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Seven Steps to Making a CRM Vendor Decision
Choosing a CRM vendor can be a difficult and time-consuming process. Making the wrong decision can lead to a costly and inefficient system that doesn't meet your company's needs. At worst, you may find yourself repeating the evaluation process again in a few years because you've outgrown a solution that isn't delivering the functionality or return on investment you require.
The seven steps outlined below will help guide you through the CRM vendor evaluation and buying process. These steps provide a roadmap to help you outline and prioritize your needs and wants, and speed your decision-making process so you can get your new CRM system up and running as quickly as possible. Following these steps will help you find the right vendor for your needs, and will help you save both time and money.
Step 1: Determine Requirements and Create an RFP
This first step is crucial in the vendor selection process. Before you can consider a CRM vendor, you need to clearly define your company's business objectives, technical requirements, and the desired functionality of your CRM system. You'll want to take into consideration the needs of a wide variety of users, not just IT or support personnel. Obtain a list of needs and wants from business managers, executives, and users, as well as representatives from IT, marketing, sales, and finance. You'll need to consider things such as:
- What are your scalability requirements for year one, year three, and year five?
- What are the real costs of the solution, both upfront and ongoing, for the deployment and continual maintenance of this CRM solution?
- What service level agreements does your company require?
- Does your company retain ownership of all data in the system (such as tasks, notes, and logged calls)?
- What training will you need to get staff up and running on the system quickly and efficiently?
In addition, you should identify goals such as return on investment and desired productivity improvement. Once these details have been determined, you can create a request for proposal (RFP) for potential vendors. Comparecrm provides a checklist to help simplify this process.
Though it might be tempting to buy part of a package or a piecemeal solution to solve an immediate problem, it's important to think about your company's long-term goals. Buying a short-term patch will increase costs, complicate implementation, and radically reduce adoption rates by end users in the long term. It's very important to consider your company's long-term goals before you make a decision¡ªstick to the RFP.
The RFP, if researched and written well, will be your guide in selecting the best CRM vendor for your needs. It is imperative that you gather as much specific company input as possible before the vendor selection process begins.
Step 2: Create a Short List of Vendors and Submit Your RFP
Now that you have defined your business objectives in your RFP, you can create a list of vendors who match your criteria. Use our convenient CRM vendor comparison tool[[insert URL]] on the comparecrm Web site to further narrow down your choices (for example, you can evaluate vendors based on hosted vs. on premise, those with solutions for small businesses, level of customer service, cost, and so on).
Look for vendors who have a solid track record and who are familiar with your industry and area of need. Find vendors who have solved business problems similar to yours. Talk to other customers with similar business needs and issues and ask for candid feedback¡ªwhat do they think of the product, how does the vendor measure up in terms of training and support, and so on.
It is also important to evaluate the viability of vendors when trying to narrow down your list. What is the financial health of the business? How many customers do they serve? How long have they been in business? You'll want to make sure you're working with a company that will be there for you not just through this implementation, but down the road as well.
Depending on how complex your requirements are, you should be able to create a short list of vendors. If you have a relatively straightforward project that won't require much customization, try to limit your short list to three vendors for simplicity. If you have more complex business requirements and need customization, integration with other systems, and the like, you might need to assess more vendors, though we recommend evaluating no more than five.
Once you have identified your short list of vendors, submit your RFP to them. It's important that you share the same information with all potential vendors so that you are comparing information with like information when vendors respond to your RFP.
Step 3: Require Vendors to Prove They Can Meet Your Needs
Once you have received the detailed responses to your RFP, you can start evaluating vendors. Your job may get easier based on the vendors' response (or lack of response) to your request. Watch out for vendors who miss your deadlines or who don't provide full responses. And also pay attention to your relationship with the salesperson¡ªthis is the person with whom you'll be spending a great deal of time and negotiating your deal. If you feel you can't trust this person or just don't have a good working relationship with him or her, it might be wise to remove this vendor from your list.
At this point, you need to determine how the vendors you have identified will fulfill the requirements you identified in your RFP. Make each vendor prove that it can satisfy your business needs. The best way to do this is to have the vendor provide a demo or a free trial of its software. During this step you need to evaluate which software package best meets your needs¡ªwhat looks good on paper might not be the best fit for you once you see it in action. A demo will allow you to evaluate the user interface, how screens are laid out, what kinds of information can be captured, and so on. Even a generic demo, without any customization for your company, can provide a good overview of how the software can meet your needs.
During this step, you can also require vendors to provide more in-depth information with specifics about how they will meet your business objectives. They should be able to outline your potential return on investment and describe what steps they will take to avoid risk and ensure a pain-free deployment. At this point vendors should also clarify how they will satisfy your technical requirements and describe how business objectives will be met or exceeded. Finally, vendors must outline what support and training is included, and what services will require additional fees.
Step 4: Pare the Field Down to the Top Two Vendors
Once you have conducted an initial evaluation of vendors on your short list, you need to pare that list down to the top two vendors. It may be helpful to consider the following:
- Which vendors were able to best show how their product will satisfy your business and technical requirements?
- Which vendors are in the strongest financial and competitive position? It will usually be safer for you to choose a vendor who is not actively involved in an acquisition or not likely to be the target of an acquisition.
- Of the vendors you evaluated, which gave you the sense of going the extra mile to earn your business? This won't guarantee the service level you'll receive after you've signed the contract, but it might help you with your negotiations now and in the future.
- Which vendors were concentrating on how much cheaper their solution was, or were trying to give their software away? You want to avoid vendors who either promise the moon or who try to give their software away¡ªthis typically means they are struggling to find customers or want to sell a version that will quickly become obsolete.
- Which vendors have proven they can solve business problems similar to those your company is trying to solve? Have these vendors provided customer reference examples or actually shown you how it can be done?
- What does your CRM evaluation team think¡ªgather feedback from stakeholders and use it to help make your decision.
Once you have considered the factors above, narrow your short list down to the top two vendors. You can then engage in further discussion with these two vendors to determine which one is the best fit for you.
Step 5: Vendor Provides Customized Trial So You Can Get Internal Buy-In
At this point in the evaluation process, your vendors should know that they are on your short list and that you will need to conduct more in-depth scrutiny of their offerings. This is when vendors will need to prove that they can fulfill your business requirements. Ideally, vendors will present a customized trial version of their product, mapped to your company's business processes and showing how your company's workflows are handled. This requirement is critical for hosted applications, which can be easily customized for your needs.
Come up with some sample business scenarios that might happen within your company. See how each product works during each stage of your scenario. This will allow your extended team to ¡°test-drive¡± the system. A customized trial will also allow you to evaluate strengths and weaknesses of each product, and to compare functionality of each product. Forcing a vendor to meet a ¡°day-in-the-life¡± scenario of your company's business functions will give you a good idea of how easy or difficult it will be to customizable the solution to fit your needs.
Each vendor should be able to present its solution to your company with a sufficient level of detail to satisfy all decision-makers. This presentation will give everyone an opportunity to ask questions and get a full understanding of the scope of the project and the vendor's ability to fulfill business objectives and address concerns. You will need to get internal buy-in for the system from senior management, IT staff, end users, and whoever will use or support the system. Often, seeing the solution in action will help clarify to stakeholders why a CRM system is important, and this will help garner the necessary internal support and will make lead to a smoother rollout of the system to different user groups.
Step 6: Negotiate the Deal
You've narrowed your choices down to two CRM vendors, and both should know that they're in the final two. Now, before you sign the contract, is when you'll have the most power to negotiate.
At this point, vendors will present you with a proposal. Remember that everything is negotiable, and lock in discounts wherever you can. Some issues to consider include the following:
- Implementation costs
- Maintenance and support fees
- Limits on fee increases (including freezing prices or locking in discounts)
- Locking in future upgrade costs
- Technical support and training
- Service level standards and guarantees
- Long-term commitments and contracts
- Upgrade provisions for future conversion from hosted to on-premise solution
Another way to negotiate a favorable deal is to serve as a reference for the vendor. A good reference is worth its weight in gold, and CRM vendors know this. Serving as a reference may give you some negotiating room in terms of price, but may also increase your level of service and support.
Finally, time your negotiation¡ªvendors are more likely to negotiate a better deal in their last fiscal quarter or during a poor quarter. Also pay attention to the vendor's business news¡ªfactors such as a significant loss to a competitor, an entry into a new market area, or a new management team can work in your favor. You can find a more in-depth white paper covering the CRM vendor negotiation process, titled ¡°The Insider's Guide to CRM Software Negotiations,¡± on the comparecrm Web site.
Step 7: Choose a Vendor and Deploy Your Chosen CRM Solution
Once you have all the information you need, you will finally be able to choose the best vendor to meet your needs. Make sure that you understand all of the details of the contract, and don't be afraid to ask for clarity. Be sure that all changes and agreements are made in writing by both parties.
Work with your vendor of choice to create a mutually acceptable schedule and internal resource allocation to fully implement your system. Negotiate deliverables, timelines, and necessary internal resources.
Conclusion
Following the seven simple steps above can mitigate some of the risk involved in the search for the right CRM vendor. Clarifying your objectives from the outset can smooth the evaluation process and ensure that you find the best vendor to meet your company's CRM goals.
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