Questions to Ask When Choosing a CRM Vendor

Questions to Ask When Choosing a CRM Vendor

Given the critical role of a CRM in the ongoing operations of a non-profit organization, there are many essential evaluation criteria when considering new CRM alternatives. Is there a functional fit with your requirements? A technical fit? What is the effectiveness of the implementation and conversion approach? The responsiveness of ongoing support?

But equally important to all of the above criteria combined is the expected quality of your relationship with your new CRM company.

Partnership or Vendor Relationship?

Does your current CRM company treat you like a partner? Or is your relationship a little bumpy and un-partnership-like? Although your CRM vendor’s people are well-intentioned and trying their best, are things not working well? If this is the case, the CRM company’s senior management and their motivations and incentives are almost always the culprits.

A CRM company’s management sets the values and, thus, the company’s culture. These values determine how a company treats its employees and its customers.

Good management, the proper values, and a supportive culture lead to happy employees and satisfied clients. The opposite is also true.

So when it is time to select a new CRM for your non-profit organization, there are several essential questions to answer about the company you are about to keep.

What is the CRM company’s overriding business value?

Companies usually have multiple values, but when a decision requires trade-offs, one overriding business value needs to prevail.

Most for-profit companies select one of three overriding business values and usually state this choice explicitly. These three choices are often client satisfaction, operational efficiency, and shareholder value. The first two overriding business values are self-explanatory, but the third one, shareholder value, requires a little explanation. A CRM company that strives to maximize shareholder value focuses on driving revenue growth for growth and maximizing profitability.

All three values may be resident in a single company, but these three values can conflict in many decisions, and trade-offs must be made. In these situations, the overriding business value of the CRM company prevails.

Here’s an example. When implementing and converting a new organization, a CRM company focused on client satisfaction wants the project to be as smooth and easy as possible. In contrast, a CRM company focused on shareholder value will prolong the implementation and conversion process as long as possible to maximize billable hours. Note that this second approach often leads to significant delays and cost overruns, a result that would horrify a CRM company whose overriding business value is client satisfaction.

One word of caution: sometimes, a CRM company’s senior management will say that their overriding business value is client satisfaction because it is what customers want to hear. But, when decisions are made, it is shareholder value that prevails.

The motivations and incentives of the senior managers of the CRM company drive the choice of which overriding business value prevails. To determine these motivations and incentives, answer the second question below about the CRM companies you are evaluating.

Is the CRM company a public firm whose stock is traded on one of the major stock exchanges, a venture capital-backed company, or a closely-held company owned by the firm’s management?

The owners and the ownership structure of a CRM company determine the motivations and incentives of its senior management. And these motivations and incentives will reveal the overriding business value and culture that prevails when decisions are made.

Let’s examine the three ownership structures and how they shape the motivations and determine the management incentives in a CRM company (or any other high-technology company, for that matter).

If the CRM company is a publicly-held firm, it must report its financial results to its shareholders, the SEC, and Wall Street every quarter. Although a public CRM company’s management typically owns 7% or less of the stock, senior managers can make substantial money when the stock price goes up. Aside from unrelated short-term fluctuations in the stock market, stock price appreciation is driven by revenue and earnings growth. As a result, senior management’s motivation is to drive revenue and profit growth because its overriding business value is shareholder value, not client satisfaction.

If venture capital investors partially own a CRM company, they have one primary objective: to make a return on their investment. Consequently, you can expect one of three outcomes when signing up with a venture-backed CRM company. Within the first 5 to 7 years after the venture money arrives, the company will either go public, be acquired, or not be doing too well. If the company goes public, see the paragraph immediately above. If the company is acquired, the outcome depends upon the new owner and its intentions. Often, the acquirer buys a customer base to move them off of the CRM they purchased to one of the acquirer’s products. If the venture-backed CRM company cannot be sold, it is usually because it is unsuccessful and may eventually fail.

If a CRM company is a closely-held company owned by the firm’s management, then the company’s management is in complete control. Ask the CEO and the senior team about their long-term plans for the company. Specifically, do they ever intend to sell the company? If the answer is yes, please see the two paragraphs immediately above. If the answer is no, your relationship with that CRM company will likely be much more stable and predictable.

Does the CRM company have a lot of voluntary employee turnover, and if so, what are the qualities of the people deciding to leave?

The continuity of the management team and the staff is critical to developing and continually enhancing a superior CRM and providing high-quality implementation, conversion, and ongoing support services. Just imagine how difficult it is to keep a CRM implementation and conversion project on track if the project team members are frequently changing.

Keeping good people requires a supportive company culture that respects people, values teamwork and collaboration, and encourages learning and personal & professional development. This type of company culture is often associated with the overriding business value of client satisfaction. A smart company knows that happy employees are a prerequisite for satisfied customers.

All companies lose some of their people to other opportunities. However, if the people leaving are consistently in the top tier of the CRM company’s staff, watch out. This is a big red flag that something is wrong with the company culture.

A related question to ask is how long the senior managers and key people have been with the CRM company. Management and staff longevity helps ensure a consistent and stable relationship between your organization and the CRM company.

Does the CRM company’s CEO have prior working experience in non-profit organizations, or is their employment experience primarily in the for-profit sector?

As any reader of this document knows, non-profit organizations are quite different from companies in our economy’s for-profit sector. People working in a non-profit organization get up to work every day because they are passionate about their mission, whether it be treating animals humanely, saving children from disease, hunger, and neglect, protecting the environment, or ridding the world of social injustice.

When evaluating CRM alternatives, a cultural fit between your non-profit organization and the CRM company is an important criterion. Suppose the CEO and some of their team members have previously worked for non-profit organizations. In that case, there is a much higher likelihood of a strong cultural fit between your organization and your new CRM partner.

When you call a CRM company’s customer references, how satisfied are its clients?

The client references of the CRM companies you are considering represent your ultimate test and reality check on each company’s claims during your CRM evaluation process.

Client references enable you to dive below the surface of fancy presentations and demos to understand how well each CRM company treats its clients.

Start by asking factual questions in your conversations with each client reference. Is the CRM live and fully operational? If not, when did the CRM company start the conversion, and when will it go live? Has there been any turnover of their professional services staff during the project? Has the CRM company exceeded its quoted implementation timeframe and cost, and if so, by how much?

Next, please move to the softer aspects of each CRM company’s working relationship with its client organizations. Are the CRM company’s people well-intentioned but have difficulty dealing with their management, or is their relationship smooth? No CRM company is perfect, but when something goes wrong, how quickly does the CRM company respond, and how fast is the issue resolved?

Using client references to understand each CRM company’s strengths and weaknesses, you can decide which CRM company will be a trustworthy partner for your organization.

When evaluating CRM companies, never assume. Verify your impressions by asking the right questions to find the right partner for your organization.

ROI Solutions is uniquely suited to be your CRM partner.

When you answer these five CRM company questions about ROI Solutions, you will find that ROI Solutions is not unique among CRM companies serving the non-profit sector but also ideally suited to be your partner.

Founded over twenty years ago, ROI Solutions, Inc. is headquartered in Medford, Massachusetts, with an office in Washington, D.C. Gina VanderLoop, one of three founders, has been the company’s CEO since its inception.

Before starting ROI Solutions, Gina worked in the non-profit sector as the Director of Development for the Nobel Peace Prize-winning organizations International Physicians for the Prevention of Nuclear War (IPPNW) and Physicians for Human Rights (PHR).

ROI Solutions is a closely-held, private corporation owned primarily by Gina and some of the company’s senior managers. Gina states explicitly in meetings with clients and other non-profit organizations that ROI Solutions is not for sale. She and the company are committed to partnering with our clients to make the world a better place. Selling the company will upset the partner relationship that ROI Solutions has with our clients.

The ROI Solutions company culture fosters management and staff loyalty. Five of the nine senior managers have been with the company for ten or more years. The average tenure of the staff is almost six years. Due to the company culture that respects people, values teamwork and collaboration, and encourages learning and personal & professional development, people have fun working at ROI Solutions.

ROI Solutions’ five oldest clients were installed in 2000 and 2001. And the largest client has over 25 million individual records and over 250 total users on the ROI Solutions CRM. The company’s overriding business value is client satisfaction, not shareholder value.

Our clients are loyal to ROI Solutions, and we are dedicated to them. But don’t take our word for it… call our clients. Learn more about ROI Solutions’ Revolution CRM.

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