Pros and Cons of a Hosted CRM

hosted crmOne of the most popular tools to keep track of sales and marketing activity has been the spreadsheet, most notably Microsoft Excel.  Although this can be a good tool to use, what if you are dealing with multiple campaigns and hundreds of potential customers you are trying to reach out to? Obviously, a spreadsheet would be very laborious and time consuming to use in this instance.  As a result, the next tool of choice becomes the Customer Relationship Management System, or ‘CRM’ for short.

Are you new to a CRM?  Learn the basics.

The Characteristics of A CRM

A CRM can be defined as software that manages the way in which an organization or business interacts with customers.  It is also a platform that allows the sales team to track, record, and input all critical customer data and information into a large database.

There are three unique characteristics of a CRM, which are:

1)      It is a very powerful, interactive tool:

For example, the sales team at a business can interface and communicate with potential customers (as well as existing ones) in real time.

2)      It is fully automated:
This particular characteristic of the CRM allows for the entire sales workflow process to be totally computerized.

3)      It possesses very sophisticated analytical and opportunity management tools:

*Future growth rates and demand for particular products and services can be predicted.

*Market segments can be defined based on how potential customers will react to newer products and services.

*Very detailed sales forecasting models can be created.

*Powerful data mining and data warehousing tools.

*Key Performance Indicators (also known as KPIs) can also be formulated in order to predict future buying patterns of particular customers.

The CRM’s Which Are Available

There are many types of CRMs out there.  Some of the leading ones include Salesforce, SAP,  Microsoft Dynamics, Oracle/Siebel, and Right Now.  But, these are known as ‘Closed Source Software’ CRM packages, meaning, they come literally right out of the box, after you have purchased them.

Want to learn how to use a top notch CRM?

There are also those that are known as ‘Open Source Software’ CRM packages.  These are systems that provide you the basic components of a CRM, but you are able to customize it to your own specific business needs.  Some popular CRM’s in this category include Zurmo CRM and Sugar CRM.

But no matter what CRM category you choose from, installing them can be a nightmare and takes a lot of time to manage.  Also, purchasing a CRM outright can be a very expensive proposition for a small-to-medium sized business.  What is the alternative?  The alternative is known as a ‘Hosted CRM’.  With this, the CRM package comes available to you in the cloud (also known as ‘Software as a Service’, or ‘SaaS’), directly from the vendors themselves.

The Benefits of A Hosted CRM

Here are some of the advantages of using a Hosted CRM:

1)      Everything is available to you at the click of a mouse:

Within minutes, you can be up and running, after selecting the package that is right for you.

2)      It’s affordable:

Because the CRM is hosted, you are utilizing what is known as a subscription based service.  With this, you pay a monthly fee (depending on the kind of package you choose) to the vendor, which is fixed and predictable.  This is a far cry from spending thousands of dollars if you were to purchase the CRM outright.

3)      You do not have to worry about hardware or software upgrades and maintenance:

Because everything resides with the vendor, they are the ones that are ultimately responsible for any server or software upgrades and maintenance.  If you owned your own CRM package, you would be responsible for all of this, which would mean huge costs and expenses.

4)      Your cost of customer acquisition is greatly reduced:

With a hosted CRM, you are able to quickly and efficiently target the right kind of customer base, and as result, you can lead directed and focused marketing efforts (thus maximizing your marketing budget).

5)      Greater scale for customer service:

Within minutes, you can glean information and data that can help pinpoint those areas in which you are weak in terms customer service levels, and make the necessary corrections.  After all, better customer service translates into more sales.

6)      You can easily transfer existing sales and marketing data:

With a hosted CRM, you can efficiently transfer existing data into your new system.  In fact, most CRM vendors offer this as an extra add-on for you by simply signing up for their services Learn how to transfer data into Salesforce.

7)      Your information and data are secure:

The CRM vendor will take extra measures to make sure everything is safe.  The CRM software resides on servers that are located in highly secured data centers.  Imagine all of the trouble and cost you would have to take on to secure an ‘in house’ CRM (this means that the CRM resides at your place of business or organization).

The Disadvantages of A Hosted CRM

Despite the advantages outlined above, there are a certain number of disadvantage as well, which are as follows:

1)      You don’t have direct control as to what happens over your customer data:

Because you’re trusting another party to host and contain your customer information, you can never be too sure what could happen to it.  For instance, there could be a natural disaster that could totally wipe out the data center of the CRM provider.  Make sure the Service Level Agreement (also known as the ‘SLA’) you sign spells out how you can get your customer data back in such circumstances.

2)      You are at the mercy of your CRM Provider:

Since you are using a third-party service, you have no direct control over the changes they might implement.  For example, you may get used to the look and feel of the CRM dashboard, but all of a sudden, if it changes, you have no direct input.  Also, depending on the plan you have, the vendor’s technical support team may take quite a bit of time to respond to you.

3)      Internet availability risks:

In order to access your hosted CRM package, you need the Internet.  Although most vendors claim to have a 99.999% uptime reliability, you never know when any network ‘hiccups’ or outages may occur, which greatly limits the use of your hosted CRM, especially when you need it most!