CRM and the Mistakes to Avoid
A lot has changed since Blair wrote his article about seven mistakes he sees creative firms make with CRM years ago, and David wants to know why Excel isn’t a good tool for managing sales leads.
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Transcript
David C. Baker: All right, Blair, this is an exciting day because you're getting nervous, are you?
Blair Enns: When you say, "All right, Blair," I feel like it's my annual performance review. Things haven't gone well.
David: Lean over. Lean over. It's your annual checkup. No, I'm just excited to announce to the world that you are launching a new career as a motivational speaker, and the topic is going to be CRMs.
Blair: Is this topic boring you? [laughs]
David: Not yet, but the potential is there. No, the title of today's episode is Seven CRM Mistakes to Avoid. People hearing that, you can just see their eyes open like, "Oh my God, turn the volume up."
Blair: I think you're going to be surprised. You're going to be surprised at how well this episode performs.
David: Sometimes I'll ask you, what prompted this? By God, you really better explain yourself on this one. Why are we talking about this?
Blair: Well, I was thinking about CRM recently, and you were part of that conversation, and then I thought, "Oh yes, I need to write a post on CRM." Then I go look up, "Oh yes, I've written a few already." I pulled out one I wrote years ago now. I can't even find the date on it.
David: Was it embarrassing?
Blair: No, not at all. There was a time when I was more deeply into CRM, and we actively made technology recommendations to our clients. We no longer recommend specific CRM. This episode is not about what CRM should I use, although I did ask my Twitter audience. 49 people replied as of this recording. We'll talk about that survey. It's really what are the trends in terms of how people are using CRM.
I looked across these seven mistakes, and the first ones still hold up, I think. I haven't studied anything. This is fairly anecdotal. I think some of the later mistakes that we'll talk about, maybe times have changed a little bit. There are a whole lot more CRM options available to people. There are a lot more integrated. In fact, a lot of the solutions are integrated with email service providers and marketing automation tools. Then there's a lot of just interoperability.
It's all got APIs, and they all plug into each other, so it's a more sophisticated landscape today. I still think there's a lot of under-usage and underperformance on the subject of CRM.
David: Mistakes made, too. This is a platform-agnostic view of CRMs, where these mistakes are the ones you could make if you're using a high-level one or Excel. [chuckles]
Blair: Yes. You were joking on Twitter about Excel being the best.
David: Some people thought I was serious. One of the advantages that you and I have is that we are in touch with people who know lots of agencies all at once, like the directors of other agency groups and so on. You had an interesting conversation with one of them recently about the connection between CRM and some other things. Share what you learned there.
Blair: I reached out to a few of our friends who run groups of agencies. Peter Zakrzewski owns the Agency Collective in the UK. He also owns a similar group for consultants. It's called the Consultant Growth Network. I've spoken to both. Peter was saying he doesn't have CRM data specifically, but he shared some other stuff coming out of the Consultant Growth Network on basically just the correlation between the sophistication of the software tools that consultancies use and their financial performance.
It's really striking. There's a small number of firms that don't use any tools, and then 5% in his survey, 28% say mostly spreadsheets, 51% say standard solutions use resource management, and then 16% use what he calls professional service automation system. A really deeply integrated system that covers a lot of functions. CRM might be part of that function. It might not be.
When you look at the financial performance that he shared, it's really interesting. I'll just take one line. I'll take a couple. Revenue growth just keeps going up. As you go across the spectrum from no tools to highly sophisticated tools, just revenue growth as a percentage just keeps going up, up, up.
The really interesting one to me was client revenue and operating partners expected to oversee in a year from £400,000 in the no tools column to £1.7 million in the PSA or fully automated systems.
Peter wouldn't necessarily make the claim that this is causal. It's likely to be more correlative. That just shows the sophistication or the business maturity of the firms. Generally speaking, when a firm uses more sophisticated tools, they tend to be more financially successful. Now, I know there are exceptions to this because I have seen a lot of firms, even some of the largest agencies in the world, buy expensive CRM solutions, try to implement them globally, and have almost nobody use them.
There's still a lot, I think anecdotally of this bright shiny technology syndrome, where people are experiencing what I would call process problems. They buy the technology to solve that problem. Then, lo and behold, it does not solve the problems. When it comes to CRM, you want to solve the sales process first. You want to have a sales process or methodology.
David: There's an idea.
Blair: Yes, there's an idea, and then get the CRM to support it.
David: I think Salesforce licenses are like gift cards. There's all kinds of them not being used with billions of dollars worth of value hidden in somebody's purse or in their wallet.
Blair: Yes, I think Starbucks has billions of dollars on the balance sheet that are basically unredeemed if that would be on the balance sheet. Unredeemed gift cards. It's over a billion dollars. I think you're right. It's an interesting way to look at Salesforce seats. Salesforce, as an organization, they seem to have Pete. They're struggling with sales. I was just reading an article on it today. In the survey, I'll just jump ahead here. I did a Twitter survey, not a proper poll because I didn't know what to list.
I just said, "What CRM app do you use?" 49 people responded. Out of 49 responses, Salesforce came up once. If we had done this seven, eight years ago when I wrote that initial post, I'll bet you--
David: Would have been a third of the firm's, I bet.
Blair: Yes, 20% or higher would have been using sales.
David: Yes. I was using it at the time. Well, no, I had a license at the time. [laughs]
Blair: There was a time we ran our entire business through Salesforce. We ran e-commerce, everything. Salesforce, basically, it was the enterprise-wide software application on which we ran everything. Absolutely everything. For large enterprises, it does really well on that, but it was never a serious player in the small to medium-sized business market. Now, if you look at the survey responses where 48 people responded, 22 Different CRMs being cited.
David: The most commonly used was?
Blair: It's HubSpot. The most second most commonly cited is not even a CRM. [laughs] It's Notion.
David: Yes, that wouldn't really surprise me. I use notion but not for CRM. Goodness.
Blair: Well, there were actually some interesting conversations in the thread about how people are customizing it. Somebody even shared a template to customize Notion to turn it into CRM. Then the third on the list is ActiveCampaign is what we use. It's not really a CRM. It's an integrated app. It's really marketing automation, an email service provider platform, that has CRM functionality. It's a fairly decent, what I would call, marketing CRM, but it's not a robust sales-level CRM for salespeople. It leaves me a little bit frustrated.
David: All right, whatever CRM you're using or intend to use, these mistakes are the ones you want to avoid. Let's dive into these. The first one is using the app out of the box. Seems like that's what I would do first when I bought a CRM. What you're saying is something different about not using it right out of the box. What do you mean by that?
Blair: I think a lot of people, when they buy a CRM, particularly for the first time, back to this issue of having a sales process or methodology, they assume that the methodology comes with it. It looks like it does because when you go to use functions like lead status or opportunity stage, you'll see there are these picklist values that are pre-populated.
You assume that because the technology company has put these lead statuses in there or opportunity stages, that these are the statuses and stages you should be using. That's not why they're there. They're there because they're the commonly used fields. The assumption is that you will go in and customize them. You'll use the ones that you actually use in your sales methodology, you'll delete the other ones, and if the ones that you use aren't there, you'll drop them in.
As an example, I think, broadly speaking, and this isn't about telling people how to use their CRM, but broadly speaking, I think of opportunity stages as early stage and late stage. Those stages are defined, not by what the salesperson does, but where the client is in the buying cycle. You won't find any CRM system that says early-stage, late-stage, or interested and intent. Those correlate to me with early stages, interested, late stages, intent.
That doesn't exist, so if I'm buying a new CRM tomorrow, and these are the opportunity stages I'm using, I have to go in and populate them. I would guess the vast majority don't change those pick-list values. They assume that they're there and should be used.
David: You have to just understand this from the perspective of the SaaS provider. Likely it could be free, but usually, you're paying something a month. The biggest reason why you would drop a SaaS subscription is because you're not using it. They have every incentive to get you up and going fast, and they don't have any incentive to help you use it correctly necessarily. You just have to make sure that you're customizing. That's the first mistake, using the app out of the box without customizing it.
The second is using it as a giant address book, or that's even a syndrome. It's a disease. Is this in the manual?
[laughter]
Blair: The most common usage, I think-- I don't know if it would be most common today. You buy this expensive CRM, and you're just using it as an address book. It's where you collect the contact information of your clients and prospects, and you're not using any other functionality. I mentioned I'd surveyed some agency friends or reached out to them about surveys they've done. Tom Beckett SoDA, he came back with the best data. He said over 86 agencies.
SoDA is the Society of Digital Agencies. You and I have spoken at the conference, really high-quality firms in this organization all around the world. What he says, a smattering of geographies, a third of the respondents are under 5 million, a third are between 5 and 10, and a third are over 10 million in net revenue. He says, "58% say they use a CRM platform." Then he says, "If you include Pipedrive as a CRM, the number climbs to 76." Then he adds his comment.
He said, "I think most people use Pipedrive at a simple level for contact management. I don't really count this as a CRM." I think Pipedrive is a little bit more robust than maybe Tom gives it credit for. I think you use it, right?
David: Yes, I used to use it. I don't now, but I like it. It's one of my favorite CRMs.
Blair: His point is he's not counting it as CRM because he thinks people who are using it are just using it for contact management. That's the issue. I have seen some of the largest agencies in the world use expensive CRM seats. Their annual worldwide license would've been in the hundreds of thousands of dollars, and it was only being used as an address book.
David: All right. That's comes free with your iPhone and your Mac.
David: First mistake is using the app out of the box without customizing it. Second, just use it as a giant address book. The third, this one's going to take some more explanation, even for me, is not distinguishing between leads, contacts, and opportunities. Just clarify what those three are.
Blair: I've seen this so often. "Oh yes, we use it. No, no, we use it fairly robustly." I look into the CRM system, and it's like, "Okay, you can't even make the distinction between a lead and a contact, or you use leads, and you use them as contacts, or you use contacts, and you use them as leads and contacts, and you don't make the distinction." This is my definition, there is no universally standard definition for what is a lead in the world of sales, but a lead is a clue to a possible sale not yet qualified.
It's a clue. It's a demographic clue. Somebody is the VP of marketing at the type of organization that you work with. There's a demographic fit, or it's a behavioral clue. Somebody's doing something on your website, or attending a conference might be another example. Leads are messy. There's lots of them. If you think of a sales funnel, leads are at the top, and they're all just clues, and they're attached to individuals, and you get to decide what is a clue. It's a clue if you have a hunch.
If you want to call somebody a lead, you can call them a lead, and it's okay because you haven't qualified them yet. Qualifying means having a conversation with them and vetting them to see if there's actually a fit. Is this the type of organization that we want to do business with? Is there a project there? A project is an opportunity. Leads are at the top. They're messy. You qualify these messy things, and then you take them out of leads, and you put them into contacts and accounts.
The contact is the individual. The account is the organization. They're tied to each other. If there's a potential project there, even if they're just interested or considering contemplating it, you create an opportunity that's an early-stage opportunity. If there's a project where they've decided, "Yes, we're doing this, and we're going to hire an organization like yours to help us do this," that's a late-stage opportunity. That's how these things are connected.
You're emptying out the leads, and I won't get into marketing qualified versus sales qualified leads, but you're emptying out this big messy bucket of leads, and you're putting cleaner data into contacts, accounts, and opportunities. As the opportunity progresses through the stage, there's a requirement for the data on all of those things, contacts, accounts, and opportunity to be cleaner and cleaner. It's messy and big at the top. It's clean and small at the bottom.
David: This is why you have to anticipate how you're going to use this so that when you set it up at the beginning, you'll have all of the categories that you need because you don't want to go through all of these contacts multiple times correcting how you had flagged them. This is thinking ahead, so this is great.
Blair: Figure this out before you go buy the CRM.
David: Is this covered in one of the books you've written, by the way?
Blair: It was covered in the first book I wrote that's been out of print forever.
David: Sounds like there's a book opportunity here, Mr. Enns.
Blair: I'll let other people-- We have documents on it. We have papers on it, we have training modules on it, so we can help in that front, but it's not in any book that's currently in print.
David: The fourth mistake is tracking the wrong things. Is the point underneath this that it's wasted time, or what's the problem with tracking wrong things? I guess you're going to tell us the wrong things to track.
Blair: What's the problem with tracking the wrong things? You're tracking the wrong things. That's the problem.
David: I know. Beyond that.
Blair: You're wasting your time.
David: It's wasting your time.
Blair: You're making predictions of future revenue that are just complete fantasy.
David: In your weekly sales meeting, it's nonsense.
Blair: I've sat in a lot of and shared a lot of weekly sales meetings in my day, and some of the reporting-- The one that drives me nuts is probability of close, and it's not that you shouldn't guess at probability of close because it really is a guess, but you see, at the beginning of the month, a salesperson will have a probability of this opportunity closing. Let's say, it's a $100,000 opportunity.
Probability of closing is 10%. You get this weighted sales forecast where you add up all of these opportunities you're working on. You take the dollar value, the monetary value of the opportunity, you multiply it by the probability of close, and then you add up all of those numbers, 10% chance of a hundred thousand dollars closing, it equals $10,000 in revenue. Then you get this forecast for the month.
This works in scaled businesses that are selling products or productized services. As the business gets smaller and more customized, it doesn't work. What happens is the salesperson starts to manipulate the sales forecast, whether it's for the month or for the year, simply because the probability of close is arbitrary.
David: What do you do instead of that?
Blair: I'm okay with probability of close, but I like having a small number of open opportunity stages. The smallest would be two, interested and intent. You can have subsets of both, and then you just assign a probability to interested, and you assign a probability to intent. When somebody's intent, doesn't mean their intent on hiring you, their intent on hiring somebody like you. I don't think you should ever get to something that's 90% probability of close unless somebody assigned a contract, et cetera.
What do you do instead is you decide what all the opportunity stages are going to have as a probability of close, and you remove the ability of the salesperson to make an arbitrary decision.
David: Should you be tracking number of calls and meetings, number of proposals written?
Blair: Not necessarily. I like number of proposals written. I like to look back on that number, just to show people how much time they're wasting, but if your opportunity stage says, "I had a meeting," if that's an opportunity stage, you've had a meeting, or you've written a proposal, you're going to force more meetings and more proposals, and your sales success is not going to rise as those metrics rise. You're more likely to actually force bad behavior.
Be careful of what you track. Think deeply about what are the predictive metrics that we will track, and don't default to some of these standard sales measurements that include awaited sales forecast or the number of meetings, the number of calls, et cetera. These apply in some other businesses. In fact, they would apply in some vertically specialized firms that are listening to this who are a more scaled business, so I shouldn't be so black-and-white about it.
If that's not you, if you don't have this repeatable productized service that you're selling at volume, then be really leery of tracking the number of calls, the number of meetings, the number of proposals written.
David: All right. The fifth mistake is underbuying or overbuying. I'm guessing you're just talking about the software tool itself.
Blair: Yes, and this isn't as common as it was when I wrote this post because as our survey showed, there are so many different CRM options available to you. It used to be, somebody would buy a Salesforce enterprise seat for everybody, and it's like, "Oh man, this is a waste," or somebody would be using the free professional version of Salesforce, and it just wasn't doing anything for them.
It's not so much an issue today. We're actually quite lucky. There's so many solutions. A lot of them are integrated with the email platforms and marketing automation platforms. It's really less of a problem.
David: The sixth mistake is not entering data as you go. The guideline here is do it right away as opposed to what? Writing on a Post-it note all over your monitor and then catching up on Friday nights?
Blair: Yes, catching up at the end of the day or the end of the week. I've been that person entering my data into the CRM too late, and it's like, "Oh God, I've forgotten all the things that happened in that conversation." You can go too far on this, too. I know times have changed. There are quiet keyboards. We're all used to a more digital world, but I am still to this day really uncomfortable typing while on a conversation with somebody.
When I take notes, and I'm in a sales call, I'm actively taking notes, and the client can see or discern that I'm taking notes, I'm writing. I think that's the way to do it. I write my notes, and then I enter the information in this CRM right after that. That's the habit that you should look for your people to adopt.
Now the challenge here is when you choose a CRM platform, let's say, you choose it for your account managers, they're already working in their project management app. They're working in Slack. They're working in these other platforms. I think of people as living on a platform or in an ecosystem, and then if you come along, and you add this thing that's outside of that platform or outside of that system, and you ask them to enter data as they go, it usually doesn't work.
If the tab to whatever the application isn't open all the time, I mean 100% of the time, then it's probably the data isn't being captured.
David: Got it. All right. Seventh mistake is ignoring powerful integrations. These options are so much more robust than they used to be.
Blair: Yes, and it's far less of a problem than it was when I wrote the post. Almost everything is integrated or integratable now, so I don't see a lot of this. I think anybody who would cross the line, not even a robust CRM user but an average CRM user, is pushing most of the sales and marketing data to the CRM.
You just think of all the data that gets generated, your website traffic, lists, et cetera, what people have bought from you, clients that have moved on, all of that data, you want to roll it up into one place where you can make sense of it and make decisions, judgments based on it. That's happening more and more today. It's less of an issue when CRM was a standalone thing, and some CRM applications would play nice with some marketing automation systems, but that's no longer the case.
We have Zapier and other tools and then just APIs everywhere. Integration is fairly standard, I think.
David: I wonder if this would be a consideration if you're thinking about configuring something like Notion, which a bunch of people are using. I wonder if it's going to be as integrated with the rest of your tools if you're doing that. I don't know the answer to that, but that would be a consideration you'd have to think about. When I force this other app to be my CRM, is it going to be easy to integrate that with some of the other tools I'm using?
Blair: I think if somebody's already using Notion, as an example, they're using it for other things. They've decided that it's flexible enough that they can turn it into a CRM for them. I'd like to see some of these instances. I suspect they're probably about as powerful as the sales-level CRM that I'm seeing in ActiveCampaign. I'd be surprised if they were more powerful. I think an organization will eventually get to a level of sales sophistication, or at least I hope they would, where they would want something slightly more robust.
I think the average listener of this podcast probably doesn't need full-blown Salesforce enterprise. Doesn't mean it's a mistake to go there because you can force a lot of other integrations.
David: All right, let me list the seven again, and we'll wrap this up. Because the audience has been so good today, we have a bonus for them. We don't do this every episode, but today, you've been really good.
The seven mistake is using it out of the box without customizing it for your particular use, using it as a giant address book only, and not as a CRM, confusing leads, contacts, and opportunities, tracking the wrong things that are not helpful to you in a sales context, under buying your solution or overbuying, not entering data as you go, but instead, saving it up and then cramming it in at certain intervals, then finally, just ignoring the powerful integrations that can make all of this data so useful to you. What's the bonus?
Blair: Giving everyone the same view. If you've got marketing people and salespeople, and they all have the same view into the CRM or even the whole MarTech stack, that's generally a mistake, not always, but you don't want to distract the salespeople with the shiny marketing things. If the CRM allows you to give them a sales view, a view that any salesperson should have into the data, then give them that view, and if they're a marketing person and not involved in sales, give them the marketing view into the CRM.
That way, the application is actually a little bit different and in some apps, a lot different from person to person. Obviously, admins would have the overarching view, and senior people would want both sales and marketing view. Most systems allow for all of that.
David: Yes, like the driver gets all the gauges, the passengers get to see what the temperature is and what radio station's on, and that's all they need at the moment. A few final points from you to wrap this up.
Blair: Excel is not a CRM.
David: Oh.
Blair: [laughs]
David: Are you serious?
Blair: Sales process first, tech second. If you're just dipping your toe into CRM, start small. Start with a simple one, and then expand with adoption. I think that's about it.
David: Okay, good. You're going to have a great career as a motivational speaker about this.
Blair: [laughs] You are going to be surprised at the number of people who are interested in this episode because it's not that people love CRM. Some people love CRM. It's one of these things they can't seem to get right.
David: Oh, I believe that. If Excel isn't a good CRM, is Word a good one? Is Microsoft Word?
Blair: We're done, David. [laughs]
David: Thank you, I think, Blair.
Blair: [laughs] You're welcome, I'm sure.