There are more software tools than ever available to help companies effectively market and sell their products and services. By now, most companies that do any amount of sales have implemented one of the popular customer relationship management (CRM) packages to organize the selling efforts of their direct sales force. Let’s take a closer look at the functionality of a CRM. After that, we’ll discuss why a CRM is not suitable for all types of distribution strategies, the indirect sales channel, in particular.
What a CRM system can do.
A customer relationship management system is built to manage customer information. It is used to organize and automate sales, directing lead traffic among the various members of a sales team and tracking revenue opportunities from lead generation to a closed sale. After a sale, it is used to maintain a relationship with customers, assigning and managing requests for service and support.
For companies that do business entirely through direct sales—reaching out to customers themselves without a network of dealers or resellers—a CRM system is usually all they need to get the job done. The story is different for indirect sales, however. While CRM systems are almost universally accepted as the best tool for managing direct sales, they were never intended to be a solution for managing channel partners.
What a CRM system can't do.
CRM systems are not purpose-built for partner relationship management (PRM)—that is, the process a company uses to interact with its channel partners for optimal sales and profit. While a customer relationship management system can be used to manage certain aspects of the partner relationship, CRM software lags when it comes to the tasks necessary for truly making it easy for a sales partner to do business with the vendor.
Why does this matter? Because unless they are part of a captive channel (in which partners sell only one brand), channel partners usually represent multiple—often competing—brands. They naturally choose to focus more of their attention and effort (referred to in channel management circles as “mindshare) with the vendors that make it as easy as possible to get the information they need to sell and service their products effectively.
CRM systems are not inherently designed with the functions critical to making it easy to do business. These functions include:
- Providing relevant marketing and communication information by user role.
- Managing training throughout a sales channel.
- Measuring certifications
- Easily compiling the data necessary for intelligently managing and incentivising proper sales behaviors including how market development funds (MDFs) are dispersed and controlled.
Choosing what is best for your sales channel.
Besides the question of functionality, in the non-captive channel, every dealer or reseller typically uses a CRM of its own, which will not necessarily be the same as the one used by the vendor. For information to flow efficiently between the organizations, either both of them have to get on the same CRM (not usually a cost-effective or scalable option) or another layer must be implemented to integrate the two CRM systems. This second layer is a partner relationship management (PRM) system.
Sales organizations should not be choosing between PRM or CRM software. If they have an indirect sales network, a partner relationship management system is the best tool available to integrate disparate CRM systems and provide the functionality required for a smoothly operating, profitable, mindshare-maximized sales channel.
Our new Executive Brief: PRM or CRM? The Right Choice for the Indirect Sales Channel discusses in-depth how PRM software systems and CRM systems can be combined in the indirect sales channel to increase partner engagement, grow the channel, and ultimately increase sales. Download this free resource today!