Integrating CRM and the Web

By Duncan Rein
January 1, 2006

This is the second in a two-part series on Constituent Relationship Management (CRM). You can read the first part in our Technology Is Not A Silver Bullet white paper.

Convergence of CRM and Web Technologies

The need to efficiently and effectively communicate with thousands of constituents is a need that has been around for a long time, and therefore the CRM industry and CRM products are relatively mature. Traditional CRM products such as Siebel Systems, Blackbaud, and Shelby are typically off the shelf software products that are purchased and installed onsite at the location of the organization that is employing the solution. Individual users are synchronized to the server through local networks. Major upgrades to these systems are typically developed every 18-24 months and must be installed at each location. As a result, non profit organizations employing these solutions have need to find individuals with the technical expertise required to maintain these servers, manage the upgrades, and keep the internal networks working.

Only ten years since the invention of the Netscape browser, the Internet has quickly matured from a playground for tech geeks to a powerful communication platform that is used by almost every American and a growing percentage of the world population. As the web has become such an integral part of our day to day lives, an organization’s website has taken on increased importance in how it communicates and how it interacts with its members or constituents.

Whereas even two or three years ago, most organizations had websites that were disconnected from their other communication initiatives, today an organization is ill-advised if it develops an overall communication strategy that does not include a strong digital component, where web updates and personalized emails are overlaid against other communication initiatives.

Likewise, a knowledge of the new capabilities and new possibilities that the web makes possible, such as increased interactivity, greater immediacy, increased personalization, more efficient information gathering, and more powerful reporting, must inform the development of the overall strategy. That the web must be a central and strategic part of an organization’s overall communication strategy is a fundamental premise for the existence of Silas Partners, and we work hard to align an organization’s web efforts in support of its overall goals and strategic priorities.

As the web matures as a communication platform, and as it becomes more central to an organization’s overall communication strategy, it is inevitable that there must be a collision between web technologies and more traditional CRM technologies. If the ideal for an organization is an integrated communication strategy, where online and offline channels work together seamlessly, and where an organization has a 360 degree view of all the interactions it has with its constituents (both online and offline), then this implies a convergence, or at least the need for synchronization between, web and CRM platforms.

Because of this rapid convergence, it is no longer advisable to select a web platform without reference to your organization’s CRM infrastructure, nor should major decisions regarding CRM infrastructure be made without reference to how it will interact with your website, email communication, (and in the future RSS feeds), as these channels will only grow in importance over the next several years.

Innovative technology vendors have recently introduced sophisticated web platforms that apply CRM principles to online communication, creating the new buzzword of eCRM. These systems offer a suite of business applications, such as surveys and registration forms, online giving and e-commerce applications, and sophisticated email marketing tools, all feeding into a centralized online member database that stores information about online interactions and allows for the display of customized content based on individual profile through web content and through personalized emails. Early pioneers that were among the first to develop this sort of eCRM capability for nonprofits include Convio, Kintera, and GetActive.

Over the past couple of years, many nonprofits have taken the approach of implementing one of these systems to provide infrastructure for their online communication efforts, while maintaining existing offline CRM infrastructure to manage offline communication and interactions. Efforts are made to synchronize the two databases, so that information collected online can be stored in the offline “database of record” and used to inform offline communication, and online communication can increasingly be informed by offline interactions. Even in the absence of synchronization between online and offline data, these next-generation web-based systems allow for more effective online communication with various groups of people, which can foster much deeper relationships, leading to deeper involvement with individual constituents.

The primary advantage of this former approach is that existing CRM infrastructure and processes do not need to be disrupted in order to add more sophisticated web capability. This is particularly significant for larger organizations, that may have hundreds of users for its CRM system and detailed business processes already established around these systems. Even for an organization with five users, there would be a significant switching cost, not only in terms of data migration, but also in terms of retraining and the establishment of new processes. This is not to be under-estimated, especially for larger organizations.

In parallel, there is a wave of organizations, primarily smaller ones, which are increasingly looking to web-based systems to manage their entire CRM efforts. This is particularly true for small businesses, illustrated by the rapid growth of Salesforce.com, the leader in providing web-based CRM solutions to businesses. According to company financial statements, Salesforce.com added over 41,000 clients in the second quarter of 2005 alone, bringing its total to number of clients to 308,000. Gartner, Inc. predicts that expenditures on web-based CRM solutions will account for over $1 billion in 2009, which would account for 25-33% of the total CRM market.

Nonprofits have been slower to migrate their CRM efforts to web-based systems, primarily because technologies serving nonprofits have been slower to develop (not surprisingly the nonprofit market is less lucrative than the business market). However, in recent times, this has started to change. In addition to providing eCRM technology, Kintera’s ambition is to provide the nonprofit market with a comprehensive, web-based CRM solution. In the church market, Fellowship Technology is playing a pioneering role in offering a next generation, web-based church management system.

The primary advantage of the latter approach is that all communication efforts, online and offline can be supported by one member database, without the need for synchronization. Especially for smaller organizations, there are a lot of advantages in migrating to an online CRM system including the following:

• Quicker deployment
• Does not require technical expertise or system administration, as the solution is hosted and maintained remotely
• Minor upgrades every six months or so are automatically included in the product, as opposed to upgrades needing to be purchase every couple of years
• Users can login from any location through a browser, as opposed to needing to login through a virtual private network, which are often blocked by firewalls. This is particularly useful for organizations that have a sales team and/or customer service team that is geographically spread out.
• Typically involve a lower cost of ownership than server-based systems.

I believe the most significant development around the introduction of web-based CRM systems is that sophisticated CRM capability that was previously accessible only to larger organizations with significant financial resources will now be accessible to smaller organizations through the introduction of cheaper, web-based systems. It is not surprising that the growth of salesforce.com has been largely driven by small to medium-sized businesses.

In many ways, the introduction of these new technologies gives an advantage to smaller organizations who are able to adopt new technologies quickly, without the switching costs that larger organizations must incur. Groups that have previously been using an array of spreadsheets, or maybe Microsoft Access databases, will now be able to take advantage of power features that they could only dream of before. The convergence of web and CRM technologies represent an incredible opportunity for smaller and medium-sized organizations to quickly take their communication efforts to the next level, driving deeper relationships with constituents and rapid organizational growth. However, again it is important to remember that technology is not a silver bullet. Investments must also be made in developing business processes and in the expertise required to develop and implement effective communication strategies around these new technologies.

Recalibrating your Overall Communication Strategy and CRM Infrastructure

The recent convergence of web and CRM technologies have made technology decisions even more difficult and more complex than they were before, as decisions about overall communication strategy, CRM infrastructure and processes, and web platform must all be calibrated against each other. While we are just at the beginning stages of this convergence, I believe this convergence will eventually be so profound and so significant that it will fundamentally change the way that non-profit organizations do business. Those who can adapt will be much more effective and efficient in their communication with their constituents, and these are the organizations that will thrive in the 21st century. Those organizations who do not adapt to these new realities will be quickly left behind, as the next generation of nonprofits comes to the forefront.

Whether you’re a small or a large organization, the rapid development of the Internet as a strategic communication platform requires that you reassess your overall communication strategy, as well as your current CRM infrastructure and business processes. These important questions must be recalibrated in light of the new potential that the web now represents for fostering deeper relationships with your constituents and growing your organization.

If you would like to find out more about how to implement these strategies and ideas in your organization, please take a moment to let us know a little about your needs.