How to Select a Great CRM Vendor

Updated: April 30, 2009

Many companies mistakenly believe that selecting the right solution is what makes or breaks a CRM project. The reality is that CRM success hinges as much on cherry-picking a well-suited vendor as it does on selecting an appropriate product suite.

Said Timothy Hickernell, an associate senior research analyst at Info-Tech Research Group , "Companies have to follow a process involving a certain amount of planning and evaluation in vendor selection." Although this process differs depending on the size and scope of a CRM undertaking, there are some hard-and-fast rules when it comes to vendor selection.

Create a Short List

When creating a short list of favorable vendors, Hickernell recommends looking beyond confusing spec sheets and jargon-riddled feature lists. Knowing which vendor is right for you means examining factors such as its target market and product-delivery models. For example, if your company is growing but has limited IT resources and funds, it is better off courting vendors that cater to small- and medium-sized businesses and offer on-demand solutions .

What's more, a company's short list of preferred providers should range from between three and five candidates, according to Hickernell. Limiting your selection to a mere two can rob you of the leverage needed to negotiate a great deal. "You're better off having a third party to play off of even if you're convinced you're really going to choose between two vendors," said Hickernell.

Selecting more than five candidates, on the other hand, can cause confusion and unnecessary nitpicking during the decision-making process. After all, said Hickernell, because of minimal product differentiation in today's market, companies really don't need to cobble together an exhaustive list of CRM contenders.

Find Out What's in It for Your Company

Once a short list has been created, the next step is sitting down with each vendor to discuss variables such as solution-delivery options, pricing and product features. Vendor representatives should meet with the CRM project's stakeholders and stage detailed product demonstrations. However, Hickernell said that companies should avoid falling victim to vendors' "traditional PowerPoint dog-and-pony shows." Rather, companies should prepare scripted questions that will prompt vendors to explain how a particular product can benefit a company's unique business needs.

Involve Senior Management

Your IT team may fully back your choice of vendor, but if you have yet to acquire the support of a C-level executive, hold off on making a final selection. Warned Hickernell, "Even if it's a smaller project, somebody from management has to have skin in the game. And if you don't have that level of support from upper management, especially with a CRM project, you should not go forward."

Consider Cultural Fit

Deploying a CRM solution often calls for establishing a solid relationship with that solution's provider. For this reason, it's crucial that companies take the time to examine a vendor's cultural appropriateness. For example, a conservative company is unlikely to feel comfortable working hand-in-hand with a vendor known for its bleeding-edge and innovative approach to CRM.

Prepare to Be Swallowed

In today's climate of constant mergers and acquisitions, companies need to prepare for the possibility of being handed over to a CRM provider's competitor. For some businesses, this can be a welcome changing of the guard. Said Hickernell, "In the case of an acquisition, you have to realize that the acquiring vendor values you as a customer."

For other companies, winding up in the throes of a tumultuous acquisition and feeling forced into switching to a brand-new product line is a prime opportunity to start searching for a new vendor. After all, by the time an acquisition has taken place, chances are that your company has already realized a return on your original CRM investment.

Nevertheless, not all mergers and acquisitions come with a silver lining. Finding out that your solution provider has been gobbled up by a competitor can mean losing that friendly account manager, the one who always answered your calls and understood your business inside and out. Fortunately, there is a way to minimize the damage. Advised Hickernell, "If you're more concerned about the vendor relationship rather than who makes and supports the actual technology, then you might want to look at a solution that can be purchased through a channel partner."

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