much or more emphasis on the R in CRM as you do the C and the M. This is a customer relationship management system. And while you can easily do customer metrics in a spreadsheet and you can manage dates and times and stuff like that in a spreadsheet, you cannot manage a relationship in a spreadsheet. And therein lies the power of the CRM. And that power is available in any CRM. You just have to use it. And I guarantee that if you do, it will increase revenue. R R R revenue.

Kelli (14:31) The big reveal - relationship management is often missing in CRM implementations. And by not using that part, you are literally wasting 80% or more of that asset, right? And you're paying for something you're not using effectively, and that's not good for anyone.

Dave (14:48) So let's look at the ways you can use the R in CRM to your advantage.

Kelli (14:54) First, I got a call last week from Ben at the Honda dealership. I couldn't answer it, so it went to voicemail. He was just wishing me a happy birthday.

Dave (15:02) Is your lease up soon?

Kelli (15:04) Nope.

Dave (15:04) Is this your new boyfriend?

Kelli (15:05) I still have two years to go.

Dave (15:07) Wow. Hey, Ben, if you're listening, great work. I bet your R part of the CRM captured Kelli's birthday when you added it to her relationship profile.

Kelli (15:19) Hey, Ben, if you're listening, you can bet I'll remember you, your name and I'll be asking for you when this lease is up.

Dave (15:25) The R in CRM means revenue.

Kelli (15:29) Have you ever gone into a good restaurant, and you've been greeted with words like, welcome back? Or would you like the same booth you had last time.

Dave (15:37) Yeah. Well, if you heard that, would you be feeling a little special? Does it surprise you a bit? In a good way? That's the restaurant's CRM our part working. It's relationship magic.

Kelli (15:50) The R in CRM means revenue.

Dave (15:53) You're at the doctor's office and she asks you, how are the kids doing? Johnny's in third grade now, right?

Kelli (15:59) Yes, that's the CRM part of the medical record system, reminding the doctor about important events she noted during your conversations. It's the are working for the revenue again.

Dave (16:10) In our episode Sell, Your Friends Make Extra Cash. We talked about relationship building, actually, how to make friends in the selling and buying situations, and we stress the importance of noting things you hear so you can use them later when needed.

Kelli (16:26) And the CRM is where you note them. I've been exposed to CRMs that have a whole long form of tidbits about the customer. These forms are usually set up in categories like family, likes, hobbies, food, important dates, and cautions.

Dave (16:40) Yeah. And in those categories, there would be checkboxes pull down menus and short text fields to record things like your customer's son's name, favorite foods, birthday, spouse's name, what car they drive, what their favorite team is in sports, the last vacation spot. This list goes on and on and on.

Kelli (16:59) You're building a relationship with that person, and it starts from the first contact you make, right? If you're being conversational, as you should be, if you're not only working on making a sale but also understand the importance of friends buy from friends, then you naturally learn things about your customer, record it in the CRM. It's easy to do. Just have the relationship pages visible when you have your calls... If your customer ...

Dave (17:25) ehhh... Your new friend ...

Kelli (17:26) Yeah. If your customer and new friend says something personal or important to them, note it. Add their birthday to the form if you know it. If you hear that their daughter Jane likes soccer.

Dave (17:37) Note it and you can use the relationship forms you built into your CRM to trigger conversation. For instance, you're on a call, the CRM relationship form is up and visible to you, and you notice there's nothing listed in the let's say food category. So you might ask your customer, hey, by the way, what's your favorite restaurant up in your area? I may be traveling up there soon. Well, when you get the answer, note it.

Kelli (18:01) Fill in and note anything you can glean from the conversations that relate to the relationship, not necessarily the sale. Here's good news, you don't need any help with this from it or the CRM admin.

Dave (18:13) Right?

Kelli (18:13) All CRMs have note fields. Just use them to note your important relationship points. While it's easier if the CRM was modified to hold this information, don't let that stop you from using the power of R in CRM means revenue, right?

Dave (18:29) And Kelli just mentioned something important. While you can use the built-in notes field in your CRM to help you remember important relationship tidbits, it is far easier and much more effective to create a CRM R relationship section purposely built to change the behavior of everyone who is using the CRM.

Kelli (18:49) 80% of the value of a well implemented CRM is in the R relationship portion of the product. Invest in the R as much or more than you invest in the C or M portion of the program.

Dave (19:01) Now here's the difference between a sales call with our data added and one without.  Hey, Mr. Miyagi, it's Dave from the Acme Wax Company calling. How are you today? Good. Hey, I was just calling to see if our wax on wax off product was working well for you or if you have some relationship data in front of you.

Kelli (19:21) Hi, Mr. Miyagi. Kelli calling from Acme Wax. Are you happy and well? Good to hear. I see the Red Sox won this weekend. I bet that made you extra happy. Good. I'm glad. I had a whole weekend of honey do lists I knocked out. Oh, it wasn't that bad at all. I had fun doing them. How's that wax on Wax off trial going?

Dave (19:44) Try not to underestimate the power of the subtle difference you hear between those two opening lines. Think to yourself, which one made you feel better. Which one would you remember?

Kelli (19:54) If you work to collect R data, the relationship data in your encounters with people, you will have a secret weapon at your disposal that your competition is unlikely to have.

Dave (20:05) Of course, unless they're listening to this podcast.

Kelli (20:08) Right?

Dave (20:09) Can you see why we say the R in CRM means revenue? By using tidbits of relationship information, you connect more closely with your customers, and you can get a natural advantage over someone who does not use it.

Kelli (20:25) And it doesn't matter if you're in sales, customer service, healthcare. You can use this notion anywhere. Personal interaction is required to show value and satisfy someone. So, Master Po, how did it turn out at the company you were consulting with? The one where you adopted the R in CRM means revenue.

Dave (20:43) Well, three important positive things occurred. Number one, it changed the way the selling and customer service teams, yes both, communicated with the customers. Two, sales increased. Yeah, awesome. Dave got paid and the team saw the only change being the addition of the R to the CRM. And since the sales team was making more money, they found the value that they needed to always keep the CRM up to date. Remember, they weren't even trying at one point in time.

Kelli (21:14) That's a good incentive.

Dave (21:15) And by proxy, this made reports more accurate. Pipeline confidence went way up. And best of all, the CEO was no longer frustrated with the cost. Finally, three, it was a net free upgrade that made a meaningful add to profit margin if you use the relationship tools available and adopt a "friends buy from friends attitude." To our CRM vendor friends, we hope you'll take a moment to reflect on this too. You're in the best position to reach out to your customers and help remind them that they're paying for all three letters the C, the R, and the M, help them use each one effectively.

Dave (21:58) Hey, we just want to say thank you very much for listening today. If you like our podcast, please tell a friend about us, just one friend or colleague who you think would enjoy the content and the stories that we share.

Kelli (22:09) You can listen to My Job Here Is Done anywhere and everywhere podcasts are available and check out our website for all the latest info on the show and how you can work with us - at myjobhereisdone.com.

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