Wall Street Journal: April 23, 2001

Special Report - Breakaway: A Focus on Small Business Technology

Keeping tabs on your clients makes all the difference

By SCOTT MCMURRAY

 

TODAY, A POP QUIZ: What is your company's most valuable asset? And what are you doing to get the most out of it?

If you answered anything other than: 1. information about my customers; and, 2. managing that information to boost sales, you risk falling behind the competitive curve.

It sounds simple and intuitive. Most small businesses probably think they do a pretty good job of it. But it isn't until they've used software that automates part of the process -- often called Customer Relationship Management, or CRM -- that they realize the amount of customer information that is probably falling through the company cracks.

TODAY, LOST INFORMATION equals lost profit. "It's almost shocking to see the number of small to medium-sized companies who don't realize customer information is their most valuable asset, and that don't have any control over it's use," says Donald Joseph, president of Northbrook Consulting Group in Northbrook, Ill.

Of the bigger players in the market, ACT, owned by Interact Commerce Corp., Scarsdale, Ariz., has about 71% of the market in this category as measured by retail sales. Interact recently agreed to be acquired by Sage Group, a British software company, for $263.3 million.

Goldmine 5.0, from FrontRange Solutions Inc. of Colorado Springs, Colo., has about 7%, and a handful of smaller rivals round out the category.

While ACT dominates the market for individual users, the real battleground is in the small-business arena. ACT's 3.5 million users world-wide include 11,000 corporate accounts that have licensed at least 10 copies of ACT each. Most of its business users are small companies with 20 or fewer sales and management personnel who use ACT to track contacts with customers, queries left unanswered, volume discounts offered, delivery dates and so forth.

GOLDMINE, A PRODUCT with more of a focus on team-oriented selling, and more sophisticated bells and whistles, tends to compete for companies with larger sales forces numbering at least 20 to 50 salespeople. Goldmine is particularly well-suited for sales teams that, for instance, want to coordinate contacts with several different buyers within a larger company, says Rich Ackerman, president of JDS Group, a suburban Chicago Goldmine reseller and consultant. The parent companies of both ACT and Goldmine offer higher-end CRM software packages for larger companies.

Which to choose? The best entry-level CRM software package, says Phil Arduzzi, a computer network software installer in Rocky River, Ohio, "is the one you actually use." The self-employed technician uses ACT to track all of his customer contacts, including timing consulting calls, and then generates customer bills based on the phone log. He also persuaded a client, a small Ohio company, to have its 15 salespeople use ACT, arguing that it was a simple way to make their customer relationships more productive. ACT makes it relatively easy for individuals and small sales teams without any training to, at the least, track and share notes about sales contacts and to link contact information with meeting reminders on their calendars.

IF YOU'RE A SLIGHTLY BIGGER and more sophisticated company you might get more use out of Goldmine. But that's not a guarantee. Each product has its peculiarities that many users find off-putting. A big hurdle many ACT users find is how restrictive it is when processing data: Almost any information you want to keep track of must be attached to the name of a specific person as soon as you enter it into the application.

In fact, ACT bowed to widespread customer pressure when it issued ACT 4.0 in September 1999, and created SideAct, an on-screen scratch pad that lets you jot down notes and attach them to ACT contacts later, if you like, even though that seems to defeat ACT's contact-centric raison d'etre. And Goldmine, even though it shares many Windows' conventions with ACT, such as pull-down command menus and one-click icons, is still considered by many customers to be harder to use than ACT, "so they use it sparingly if at all. Which defeats the whole purpose," says Jim Carroll, a Goldmine user and the former head of sales support for a hydraulics company in Cedar Rapids, Iowa.

THEN THERE IS THE COST of using the software. Many small companies, after sampling free demos of the products available on each company's Web site, may want to ask a consultant to help them get the most out of their CRM software pick. While individual copies of these software packages are typically $150 to $170 each on Amazon.com, consulting fees can easily range from $2,000 to $10,000 for a small company sales team, says Mr. Joseph of Northbrook Consulting Group.

While these products are the most popular entry-level CRM products, there are other options. Microsoft Outlook, included in the Microsoft Office software package, offers fairly basic contact management and scheduling options. But the growing number of ACT and Goldmine users suggest that many small business and other customers are looking for more in-depth offerings. At the other end of the spectrum, a number of companies offer Web-based CRM products. Salesforce.com (www.salesforce.com1 ) for instance, touts its seamless updates -- no need to download software to your computer or buy the latest version on CD, and quick access from remote computers with Internet access. Such conveniences come at a price. Salesforce.com users pay $50 a month, though the first five users get 12 months for free. And while your contact information on the Web is safeguarded by the latest encryption technology, your ability to access it is only as good as your Internet connection.

All of which highlights the real competitive issue for these and most productivity-enhancing software products. Until they are even easier to use and integrate with the working world, their biggest competitors won't be each other. They will remain pen and paper.

-- Mr. McMurray is a writer in Chicago.

 

Write to Scott McMurray at breakaway@wsj.com