Part 1 of this series on getting started with CRM addresses factors to consider when deciding whether the time is right to take the plunge.Part 2 offers advice on how to choose the right CRM tool.
Once a small business finds the perfect CRM solution for its needs, the owner or manager must then negotiate the appropriate legal agreements with the vendor. This can be a daunting task for anyone who is not familiar with the many types of contracts that may come into play with an IT purchase.
The types of contracts vary depending on the nature of the business and how the vendor and customer are set up rather than on the size of the company, Gary M. Zeiss, an attorney who specializes in IT agreements, told CRM Buyer. A purchase may require separate license and service agreements for one vendor or multiple vendors.
“It runs the gamut,” he said.
There can be multiple agreements even in small implementations, concurred Dan Brennan, principal of A-Frame Technology Assurance. Initial license agreements and annual maintenance implementation agreements are typical, he told CRM Buyer.
Licensing agreements usually contain restrictions of use, protection of intellectual property rights, and restrictions on the number and types of users, whereas annual service agreements are put in place to determine how software is maintained, Brennan explained. That would include fixes and updates and the type of help desk support available.
A system integration contract may be used when the small business needs help to implement software, he said. It covers configuration, customization, data conversion and training.
Contract Terms
A small business should be aware of the terms of the contracts. In addition to license terms, a description of services is important, as is a stipulation for how an agreement can be terminated, Zeiss advised.
In order to create stickiness, some vendors make it very difficult to take data out of their systems and move it to another system, Zeiss warned.
Choose a vendor wisely and have an understanding that the data should be easily transferable, he recommended, because some vendors can be resistant to having that in the contract.
“It depends on the supplier,” he remarked. “Those are all important considerations.”
The vendor should allow a customer to back up the data on its own system as well as on the vendor system, added Zeiss. This local backup should be done in-house on a regular basis.
Standard Contracts Favor the Vendor
Typical boilerplate agreements tend to favor the vendor rather than the buyer, Brennan cautioned.
This is especially true in situations involving a small enterprise, Zeiss said, noting that vendors can take a hard line against changes to the agreements.
In some situations with uncompromising vendors, small companies can threaten to take their business elsewhere, he suggested. However, timing can work in favor of small businesses; a commissioned salesperson trying to meet a quota might be more reasonable during negotiations.
“There are certain provisions you should negotiate,” Zeiss emphasized. Customers should not have to accept all the risk.
However, the small business should be reasonable as well, he pointed out. The terms should not be entirely favorable to either side. “You have to be, to a certain extent, reasonable.”
Getting Professional Legal Help
A small company should consider engaging a lawyer who specializes in IT contract negotiation, recommended Brennan.
“It’s one of those areas that I strongly recommend getting professional help with,” he emphasized.
An attorney can help a small business recognize what is reasonable to try to negotiate with the vendor, Zeiss concurred.
“These things are specialized agreements, and there are specialized things to look out for,” he explained.
A small business should have a lawyer in reserve in case one is needed, advised Zeiss. At the very least, a lawyer can review the contract and provide feedback.
“It doesn’t necessarily have to be at the table,” he said, admitting that sometimes it is best to have the lawyer outside the room because they can slow things down. “I wouldn’t put a lawyer in their face right away.”
Evaluate the Product First
Even before the contract negotiations begin and before they inform their staff, small businesses should be thoroughly prepared by carefully evaluating the CRM tool, said Zeiss. Test-drive a trial version of the product first to become comfortable with it and understand the technology as much as possible.
Do not rely on information from vendor salespeople about the product, he warned. Small business owners and managers should learn as much as possible on their own.
Before settling on the right product for his real estate investment company, Farbelowmarket.com, Kurtis Squyres learned as much as he could and used several CRM products.
“I tried so many,” Squyres told CRM Buyer, who recommended that small businesses do the research and fully understand their own needs and requirements before putting any contracts in place.
He used the Web-based SalesNexus, an enterprise version of Outlook, and ACT! before settling on his current tool, Relenta.
The email marketing capabilities, including groups and auto-response functionality, best suited his company’s needs and helped make it successful, he said, noting that it made it easy to target his marketing communication.
“I can instantly blast it out,” said Squyres. “It’s very powerful with the groups.”
Simple or Complex Agreements
Choosing a lean CRM solution rather than one that was fully loaded made the software agreement much simpler as well, Squyres said. A monthly agreement that could be canceled at any time sufficed in his situation.
However, more complex or larger businesses would likely require more complex contracts and more than one type of agreement, he pointed out.
In addition, vendors that offer Web-based applications, such as SalesNexus and Relenta, will likely be the types of solution providers that businesses of all types will be contracting with in the future, Squyres predicted.
“Cloud computing is getting better,” he remarked. “I really think it’s the wave of the future.”
Everything is becoming so mobile; the model of purchasing an application for a one-time fee and then installing it is dying, he noted. “It’s going the way of the dinosaur.”
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