guest interview

Customer Relationship Management Panel

Customer relationship management (CRM) is a hot button for professional services firms. To assist CPA and law firms in researching CRM solutions Capstone Marketing, Inc. assembled a panel of experts. This Guest Interview is longer than usual. Rather than printing this screen, you are encouraged to download the Word document for easier viewing and printing. Our panel includes:

FrontRange Solutions, Inc. (producers of GoldMine):
Ronan Vance, Director of Technology Partners and Alliances
ronan.vance@frontrange.com
www.frontrange.com

Interface Software (producers of InterAction):
Heidi Hookstadt, Accounting Industry Market Director, hhookstadt@interfacesoftware.com
Rick Klau, VP, Legal Markets, rklau@interfacesoftware.com
www.interaction.com

Patricia Seybold Group (e-business consultants and thought leaders):
Ronnie Marshak, Senior Vice President
rmarshak@psgroup.com
www.psgroup.com
Patricia Seybold's new book, The Customer Revolution, is available starting March 20, 2001 and can be purchased at www.amazon.com.

Capstone: Define customer relationship management (CRM) and what it means to your company.

Marshak: The Patricia Seybold Group are industry analysts and consultants in the CRM area. To me, and to us, CRM is a strategy, not necessarily a technology category. Having close relationships with your customers we believe is the only way to thrive in this new business environment and economy that we are facing right now. Your customer franchise, the relationships you have with your customers, are what is going to help you keep them and continue to succeed in the face of increased competition, worldwide markets, the Internet and all the other areas. CRM software is there to support the strategy and the initiative whereby you get and stay close to your customers.
Vance: Yes, CRM is a strategy and even a philosophy, if you will, in how you approach and manage your business relationships whether they be with customers, prospects, business partners, or vendors. We try to take a very simple approach since we will typically be dealing with small and medium sized businesses that CRM is just tying together all the customer-facing departments and people within an organization which can be sales, marketing, customer service in most cases, but also other departments that touch customers and other people like accounting, shipping, all of those people have an opportunity to interact with a customer. Being able to provide them with a set tool that unifies the experience with those customers and constituents outside the organization so you can treat them with a consistent level of service and quality on an ongoing basis.
Hookstadt: We look at CRM as a process and not a technology that a firm goes out and adopts based on the needs they are looking to achieve. For example, if an accounting or law firm is looking to enhance client service or work on administrative efficiencies or increase marketing initiatives they've been involved in and ultimately increase revenue, we are an enabler and a critical component of that process to help firms achieve what they need to achieve and CRM is part of that to make that happen.

Capstone: As accounting and law firms are looking to develop a CRM system what are the key considerations that they should be looking at in developing and implementing a CRM solution?

Klau: There are three separate issues. First, probably most importantly, and this may sound obvious but in our experience it hasn't been, the firm ought to have a clear objective going in. What is it they are trying to accomplish by implementing this system? Second, would be to identify before you start the implementation, identify the cultural issue that may present a challenge in implementing the system. Third, is simply to manage expectations. Obviously, as vendors in this market space believe there is tremendous benefits to be gained but you can really end up going down the wrong track if the expectations aren't managed from the outside. People will be expecting to see 10% to 20% revenue jumps without fully understanding what it will take to get to that point.
Marshak: To build on what Rick just said, I think that a key starting point is for firms to understand what clients want from them. The best way to do that is to ask them. You are absolutely right that you need to have objectives, what you hope to accomplish, but you really have to understand what your customers want from you to make sure as you're designing your systems, you're going to be providing that, not just systems that make it easy for you to interact with your customers in the way you want but also, and even more important, in the way your customers want to interact with you.

Capstone: Ronnie, do you feel that most firms look to developing a CRM solution are looking inward at their firms as opposed to outward at their clients?

Marshak: I think too many start that way, but I think the vendors of the software understand that the customers are key and try to dissuade them from doing that. All to often, they look at "what we want from the customers is this kind of information," "what we want to provide to the customers is this," "we want our clients to give us all this data," "we want our clients to use the web instead of using the phone," "we want, we want," and unless you truly understand what your customers want and support that no CRM initiative is going to succeed.
Vance: I agree with that. We create a product that's widely available in the marketplace, but it's very customizable. We don't presume to know exactly what our customers are looking for since it is very horizontal and designed for a variety of different markets. GoldMine Solutions Partners, actually FrontRange Solutions Partners now, that are experienced in a variety of different industries and really understand, based on past experience, what they can do to work closely with the customer to actually apply the technology to what the customer is trying to accomplish with their constituents. I think the customizability and personalization factors are obviously key and we don't have a one-size fits all approach at all.

Capstone: What are the common obstacles or mistakes that firms make in implementing a CRM system?

Marshak: Most firms have wonderful, flexible tools that they're trying to implement but they think internally. They try to automate what they've always done. So, there are two dangers there. One, they are automating the wrong things. They are not automating what their clients want. Two, they are missing wonderful, new opportunities that the tools can provide to them to get closer to their clients.
Hookstadt: Some of the mistakes we've seen is when a firm purchases a product, they assume that it is going to meet their needs without fully understanding the product. What we look at is a "make" vs. "buy". They end up adapting and creating a lot of things because the product doesn't meet the needs of professional services firms and how they go to market as well as how they manage their clients and their relationships with those clients. Also, I think they not only need to understand what their clients need but when they are implementing something, they need to understand internally what the needs. Marketing has very different needs than partners. Partners have very different needs than administrative assistants. Being able to understand all of the dynamics and what it's going to take and finding the solution that covers those and balances that based upon all the dynamics internally, with the billable hours and everything else, needs to balance.
Klau: Adding to that, specific to legal, of course being professional services firms they share a lot in common with accounting firms. One of the things we've run into dealing with law firms that may be a bit particular is that they are not always the best at sharing. Law firms traditionally somewhat difficult to convince that there is value and a clear benefit in sharing information that otherwise may stay private. So that's been an obstacle that I think a lot of firms have to overcome in making the leap to decide "it's OK for me to share what is essentially viewed as my rolodex" because ultimately there may be some benefit that will bring business to the firm that we may not otherwise get. That leads into another issue which is not so much an obstacle for implementing CRM but in terms of measuring the success of the implementation, which is the firm needs to agree up front, "How are we going to measure the return on our investment?" How will they determine success? Is it going to be measured in terms of revenues? Of course, Ronnie's point is that would be an inwardly focused goal but perhaps a valid one in terms of assessing what the desired result is. On the other hand, it may be in measuring client satisfaction. Whatever it is, you need to agree on what it is, or else it will be very difficult to implement the system successfully.

Capstone: Does it make any sense for a firm to develop a CRM system that would not be used firmwide? Perhaps only used for a specific niche or practice area?

Klau: I think it was Bob Metcalf who coined a phrase several years ago, "The value of a network is equal to the number of users squared." This says that every user you add to a network environment the value of that network increases by an order of magnitude. So, while I'm certainly going to agree that there is value in a departmental implementation of a system like this, I think the firm is missing the boat if they do it departmentally and do not commit to a wider implementation. At the end of the day, the professional are the ones that have a lot of relationships that are valuable to the firm. If you aren't benefiting from their data, if you aren't benefiting from what they know about their clients and partners, ultimately the firm will miss out.
Marshak: I agree with Rick. While piloting in a single practice area might make sense, the thing you want to make sure you avoid is different stovepipe solutions where each different practice areas has a different CRM solution. Then, there is no ability to share information and sharing is very important. You really do need to make sure that, even though you might implement in a small part of the organization to begin with, that when you expand you are expanding the same solution to everyone involved. As was mentioned before, the idea that all information in the organization needs to be involved not just the people who typically get on the phone and talk to clients.
Vance: I think we're all in agreement here that this shouldn't be a departmental or a siloed approach. The more people that have access to the information are just more people that can help the clients get what they need from the organization.

Capstone: How should a firm prepare for implementation of a CRM solution? What do they need to do in advance?

Hookstadt: I think there are a few things from the standpoint of really making sure that you have your business plan and your business rules in place. Because there is a lot of flexibility with systems, really understanding what it is that needs to happen based upon the homework that you've done with your clients and internally. Also, you've got to have some internal education and partner buy-in and make sure that you have all of this in place before you start rolling out your solution.
Marshak: I totally agree. Basically, you need a high-level champion who is going to make sure that the resources necessary, not just financial but the people resources required, are going to be allocated to the project and continue to be allocated as the project grows and it does go organization-wide.
Vance: I also think you need a vendor that you can really count on and trust, that will guide you in the right direction. I think that taking on CRM can become someone's full-time job within an organization and most people don't have the expertise to understand all of the intricacies of the market, the technologies, and what's emerging so it's really important to obviously find a business consultant that you can work with and trust and can guide you, not just for the immediate implementation but for the long-term health and longevity of the solution.

Capstone: How can your product address the differing needs of a firm's users? You have partners, administrative people, marketing directors, and human resources directors. How does your software address the different needs of these groups of people?

Vance: In the case of GoldMine, it is very customizable. It is a very horizontal product so it hasn't been designed for any specific industry or type of user. It does have sales and marketing and service automation tools built into it but it's still a really great relationship management tool for anyone within an organization who is trying to manage external relationships. We offer some solutions around vertical industries like legal, accounting and insurance so for people that are in professional services, they can get a flavor for how GoldMine can be customized to actually fit their specific industry and the tasks they perform internally with their colleagues and externally with their clients and prospects. We have those available on our web site under the Industry Solutions area where we post not only templates that you can download for free but also additional product enhancements that extend GoldMine's product functionality.
Hookstadt: We do not focus on a number of different markets. Our market is professional services, law firms, accounting firms, and management consulting. That is what we know and what we focus all of our efforts on. We spend a great deal of time, and have over a number of years, really entrenching ourselves in knowing and understanding the internal workings of how professionals, administrative assistants, and marketing people deal with their clients. It is such a different dynamic than the consumer side. Interface has brought on attorneys, like Rick, and other marketing professionals who have worked in Big 5 and other accounting firms, we use that talent to focus on what we need to do to help the individual users drive what they need to become better performers. Our product is also extremely customizable and we allow the partners to create their personal target lists and clients and referral sources and monitor within their firm who is interacting with others. It allows them to share some information but not all. I come from a marketing background and work very closely with the marketing group and help them leverage and manage their information regarding event planning, campaign management, RFP's, marketing initiatives, whatever they may encounter. Then, we know that administratively a lot of that data entry is entered in an area that the partners and marketing people are involved with so the product has to be easy to use. We look at how we can allow information to be input in, whether in Word, or whatever the vehicle is, the information is automatically pulled into a single database so everyone can manage and leverage that information and those relationships.

Capstone: In your experience, do you find that the implementation of CRM and the use of a software product, are firms more successful if as many individuals as possible are using the system? I can easily see partners having their administrative people utilize the system for them. Does it make a difference?

Klau: This gets to the heart of what makes professional services different than perhaps some other markets. In other industries, these companies have sales forces. So you have a sales force whose job it is to be out there on the front line, actually collecting information about prospects and customers and managing those relationships. The executives back at headquarters are not necessarily engaged at that level of the relationship management. In professional services, whether you are an accountant or a lawyer, you're the salesperson as much as you are doing the job. That means the demands on your time are a lot different and you're not necessarily spending a lot of time in front of the computer. You're spending a lot of time billing your time and that means you're doing productive work. You don't necessarily want to spend a lot of time sitting in front of a keyboard entering data. One of the things that Interface has spent a lot of time doing is trying to figure out how to make it as simple as possible for that professional to add value to the system without requiring him to go through hours and hours of, "I know this person because we went to school together and our children play soccer together," and all that other stuff. There is a fine line. What we found is that when you have the administrative support and the secretaries and assistants are able to participate in the system, in some cases as a proxy for the professional, you're in very good shape. For example, you have a corner office attorney who is on the road, has been in a couple of meetings and has taken some notes on the backs of some business cards. Rather than requiring them to add that data on their own they may very well just drop those business cards on their secretaries desks. It then becomes very simple for that secretary to add in that information, annotating the system and adding the value that you need to. At the same time, the professional who wants to get that 360 degree view of their client can still, through a web interface or on their palm pilot or other device, see the information that matters to them, if they are going to a meeting or participating in a conference call, so that they at least have an understanding of what's going on with their client.
Marshak: I think you are hitting on some key issues, which is the practice of how you use CRM systems. While dropping off the business cards is very valuable because the professional doesn't have to enter the information, it's the anecdotal information that is often the most valuable. How do you capture the anecdotes? How do you capture the war stories? How is that information then used and actually become almost quantitative? How do you take that information and make it more than just, "Oh, that's nice. We went to school together," but make it something that's usable, make it something that will trigger an idea of how to interact with the customer no matter who in the firm is doing the interaction. That's a matter of practice. How do you use it? Not a matter of what the technology does because all of the technologies have ways to support that.

Capstone: Ronnie, do you agree that a CRM system would work by placing the business cards on a desk and having the administrative person enter it, as long as they have a process to capture the other information?

Marshak: I think that's a way to start. I think that you need the flexibility within your firm to decide how you want to do it. Maybe there's someone who sits in on the partner meetings to hear the stories and capture salient information. There are lots of ways it can be done but it's not a technology issue. It's an issue of how a firm wants to do it and what information it wants to gather.

Capstone: To me, it's an issue of a firm's culture and the commitment that they are going to make the system work.

Marshak: Exactly. The advantage to implementing a CRM system in professional services firms have is that they are not doing customer relationships, they are doing client relationships. Just by doing that it implies a closer relationship. They're not selling toasters to millions of people. They are providing services to a handful, it could be a very large handful, of people that they are in contact with, in partnership with, to come up with solutions. In doing so, they understand the value of relationships in ways that perhaps some consumer firms or even manufacturers may say, "Let our dealer channel deal with the relationships." There is an understanding and a value on the human network that might not be in some other organizations. That's a positive for professional services firms.
Hookstadt: That's why I really think the planning process is really critical because that's part of changing the way they do business. It can't happen overnight. It must be one step at a time. Getting the business card with a little information, then being able to ask a couple of questions. Over time, you see it evolve. Then, we they see the benefit of everybody contributing all this valuable knowledge that they keep in their heads they are now able to become true business developers and really take that to a new level.
Marshak: Earlier, Rick was talking about ROI and revenue. Patricia Seybold's new book, The Customer Revolution, includes information about new sorts of metrics of what you measure. Rick, you talked about revenue and how it's very important to measure. I totally agree that you still have to look at that, you need to look at P&L. But, there's a whole new set of customer metrics that we talk about like profitability per customer, per account per customer. For example, if you're the law firm for a large corporation, which divisions are giving you the most work and which individuals within those divisions are there, and understanding the lifetime value of a client, the revenue per client, what is the value of that client. This can be done and quantified. It is becoming very important metrics for running your business. You drill down to truly understand where you are making money. Where are we providing value? If you can look at those things and understand the relationship you have a pretty good picture of how to continue the relationship profitably.
Klau: It makes a whole lot of sense because, obviously, in a professional services context you don't have a product, you don't necessarily have structured processes, so even if there were a bump in revenues you can't necessarily attribute that to a piece of software or a new building, for that matter. There are a lot of intangibles that go into the whole professional services mentality. On the client side, however, if you're looking at raw billing data, you're not necessarily presenting that in a relationship context that gives you any ability to make a decision about what's valuable and what's not.
Marshak: Exactly. You have to have more than just the blank numbers. They need to be in context of the customer relationship.

Capstone: How does the security features of your product accommodate the privacy requirements within accounting or law firms?

Vance: We have five levels of security that are built in the product. Each user has their own unique user login name and password. There is a way to provide security access all the way down to every single individual user defined field. You can block access to records, to data fields, by the user so that there is very private or sensitive information that is part of the relationship that you have with a customer that you want to have it in the system but you don't want to share it with others in the organization, you have multiple ways to accomplish that.
Klau: This is one of those things that may be particular to lawyers and accountants. You look at folks in marketing, you look at the attorney who manages the relationship, and you look at someone in the billing department. People tend to have different relationships with the same person or company. We look at security not only in the context of how Ronan (Vance) is describing it, which I think is absolutely accurate. You need to have the ability to lock people out or enable access to certain information. But, it's also security in the context of protecting the integrity of the relationship specific to different people. What I mean by that is saying, I may have Ronnie's cell phone number and I may know her by a nickname. Heidi, on the other hand, may have only her main office phone number and may have a more formal way of addressing her because their relationship isn't as close. In a system that doesn't allow for those levels of security, you're not doing as good a job in managing that relationship because ultimately you're forcing everybody into one view of somebody on the outside. Especially in a professional services context, you want that corner office attorney to be able to get access to the information that is critical to them and may be very different than the information the marketing department tracks about those very same people.
Marshak: What about extending this ability into the systems out to the clients? Do your products support that? We believe it is very important that clients have access to some, if not all, the information you have about them so that they can make sure it's accurate, for one thing, and to know what's going on.
Klau: Absolutely, the relationship ought to be bi-directional. You don't want to be the firm simply dumping stuff out to somebody without giving them an opportunity to reciprocate. Yes, InterAction will allow you to expose certain information to people on the outside. It goes further than simply saying, "Here is your phone number, address, e-mail address, make sure that if it changes, let us know." That's one step. There is another that says, we are eight lawyers in a firm representing General Motors. If I'm at General Motors I may want to know who the contacts are that are related to that matter. If it's an accounting context it's, "Who is working on the deal?" Managing that relationship not only to the people but to the matters and enabling people on the outside to benefit from the information that you are capturing only serves to strengthen the relationship.
Vance: GoldMine has that capability. It's an ATI function that would enable one of our business partners to set that up and customize it for the end user. It's not necessarily something that we sell right out of the box, but that capability exists for the customer through a business partner.
Hookstadt: Looking at it from the accounting perspective, something that I've seen is some firms are moving into what they define as a paperless environment, which means that because they are working on so many different types of financial pieces of information for clients they will have to have some type of vehicle in which to communicate it and allow that client an opportunity to see what is going on, whether it be a tax return or a valuation. Being able to have that venue to allow that interaction to happen is critical.
Marshak: I agree, and I think that brings up a really good point about CRM having to extend beyond marketing/sales support issues to issues of collaboration. In professional services firms you are often working collaboratively on documents. Now these are typically different systems than your CRM system but there needs to be connections and security that spans both and integration of these types of systems because you are doing work together.
Hookstadt: We have a tool that pulls from HR and time and billing systems, any kind of systems where you need to capture information but you don't want to re-enter it or manually have to keep monitoring or managing when something has changed in your time and billing system. It is automatically updated and populated into a central repository where the people in the firm have access to it instantaneously.

Capstone: How would your define you define your company's or product's vision of knowledge management and how it relates to CRM?

Vance: Knowledge management is still a very broad term that defines a lot of different types of information technology. We would consider CRM a subset of knowledge management, but utilizing knowledge sources and knowledge bases in how you manage customer relationships is important. A big portion of our business has to do with service and support automation or offering help desk solutions. We have GoldMine product service and support that perform that as well as our specialized product in that area called Heat. Heat really utilizes a knowledge base and knowledge management to help facilitate and resolve problem resolution. That division has been making great strides in actually harnessing the power of knowledge management in being able to service customers effectively and get them the answers they are looking for quickly, which improves customer service.
Klau: Ronan hit the nail on the head talking about CRM, however we define it being a subset of knowledge management. If you get real basic, knowledge management is a combination of who you know and what you know. We've taken the whole concept of what InterAction does and call it relationship intelligence. We think of the combination of the following things: It's the experience (what the firm has done), the expertise (who in the firm can do that today), and then it's the clients, identifying who out there in the world of possible clients you actually want to do that for. If you do it well, if you implement this system correctly, you're able to pick your business. You don't have to answer the phone every time it rings if that's not business you want. By doing that, you are developing deeper relationships with your existing customers, you know a lot more about what you do on their behalf, what you've done elsewhere in the firm that may be relevant to those clients, and ultimately, to expand on Ronnie's point, you are delivering service that is really what they want. It is more valuable to them. Therefore, they are loyal, they are less likely to jump ship and go to somebody else.
Hookstadt: I think along the lines of knowledge management is being able to access knowledge wherever you may be. That is the whole key to being able to allow you to tap into every change that touches any relationship in your firm. For example, you are in China and you meet someone. You can go to your phone and type in their name. This goes into your InterAction database and allows you to access information on this person and provide you any information the firm has on that individual, which allows you the ability to harness your knowledge and better focus what you need to do wherever you are.

Capstone: Tell me about any alliances your company may have with other technology providers.

Klau: If you accept the premise that our purpose is to provide tools to a firm that will allow them to do what we've been talking about, then the goal ought to be to partner with companies who either know more about those clients or know more about the industries in which they operate. Or, on the other hand, companies that provide tools that allow individuals in a firm to gather more of that information on their own. We use that as our marching order. We partner with companies like Lexis-Nexus, AmWest Publishing. We work with portal vendors, companies like Plumbtree, Lexis-Nexus also has their own portal, and Hummingbird, their enterprise information portal. At kind of opposite ends of the spectrum, these companies are focused on ensuring that if there is information out there they are going to make sure it is available to you so that you don't miss something that is potentially critical to managing your relationships with your clients. On the portal side, it's more a presentation piece which says, "If there is data contained within your own systems, whether it's e-mail, your HR system, your accounting system, then you need to present that in a portal view, in a one-page view, so that that person gets that 360 degree view.
Vance: We partner and nationally integrate with a number of different technology partners including Microsoft and Palm all the way down to over 150 independent software vendors that write and promote technology enhancements for GoldMine and Heat products to extend the functionality into areas that we don't actually handle as part of our core offering. Some of those things are integrations to other business applications like accounting applications, we link out to most of the popular small and medium sized business applications so you can actually share customer relationship data with the accounting department and vice versa, you can blend that data together to drive marketing and sales programs. We also work with a variety of different functional vendors that provide faxing software, data software, computer telephony software, and so on. It's possible for a GoldMine customer to build out a very robust and customized suite of products around the GoldMine product line due to the open integration standards that we've put in place over the years.

Capstone: Any other thoughts or considerations you'd like to share?

Marshak: The Patricia Seybold Group is software independent. We don't partner with any specific software vendors. We have our customers.com mapping methodology whereby we work with the firms that are ready to implement to help them in designing what we call customer scenarios to figure out how customers do want to interact with them. When they are ready to actually do implementation and do all the customization that both the products we've been talking about are able to do, they know what their customers want. That's where we come in.

Capstone: Thank you, everyone!