What is the point of an expensive CRM system?
Sales & Marketing for Professional Services & Strategic Issues

What is the point of an expensive CRM system?

March 17, 2013

by Tony Vidler


An adviser who plans on being in the business for another couple of decades asked what the point is in paying for a fancy CRM  database.  Honest.  He did ask that.  He has a list of clients in Outlook and has the clients home addresses, phone numbers, and sometimes email addresses – “what more do you need, right?”

Whoa….It did take 10 seconds or so of immense self-control before I responded, and if I may say so myself I thought I did well not to laugh out loud instantly.  It did highlight that there are many elements to running a successful business that some financial advisers simply do not understand.

The power of having detailed information, and knowing your client well – without having to rely on the fallible human mind alone – would seem to be a good argument in itself to me.

Clearly that isn’t enough for some, so we spoke about information creating value.

Most of the real value in an adviser’s business lies in the lifetime value of the trusted relationships.  It is the future opportunity which presents the greatest value on average.  Clients tend to do business with advisers they trust, and who know them well, and who are looking to help the clients achieve their objectives.  The more you know about their objectives, their situation, their likes and dislikes….the more valuable the adviser is to the client.  And the more valuable the client is to the adviser.

The peculiar thing is that advisers know this, yet ignore it.  They spend a significant part of their resources on getting new clients knowing that the future earnings are far more valuable than any historic income streams.  Their eagerness to purchase another advisers business is more often driven by the latent opportunities that business presents for them to create new revenue.

Oddly enough though many financial advisers value their own business on the basis of what has been done historically, and what is simply “in-force” business.  This is little more than a contractual right (perhaps) to a historic and probably diminishing income stream.

The gap between how advisers perceive the value in their own business, and the higher potential value they perceive in another book of business is often because they do not actually have organised knowledge about their own clients.  That is, they don’t value the opportunity that sits inside their own business as much as they value the opportunity that they perceive exists elsewhere because they only think they know their own client base.

Even many of the advisers who invest in good data management and have a very capable CRM system use it only to manage their workflow with a client when a piece of advice is being provided.  So even many proficient and diligent professionals are not maximising the opportunity that good data management presents.

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Certainly the CRM system can help manage workflow, which creates efficiency and reduces business risk as it enhances the probability of providing fully compliant advice processes.

Typically though advisory businesses are poor at collecting all valuable data while they are managing the advice process.  Sure they capture data in forms, and then scan and keep the forms electronically in the CRM record – but those documents are usually not searchable content and the key information that will help you understand the clients needs and objectives is not captured in a useful method.

While it is good that information is collected and stored, it is rarely understood in any meaningful sense, and its worth is therefore negligible in terms of assessing future opportunities, or building deeper relationships with clients.

There is no doubt that a good CRM system containing pertinent information about clients can help improve your client service or support functions.  There is no doubt that it can improve your marketing efforts.  There is no doubt either that increased service levels, together increased marketing impact, with people who trust you provides better sales opportunities.

Probably better opportunities than one will have with complete strangers at a guess.

It is best to leave the advisers behind who do not quite see the importace of running a business efficiently and knowing their clients needs well, and being able to respond to their clients needs at a deeply personal level.  Outlook will probably serve those advisers well enough for their short sales careers.

For the professional advisers though a good CRM system that captures all the pertinent data that can strengthen your advice process AND the client relationship is critical to your success.  It is the true reservoir of future value that will underpin the value of your commercial enterprise.

To get the most out of it though you have to be clear about two key areas:

1.  what the purpose of the CRM system is for your business

2.  what your advice, service and marketing processes are, and how the CRM system can improve all three areas.

If you are clear in your thinking in these two areas then you have a very high chance of business success, and maximizing future business value.


(“Importance of Clarity” graph courtesy of   Stanton Allen http://www.stantonallen.com/crm.html)

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Comments (3)

  • Do you have any good suggestions of a good crm for advisers?

    • Hi Kevin

      great question. The majority of CRM systems I come across do the job ok – in fact will do the job better than the advisers think, but the advisers are not really using the full capacity of the systems. Having said that, pretty much all have some serious shortcomings from a practice management or a marketing platform perspective. The most successful systems I’ve seen in terms of practical application for managing clients and running a good business have been built out of a basic infrastructure (e.g. Salesforce) and then heavily personalised. The problem with that is largely integration of other client bases, or the sale of the practice with the bespoke system, later on with the bespoke CRM system. I have been looking at off the shelf CRM systems for a few years and generally find them to fall short of my expectations, largely because the vendors build for a common denominator, which introduces compromise and therefore limits my ability to use them as practice management tools. They tend to be good for client data management and managing workflow, but often not much beyond that. To be fair though, for most advisers that is all they want, so the vendors are meeting market expectations I suppose. I am looking into a system out of Australia at the moment which is still in Beta, but which looks very promising indeed. If it turns out to be the real deal that I’ve been looking for, I will certainly let people know about it.

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