News

When entrepreneur Stephen Bieda realized his business needed a better way to manage customers' purchases of snowmobiles and watercraft, he didn't just install a piece of software -- he created one himself.

Bieda's Powersports, in southern Ontario's Niagara Peninsula, needed a way to not only track customers' purchasing habits in order to predict necessary stock levels but also to make the convoluted registration process more efficient and palatable for customers. It took Mr. Bieda five years of programming in his spare time, but in the end he created an inventory and customer information management system that rivals many professional software products sold under the catch-all acronym CRM, which stands for customer relationship management.

CRM may sound like buzzword gobbledygook, but it ultimately means one thing: keeping track of customer information.

If you've ever been asked for your address and phone number when buying a television, or filled out an on-line product survey or called a customer support line, chances are good you've experienced CRM. It may seem a little sneaky and even borderline suspicious, but it's not much different from the large metal cabinets and sheets of paper companies used to gather and store the same type of information 15 or 20 years ago. CRM technology, however, is far more efficient at accessing and analyzing that information as well as putting it to use.

Mr. Bieda's homemade software lets managers use the same computer document when filling out orders, eliminating the need for constant re-copying of information as is necessary with paper-and-pencil orders. Sales information, financing details, customs applications and vehicle registration are all handled electronically on a single form, which can be bounced among relevant managers via instant messaging programs.

The results have been faster turnaround time for Mr. Bieda's customers, easy processing of vehicle licences alongside an order, and most importantly a 10-per-cent increase in sales.

"It makes the process simple for customers and makes closing the deal seamless. Above all, it allows for much more detailed collection of data. You can't manage what you don't measure," Mr. Bieda says. "It really helped us remain competitive, and it's been a great way to enhance our bottom line."

CRM doesn't need to touch the customer directly to be useful, says software managing consultant Phil Obal, president of Industrial Data & Information Inc. Upgrading an inventory system to include voice-activated bar-code scanners can save 10 to 20 per cent of inventory labour. Combined with planning and scheduling software, good inventory software also can translate to greater savings in shipping, since faster inventory control lets managers consolidate shipments in more efficient ways and reduce errors.

"A warehouse management system can reduce the number of errors you have, and errors are expensive," he says.

For managers without the technical wizardry to write their own software, the solution is to use a commercial CRM product. Prices have traditionally been high, ranging from $300 to $1,000 a user for small businesses to $3,000 or more for each user for larger organizations.

Recently, however, the Internet has made possible cheaper, on-line-based services that charge monthly user fees and require only a Web browser and Internet subscription.

"It used to be you had to spend millions and millions up front," says Adam Gross, vice-president of Salesforce.com Inc. "Now the Internet has changed it so you can buy CRM services just like you buy your cellphone service, with monthly payments. It has democratized CRM."

Of course, Salesforce.com is in the business of selling monthly CRM service packages, so Mr. Gross's enthusiasm is no surprise. But companies like his are proof of just how great an impact the Internet has had on CRM use.

The collection of data need not stop at shipping and billing information. Today's cutting-edge CRM services often delve deeper, tracking things as fundamental as a customer's favourite colour (based on those he or she has bought before) or preferred time of day to shop (a clerk can see when is the most convenient time to have your order ready for pickup without calling you).

It's a growing trend that is not likely to slow down despite concern over the blurred ethical line between keeping records and invading privacy. Remember the creepy eye-scanning advertisements that pervaded public spaces in the 2002 sci-fi movie Minority Report? The ad technology, dreamed up for the movie by futurist-thinker John Underkoffler, might be a bit of a stretch, yet many who saw the film found it eerily prescient.

South of the border, U.S. shoe retailer Nine West hired Puntos Net Corp., a group of consultants based in Mexico, to design software that would allow the retailer to track a customer's buying habits, including what brands he or she buys most often, or whether the customer buys only sale items or prefers new, big-ticket items. Upon checkout, a shop clerk can then let that customer know when a favourite brand or colour of shoe is on sale. It's not much different from what many on-line retailers already do by sending out product updates and reminders to previous customers.

Whether such approaches ultimately drive customers away or help build loyalty remains to be seen, but industry veteran Barton Goldenberg, president of ISM Inc., says newer generations will be more likely to accept even more expansive CRM technology because by 2015 most people younger than 25 will have grown up oblivious to the old way of doing things. This will put increasing pressure on businesses of all sizes to adopt CRM software to help serve customers efficiently, whether they install it in-house or buy it in the form of an Internet-based service.

"This next generation will never have known analog technology," he says. "For this group, e-mail is old-fashioned -- instant messaging is the only way to deal with people. This group has a different way of doing business; their phones are always on, and they expect to be connected to other people 24/7.

"When they want to buy a product, they want to do it their way, not your way. When they want to get information, they want to do it their way, not your way," Mr. Goldenberg says. "That generation will dominate the world in the future, and businesses that fail to respond to their needs will fail."