Most distributors using Enterprise Resource Planning software to help run their businesses use some type of Customer Relationship Management function, whether it's part of their ERP platform or a separate, third-party solution. But what, exactly, is CRM?

Broadly speaking, it's a way to track every single customer interaction, from a 30-second phone call answering a quick question to a multi-thousand dollar order. But it's also a way for distributors to maintain an in-depth “portrait” of each customer, marking their buying habits, the business environment they operate in and even their personal lives and interests. And it's a way to improve operations, freeing sales staff to bring in new business and enhance the bottom line.

“It's just basically being able to collect information on your customers, to be able to know when was the last time you talked to them, what was said, what transpired: 'Last time we sent them information from our company was three months ago,' or, 'We just loaded them up like crazy yesterday,'” explains Gary Rippen, director of distribution industry and product marketing for software provider Infor. “To me, it's having an understanding of sales history, so when you do deal with a customer, you are in a position to have a strong understanding of that history, of the last time you got them involved in something, so you can talk to them about it and not feel like you are overpowering them. … It's just a better way to relate to those customers.”

There are a few key ideas to keep in mind when researching, buying, implementing and using a CRM solution. INDUSTRIAL DISTRIBUTION asked the experts what distributors need to know about getting the most out of CRM.

Frank Heenan, director of product management and marketing for business software provider Activant, says the first thing a distributor looking at CRM should do is actually a “don't.”

“Don't just investigate a package or a feature that has CRM capabilities and not have a company and sales methodology,” Heenan explains. “It's just like implementing any business system—it's a change, and in any organization what most people have a fear of is change.”

Establishing a team to create that sales methodology and select and implement a new CRM system is one way to mitigate those fears, he adds.

“When you look at your CRM solutions, don't look at it as a minor project. It's something you have to have a vision for. If you don't have that, there's a higher probability that your implementation is not going to be successful,” Heenan says.

Managing customer relations is a three-pronged approach, he adds, incorporating taking care of existing accounts, managing the sales force and developing a go-to-market strategy.

“The first piece of CRM is managing your existing customers, understanding their buying habits—what they're buying, how often they're buying and understanding some aspect of their account, their [accounts receivable], say, or their revenue streams,” he notes. “The second piece is sales force and opportunity management. That is, managing sales pipelines and managing sales reps. The last piece is really geared toward marketing activities, developing call campaigns, blasting communications into the channel and following up behind those call campaigns—leaving a distributor's customers feeling they have that one-to-one relationship.”

As far as the “do's” are concerned, Heenan says, due diligence tops the list.

“Do your homework. Understand what you're doing today; understand what capabilities exist out there; define your sales process or your sales methodology,” he says. “Once that's done, when you're executing on that CRM application or module, you have a higher success rate in tactically executing to it.”

Some of the capabilities to consider include the ability to define sales cycles and their stages, the difference between a solid customer and a prospect and the probability of closing a sale, he adds.

“[Make sure] you have an opportunity to see, for any given month or quarter, any given selling period, what your sales pipeline looks like,” Heenan explains. “[You need the] capability to define your sales activities and the reporting capability to see what your sales reps are doing, how much time they're spending in one aspect of the sales process.”

On the customer-facing side, Heenan says, the CRM module should be able to track the buying habits of each and every customer.

“So you're a distributor selling to one organization and another calls you, and they look, act and feel like Company A. You might say to them, 'Other businesses like yours are also buying these products.' They may not be aware of that, so you're giving them a little bit of value-add there. But you're also upselling them,” he notes.

Finally, Infor's Rippen says, it's crucial to confirm that the CRM module you select, whether it's a free-standing, third-party option or part of an overall ERP suite, can integrate with whatever ERP platform you're using.

“Make sure it is a technology that can interface with the internal systems [you already have], because there's going to be data that should be shared with internal sales reps, order entry personnel, shipping [personnel], et cetera,” he explains. “There are plenty of stand-alone products, but how does that [data] get shared?”

Hannan Supply Co. of Paducah, Ky., had been using the same operating system for 16 years before the electrical distributor upgraded to a new platform with a robust CRM module, executive vice president Phil Haire says.

“It was extremely cumbersome. … Receiving a phone call in our old system, we would have had to get completely out of what we were in the middle of, put it on hold and go back in to try and settle the customer's needs,” Haire recalls. “Our new system is Windows-based. … No matter where I am [in the system], it's a matter of just a point-and-click and I can move and go directly into another module in order to enter the customer's question. That aspect of it has been a huge benefit.”

Other huge benefits include the ability to respond instantaneously to customer requests, better inventory, pricing and product knowledge and the ability to generate detailed, customized reports, he adds.

“A lot of times a customer may need an additional copy of an invoice, or they may need an acknowledgement that they received something. At any time with this system, I can have it e-mailed to them before they even hang up the phone. With the old system, it was 12 to 24 hours later before they actually got a copy,” Haire notes.

The system also allows Hannan Supply to add customers' unique SKU codes to invoices, a feature that provides a number of benefits for both parties.

“From a receiving perspective, it really speeds things up. Those that we've done that for think it's the greatest thing we've ever done,” Haire notes. “We were doing it in our old system, but it was done with a comment we had to attach on every item.”

And for Hannan Supply's Vendor Managed Inventory operation, the capability to use customers' SKUs and bin labeling numbers has freed up the sales force to do what they do best—sell.

“Our truck drivers can actually deliver that material to the end user and put it away in their bins, because we've also started incorporating their bin numbers on that [invoice],” he says. “Before, our salesperson would have to spend an hour sorting that material and putting it in bins. Now he's out selling instead.”

For Haire personally, the best part of the new CRM system is its ability to generate customized reports around any parameters he selects.

“I had a customer ask for second-quarter purchase reports on all the VMI stuff,” he says. “I first thought, 'How am I going to do that?'” Haire recalls. “But when I found the report I wanted and imported it to Excel, it was a huge time-saver. She asked for it at 8 a.m. and by noon she had that report. In the past I would have had to go to my IT guy, he would have had to go and write that report, send it to me and I would have had to edit it.”

There are other capabilities distributors should seek when examining CRM products, Infor's Rippen advises. First, he says, remember that businesses are being forced to operate in an increasingly global economic environment. And that trend is being reinforced by the falling value of the dollar against foreign currencies.

“We're selling much more outside the U.S.,” Rippen notes. “A customer now could be sitting in Germany or Nebraska. One of the keys is to make sure the technology is there to understand the currencies and time differences [among customers].”

The world is also increasingly wired—and wireless, he adds. A CRM product that can operate in a real-time, online environment can help position a distributor to compete in an ever-more sophisticated arena. One aspect of that is connecting field sales reps to CRM data on a hand-held device, enabling them to send and receive up-to-date customer information wherever they are.

Hannan Supply, Haire says, will continue to explore the features and capabilities of its new system, refining its operations and growing more and more efficient.

And that, in turn, means more and happier customers.

“The more we use it, the more benefit we'll definitely see out of it,” he says. “It allows us to be a better server or supplier to [our customers], by their knowing that we're trying to be more efficient with our time. We're spending more time in front of them, hopefully solving their problems.”